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  • Power provider Origin Energy (ORG) has downgraded its profits and earnings guidance for the 2021 financial year
  • The move is being blamed on the COVID-19 pandemic and La Nina weather pattern across parts of Australia, which has impacted consumer demand
  • The energy business expects to bring in between $1 billion and $1.14 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA)
  • It previously estimated FY21’s EBITDA to hit between $1.15 billion and $1.3 billion with around $1.27 billion in earnings brought in last year
  • ORG also expects its electricity gross profits to drop by up to 290 million and natural gas profit to decrease by $250 million when compared to FY20
  • Unfortunately, Origin isn’t expecting a change in operating conditions in the 2022 financial year with gross profits expected to be impacted again
  • The energy stock has dropped 7.86 per cent since the downgraded guidance was made public, trading at $4.57 per share

Leading power provider Origin Energy (ORG) has downgraded its profits and earnings guidance for the 2021 financial year.

The move is being blamed on the COVID-19 pandemic and La Nina weather pattern across parts of Australia, which both negatively impacted demand.

Due to the challenging market conditions, Origin now expects to bring in between $1 billion and $1.14 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA).

It had previously estimated FY21’s EBITDA to hit between $1.15 billion and $1.3 billion, after bringing in $1.27 billion in earnings over the 2020 financial year.

The energy stock expects its electricity gross profits to drop by between $250 million and $290 million when compared to FY20’s result.

Natural gas profits are also expected to decrease, with ORG expecting a drop of between $200 million and $250 million year on year.

Additionally, ORG’s corporate costs have ballooned over FY21 to between $90 million and $100 million, compared to just $59 million last year.

Looking ahead, Origin isn’t expecting a change in the “challenging” operating conditions in the 2022 financial year.

The business has warned of further impacts to gross profits, particularly in the electricity sector.

Commenting on the revised guidance and outlook, Origin Energy’s CEO Frank Calabria has put a positive spin on the changes.

“Origin has two leading businesses with high quality assets and resources,” the CEO stated in today’s market release.

“We remain very focused on maximising value from the existing businesses
and pursuing growth in customer value and low carbon solutions, which puts Origin in an ideal position to lead and capture value from the energy transition,” he added.

Despite the hopeful comments, shareholders appear spooked by today’s downgraded profits and earnings guidance.

The energy stock has dropped 7.86 per cent since the revised guidance was made public, trading at $4.57 per share at 1:21 pm AEDT.

ORG by the numbers
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