Origin Energy Limited · ASX:ORG
Origin Energy — H1 FY2013 Earnings Presentation
36 slides from Origin Energy's earnings presentation, Feb 21, 2013
Slide 1: 2013 Half Year Results Announcement
2013 Half Year Results Announcement Half Year Ended 31 December 2012 Grant King, Managing Director 21 February 2013
Slide 2: Important Notice
Important Notice Forward looking statements This report contains forward looking statements, including statements of current intention, statements of opinion and predictions as to possible future events. Such statements are not statements of fact and there can be no certainty of outcome in relation
Slide 3: Outline
Outline 1. Performance Highlights Grant King 2. Operational Review Grant King 3. Outlook Grant King 3|
Slide 4: 1. Performance Highlights
1. Performance Highlights Grant King, Managing Director 4|
Slide 5: Origin is focusing on maximising cash flow from the existing business, progressing APLNG
Origin is focusing on maximising cash flow from the existing business, progressing the APLNG project and strengthening its funding position Existing Business APLNG Funding Responding to Challenges Confidence in Schedule & Cost Strengthened • Reduced sales volumes and • Upstream 29% complete, • $5.4
Slide 6: Results
Results Statutory Profit* $524 m down 34% Statutory EPS* 48.0 cps down 35% Net items excluded from Underlying Profit1 $162 m down 47% Underlying Profit* $362 m down 26% Underlying EPS* 33.2 cps down 27% Underlying EBITDA* $1,055 m down 9% Interim Dividend Fully Franked 25.0 cps steady - Group OCAT*
Slide 7: Energy Markets performance impacted by lower volumes and reduced margins
Energy Markets performance was impacted by lower volumes and reduced margins in Electricity TWh 25.0 15% C&I MM 14.1% (1.2%) 20.0 (3.5%) Underlying EBIT Margin (%) 10% 15.0 9.4% 10.0 5% 5.0 0.0 0% H1 FY2012 H2 FY2012 H1 FY2013 HY2012 0.0% Carbon 0.0% Other HY2013 • Origin‟s average electricity • Car
Slide 8: Stabilisation of the new SAP billing and customer management system
Stabilisation of the new SAP billing and customer management system is well advanced, enabling increased win and retention activity … 120 200 Number of Late Bills ('000) 112 89,000 improvement 100 in net customer losses 150 Customer Accounts ('000) 80 100 60 40 48 50 20 23 0 1 - … with resolution of
Slide 9: Origin is undertaking restructuring initiatives to lower costs
Origin is undertaking restructuring initiatives to lower costs … OPERATIONAL EFFECTIVENESS ASSET CONSOLIDATION A review of investment activities and 600 assets has resulted in: • Discontinued investment in Transform 500 Solar and Geodynamics Number of Employees • Suspension of operations at Kincora
Slide 10: Confidence in delivery of the APLNG project confirmed through project review
Confidence in the delivery of the APLNG project was confirmed through a project review, resulting in acceleration of the schedule for Train 2 … SCHEDULE • Train 1 on track to be complete on, or ahead of schedule, with first LNG sales expected in mid calendar year 2015 • Train 2 expected approximatel
Slide 11: Committed undrawn debt facilities and cash provide sufficient liquidity
Committed undrawn debt facilities and cash, combined with cash flows from operations, provide sufficient liquidity for Origin to fund its investment in APLNG … 1,200 Reduced spend 1,000 as the existing business matures Free cash flow $4.4 billion3 800 from existing funding business requirement $ mil
Slide 12: Expected FY2013 performance within guidance except Queensland price events
Expected performance for FY2013 is within guidance provided in November 2012, with the exception of high electricity price events that occurred in Queensland in January 2013 Half-year Underlying NPAT 600 In the second half of FY2013 Origin expects: • Regulatory pressures and market 500 competitivene
Slide 13: Fully franked interim dividend determined, 75% payout ratio
A fully franked interim dividend of 25 cps has been determined, representing a payout ratio of 75% of Underlying EPS Origin Dividend History 60 Dec Half Jun Half 50 40 • Ex-dividend date: 26 February 2013 cents per share 25 25 25 • Record Date: 4 March 2013 30 • Payment Date: 4 April 2013 • The Divi
Slide 14: 3. Operational Review
3. Operational Review Grant King, Managing Director
Slide 15: Energy Markets
Energy Markets Underlying EBITDA down 20% to $660 million Reduced Electricity Gross Profit (-18%) partially offset by increases in Natural Gas (+15%), Non-Commodity (+61%) and LPG (+10%) Electricity volumes down 2% or 0.4 TWh Underlying EBIT margin* contraction from 14.1% to 9.4% Integrati
Slide 16: Decrease in Energy Markets EBITDA due to lower Electricity Gross Profit
The decrease in Energy Markets Underlying EBITDA was largely due to a decline in Electricity Gross Profit … Underlying EBITDA Bridge 900 (28) 800 (58)1 • Lower electricity volumes (53) (30) 20 (32) • Unfavourable tariff determination 700 19 in Queensland, reducing revenue 600 Lower • Higher wholesal
Slide 17: Energy Markets restructure and rationalisation programs are underway
Energy Markets restructure and rationalisation programs are underway … 4,000 • Energy Markets full time employee (FTE) 3,500 numbers reduced by 372 during the 3568 (372) 120 (127) current period 3,000 3189 No of Employees 2,500 • An additional 120 FTEs to service the Integral Energy NSW customers, 2
Slide 18: Origin has lifted acquisition and retention activity and reduced churn
Origin has successfully lifted acquisition and retention activity, and reduced Origin churn relative to market … Combined Electricity and Natural Gas Churn Rates 40% 800 Customer wins and retains ('000) 29% increase in Origin, HY2012 Origin, HY2013 700 wins & retains 35% Market, HY2012 Market, HY201
Slide 19: Stabilisation of the new SAP billing system is well advanced
