Origin Energy brings forward exit from coal, shares fall on -$131m first-half loss

Origin Energy (ASX: ORG) plans to accelerate the closure of its coal-fired plans, replaced by renewable generation by mid-2025. 

Origin also delivered its half-year FY22 results, reporting a statutory loss of -$131m, reflecting one-off major accounting adjustments from the 10% divestment of Australia Pacific LNG (APLNG). 

Financials at a glance: 

• Underlying profit of $268m, up 18%

• Free cash flow of $355m, down -45.8%

• Interim dividend of 12.5 cents per share, unchanged 

The underlying profit figure topped Morgans’ expectations of a 16% increase, driven by oil prices and the strong performance of the APLNG business. 

“Origin achieved a solid result in the first half given the continued economic disruptions from COVID-19 and challenging conditions in the electricity market driven by more subdued demand and lower tariffs,” CEO Frank Calabria said. 

Goodbye coal 

Origin plans to close the Eraring plant, the nation’s largest coal fired power station, by mid-2025, well ahead of its original 2032 closure date. 

To-date, Eraring supplies roughly 20% of NSW’s energy, providing a baseload power to the grid. 

Origin expects to replace Eraring’s load with “lower cost renewable generation under the NSW Roadmap by 2025-26”. 

Sellers take control 

Origin shares were -0.3% lower as the market opened but down -4.5% just before noon.

Earnings from energy markets declined -58% to $268m, driven by lower electricity customer tariffs and increased fuel generation costs.

APLNG earnings carried the company's first-half performance, up 54% to $870m. Though, this was widely expected given surging commodity prices.

Upgraded guidance 

Investors didn't seem very receptive of Origin's upgraded earnings outlook.

FY22 earnings is now estimated to be higher, between $1.95bn and $2.25bn, up from its previous guidance of $1.85bn to $2.15bn.