Origin Energy Ltd said on Thursday its first-half profit was nearly wiped out, hurt by persistent weakness in wholesale electricity prices, and forecast challenging times ahead for its energy markets business.
Underlying profit from the electricity and gas retailer's energy markets division was A$635 million, down 12% compared to last year. Most of the earnings for the division came from its stake in the Australia Pacific LNG (APLNG) project.
APLNG is a joint venture between Origin, ConocoPhillips and China's Sinopec.
"The recent rally in oil and gas markets is expected to have a positive impact on Australia Pacific LNG's earnings in the second half, given the lag in contract LNG prices," CEO Frank Calabria said in a statement.
However, Calabria said that near-term outlook for its energy markets business was challenging, as gas supply costs increase and wholesale electricity prices remain depressed.
The company and peer AGL Ltd continue to suffer from a deterioration in wholesale power prices and related margins, with government plans to underwrite new power plants also posing significant headwinds.
Origin's half-yearly profit attributable was A$13 million ($10.08 million), down from A$599 million a year ago.
The company announced an interim dividend of 12.5 cents per share, compared with 15 cents per share paid last year.
(Reporting by Arundhati Dutta and Soumyajit Saha in Bengaluru; Editing by Maju Samuel)