Stabilisation of the new SAP billing and customer management system is well advanced, enabling increased win and retention activity … 120 200 Number of Late Bills ('000) 112 89,000 improvement 100 in net customer losses 150 Customer Accounts ('000) 80 100 60 40 48 50 20 23 0 1 - • Billing and collec
Slide 20: Energy Markets positioned to capture value through legacy fuel position
Energy Markets is well positioned to capture significant value through its legacy fuel position … • Value of legacy fuel contracts at • Increased customer wins and low domestic prices in a rising retentions gas price environment, already • Improved customer satisfaction evidenced through recent gas
Slide 21: Exploration & Production
Exploration & Production Underlying EBITDA up 12% to $200 million Yolla platform returned to production after an extended shutdown for the Mid-Life Enhancement Project Successful completion of major planned maintenance shutdowns at Kupe and Otway, with Otway accelerated into the first half to
Slide 22: Major planned maintenance outages completed
With the successful completion of major planned maintenance outages, and none planned for the remainder of FY2013 … Geographe well test Jascon 25 construction vessel at Yolla Kupe processing plant Otway BassGas Kupe • Successful completion of a 23 day • The Yolla platform returned to • Successful co
Slide 23: Australia Pacific LNG
Australia Pacific LNG Origin‟s share of Underlying EBITDA up 19% to $19 million Upstream Project 29% complete and Downstream Project 31% complete FID2 taken in July 2012 with Origin‟s shareholding in APLNG diluted from 42.5% to 37.5% on 12 July 2012 Recent project review confirms the strengt
Slide 24: Project progress - Upstream 29% complete and on track
Project progress - Upstream 29% complete and on track Coil-tubing drill rig Laying of gathering pipe Condabri North Switchyard Laying of pipe Drilling Gathering Facilities Pipeline & Electrification • 141 Phase 1 operated • 967 of 1,100 operated • 5 of 15 gas plant units • Pipeline 84% delivered wel
Slide 25: Project Progress - Downstream 31% complete and on track
Project Progress - Downstream 31% complete and on track Curtis Island site, January 2013 LNG Tanks, January 2013 Overview of Train 1 Inside Battery Limits (ISBL) Curtis Island LNG plant Module yard in Batam • Site works 95% complete • Methane compressor string test • Steel deliveries commenced • Mat
Slide 26: APLNG is on track to achieve key project milestones
APLNG is on track to achieve key project milestones Target Key Project Milestones Status Update Date at FID First gas field facility complete Mid 2013 On Track Pipeline complete Early 2014 On Track First LNG from Train 1 Mid 2015 On Track First LNG from Train 2 Early 2016 Ahead of Schedule Key proje
Slide 27: Confidence in delivery of APLNG increased through a project review
Confidence in the delivery of APLNG‟s project increased through a project review … SCOPE • Project capital costs were reviewed based on actual costs incurred through to late 2012 and revised forecasts SCHEDULE • Train 1 on track to be complete on, or ahead of schedule, with first LNG sales expected
Slide 28: Contact Energy
Contact Energy Underlying EBITDA up 9% to $198 million Improved price competitiveness has stabilised customer numbers Lower wholesale prices more than offset by lower generation costs from diverse fuel and asset portfolio Te Mihi enters commissioning phase with completion in mid 2013 Ongoi
Slide 29: Recent investments in Contact's generation portfolio improved flexibility
Recent investments in Contact‟s generation portfolio have delivered improved portfolio flexibility … Benefits of favourable fuel mix realised during the period • Higher rainfall resulted in increased hydro generation • Stratford Peaker and Ahuroa gas storage increased Contact‟s ability to respond to
Slide 30: 4. Outlook
4. Outlook Grant King, Managing Director
Slide 31: Expected FY2013 performance within guidance except Queensland price events
Expected performance for FY2013 is within guidance provided in November 2012, with the exception of high electricity price events that occurred in Queensland in January 2013 Half-year Underlying NPAT 600 In the second half of FY2013 Origin expects: • Regulatory pressures and market 500 competition i
Slide 32: January high prices in Queensland
In January, a combination of weather, demand and plant availability resulted in an extended period of high prices in Queensland 120 Driven by higher 100 average prices in Queensland • During the month almost 20% of half Average NEM Pool Price ($/MWh) 80 hourly Queensland electricity spot prices were
Slide 33: Higher plant availability expected to drive Exploration and Production increase
Higher levels of plant availability and production in the second half is expected to drive a strong increase in Exploration and Production … H1 FY2013 H2 FY2013 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Bass Otway Kupe Producing, actual data Unscheduled acceleration of Otway planned outage P
Slide 34: Primary driver of growth will be investment in APLNG
The primary driver of growth for Origin over the coming years will be its investment in APLNG • Two-train CSG to LNG project • Australia‟s largest 2P reserves base • Prime acreage in both of the Queensland‟s CSG “sweet spots” • ConocoPhillips-Bechtel experience in developing LNG facilities using Opt
Slide 35: Committed undrawn debt facilities and cash provide sufficient liquidity
Committed undrawn debt facilities and cash, combined with cash flows from operations, provide sufficient liquidity for Origin to fund its investment in APLNG … 3,500 3,000 2,500 Free cash flow $4.4 billion1 from existing funding 2,000 business requirement for Origin’s 1,500 share of $5.4 billion2 in
Slide 36: Thank you
Thank you For more information Lina Melero General Manager, External Affairs Email: lina.melero@originenergy.com.au Office: +61 2 8345 5217 Mobile: + 61 427 017 798 www.originenergy.com.au 36 |