Origin Energy Limited · ASX:ORG
Origin Energy — FY2024 Earnings Presentation
74 slides from Origin Energy's earnings presentation, Aug 15, 2024
Slide 1: Origin Energy 2024 Full Year Results
Origin Energy 2024 Full Year Results Year ended 30 June 2024 Frank Calabria, CEO & Tony Lucas, CFO 15 August 2024
Slide 2: Outline
Outline 1. Introduction - Frank Calabria 2. Financial Review - Tony Lucas 3. Operational Review - Frank Calabria 4. Outlook & Wrap Up - Frank Calabria 2 15 August 2024 • 2024 Full Year Results Announcement
Slide 3: Introduction
Introduction Frank Calabria, CEO
Slide 4: Strong earnings result
• Strong earnings result − Recovery in Energy Markets from lagged higher wholesale electricity prices flowing into customer tariffs and lower coal costs − APLNG production up 3 per cent − Share of Octopus Energy earnings down – prior period reflected lagged recovery of higher wholesale prices, partl
Slide 5: Financial highlights
Financial highlights Statutory Profit Underlying Profit Underlying EBITDA $1,397 $1,183 $3,528 million million million Up from $1,055 million in FY23 Up from $747 million in FY23 Up from $3,107 million from FY23 Adjusted Net Debt / Adjusted Origin ROCE (pre-tax)1 Final Dividend Underlying EBITDA 1.0
Slide 6: Recovery in electricity margin includes lagged catch-up of prior high prices
Recovery in electricity margin includes lagged catch-up of prior high prices Key drivers of improved Energy Markets EBITDA Electricity Gross Profit ($/MWh) 50 • High wholesale prices in FY22 and FY23 resulted in the regulated customer tariff under-recovering 40 wholesale costs • In FY24 the regulate
Slide 7: Eraring supporting Government policy to reduce electricity prices
Eraring supporting Government policy to reduce electricity prices Higher output from Eraring TWh +2.1 • Eraring’s output increased by 2.1 TWh to 14.3 TWh to support Government policy aiming to increase generation to put downwards pressure on electricity prices for customers • The agreement with Gove
Slide 8: Supporting our customers and communities
Supporting our customers and communities $50m >$3.8m spent during FY24 on supporting contributed to communities during FY24 via customers in hardship the Origin Energy Foundation • Energy affordability is a key consideration of energy • We aim to work responsibly and respectfully with the transition
Slide 9: Our ambition and strategy
Our ambition and strategy Our ambition To lead the energy transition through cleaner energy and customer solutions Our Unrivalled customer Accelerate renewable Deliver reliable energy strategic solutions and cleaner energy through the transition pillars Our value Lower cost, greater product and serv
Slide 10: Executing on our strategy
Executing on our strategy Ambition Achieved as at 30 June 2024 Due to investment in growth and persistent cost headwinds, FY25 target $200 - $250 million cost to serve reduction (FY25 vs FY18) won’t be met. Targeting a $100 - $150 million reduction from FY24 to FY26 Octopus 100 million licensed Krak
Slide 11: Electricity market in transition
Electricity market in transition Intraday price variability increasing 16% NEM average daily price ($/MWh) 300 Increase in electricity 250 demand in NEM by 20301 200 • Higher electricity demand forecast driven by electrification, EV adoption and growth in data centres 150 • Existing assets more valu
Slide 12: Advantaged wholesale electricity portfolio
Advantaged wholesale electricity portfolio ~3 GW gas fired generation • Leading portfolio plays a valuable firming role for renewables in a more variable electricity market • 1.4 GW VPP delivering value today • 240 MW Shoalhaven pumped hydro plant • Eraring playing a valuable role until new supply i
Slide 13: Accelerating complementary renewables and storage
Accelerating complementary renewables and storage 1.5 GW committed battery projects • Combination of owned and tolled projects – Eraring battery stage 2 development approved – Construction underway for Eraring stage 1 and Mortlake batteries Artist’s impression – Queensland Supernode battery tolling
Slide 14: Gas to play a long-term critical role in the energy transition
