Origin Energy (ORG) has followed up a warning earlier this year and scrapped its final dividend after revealing a second annual loss in a row.
The company said this morning it lost $589 million for the full year thanks to more write-downs and a weak operating result.
In 2014-15 Origin reported a statutory loss of $658 million, after taking write-downs on a business in New Zealand and its upstream oil and gas assets.
Underlying profit for that year was $682 million and for 2015-16 it fell a very nasty 41% to $354 million.
Revenues for 2015-16 slid 14% to $12.17 billion.
Origin had paid out a final for 2014-15 of 25c a share. Shareholders received an interim for the latest financial year of 10 cents a share, and a warning that the final payout could be scrapped, which became the case this morning.
Chairman Gordon Cairns justified the decision to drop the final dividend, saying in a statement that given the “important task” of debt reduction and the absence of any generation of franking credits, the board had decided not to pay any dividend for the second half.
“While the board will review each dividend decision in light of the prevailing circumstances, the board’s view is that suspension of the dividend is in the best overall interest of shareholders," he said.
“In building resilience to a lower oil price environment, Origin has made good progress on asset sales and cost reduction,” chief executive Grant King said.
“The 2016 financial year has seen some major changes in the global energy industry with lower oil prices, new LNG projects coming into production and the adoption of carbon reduction targets on a global basis,” he said.
Turning to the outlook, Origin said it expected a 45-60% improvement in underlying earnings before interest, tax, depreciation and amortisation this coming financial year from continuing operations. That will still (at the 60% top of the forecast range), put the 2016-17 figure well short of the 2014-15 outcome.
The statutory loss for 2015-16 was driven by after-tax write-downs of $515 million, including $271 million in the second half as reserves were downgraded.
A $249 million drop in underlying profit from Origin’s continuing operations hit hard, as did a $55 million impact from the sale of New Zealand’s Contact Energy last year.
Despite that more optimistic outlook, the shares lost more than 2% in the first hour of trading this morning to be around $5.68 just after 11am.