Gas to play a long-term critical role in the energy transition Gas peaking plant output forecast to increase three-fold during peak days Maximum daily gas-powered generation demand (TJ/day) 3000 • Gas is part of the long-term energy solution to support renewables 2500 • Ensuring security of supply i
Slide 15: Energy Markets gas supply: assets, contracts and expertise underpin value
Energy Markets gas supply: assets, contracts and expertise underpin value Energy Markets domestic gas supply PJ 250 • Long–term gas supply position underpins gas fired generation, Retail and Business customers 200 • Portfolio strength underpinned by long-term multi directional transport contracts pr
Slide 16: Customer: Gaining momentum – brand and experience
Customer: Gaining momentum – brand and experience Home and Small Business (Retail) Large Business (Origin Zero) >4.6m ~26k customer accounts1 sites • +135,000 customer accounts in FY24 • >14% customers on broader services (4% at Jun-23) • Strong brand and award winning customer experience • 20% inve
Slide 17: APLNG: world class asset making a valuable contribution to domestic market
APLNG: world class asset making a valuable contribution to domestic market >15,000 PJ ~25% reserves and resources1 of sales allocated to domestic market2 • Production up 3% • >150PJ delivered to domestic market in FY24 • >50% reserves and resources available beyond long term • APLNG continues to sup
Slide 18: Investing in the future energy ecosystem
Octopus Energy: Continued exceptional growth 35% increase in UK retail 60% Investing in the future energy 190% and increase in increase in Kraken contracted customer accounts in FY24 ecosystem international retail customer accounts in FY24 • Largest electricity supplier and second • ~51 million cont
Slide 19: Our competitive advantage enables value creation through the transition
• Our competitive advantage enables value creation through the transition − Leading customer position and a world class platform − ~3 GW gas fired generation, competitive gas supply − World class CSG resource and LNG asset − Exposure to Octopus global growth opportunity • Combined, these are difficu
Slide 20: Financial Review
Financial Review Tony Lucas, CFO
Slide 21: Underlying Profit up $436 million to $1,183 million
Underlying Profit up $436 million to $1,183 million Movements in Underlying Profit ($m) (43) 6 (87) (172) 617 (227) 342 1,183 747 FY23 EM Share of Octopus IG - Share of IG - Other Corporate D&A Tax/other FY24 EBITDA Energy profit APLNG profit EBITDA EBITDA Lower earnings from UK retail business, Hig
Slide 22: Free Cash flow up $506 million
Free Cash flow up $506 million ($m) FY24 FY23 Change • Tax payments on higher earnings and APLNG unfranked Underlying EBITDA, adj for non-cash 1,756 803 953 dividends received (-$628 million) • Restructuring, transaction and transformation costs Change in working capital (15) (771) 756 excluded from
Slide 23: Energy Markets cash conversion
Energy Markets cash conversion Energy Markets Operating Cashflow ($m) 2,000 • $600 million receipt from QLD Government relating to FY25 bill relief provided a cashflow benefit in FY24, which will unwind in FY25 as 1,500 rebates are applied to customer bills • First refund ($160 million) for value ac
Slide 24: $1.38 billion APLNG cash distribution
$1.38 billion APLNG cash distribution APLNG distribution and Origin oil, gas and FX hedging ($m) 2,000 • Cash distribution of $1,384 million to Origin 1,500 — including the equivalent of $132 million fully franked dividends in FY24 1,000 — $1,367 million net of Origin hedging • APLNG Operating cash
Slide 25: Strong balance sheet
Strong balance sheet Adjusted Net Debt / Adjusted Underlying EBITDA1 3.5x • Strong combined cashflow from Energy Markets and 3.0x Integrated Gas 2.5x Target Range 2 – 3x • Balance sheet provides ability to fund shareholder distributions and efficiently invest to capture existing and 2.0x future grow
Slide 26: FY24 dividends increased to 55 cents per share
FY24 dividends increased to 55 cents per share Dividends cps 55 Target Range 2 – 3x • Shareholder distribution policy seeks to deliver sustainable distributions through the business cycle • Target an ordinary dividend payout of a minimum of 50% of Adjusted Free Cash Flow per annum 36.5 • Distributio
Slide 27: Capital allocation framework in action
Capital allocation framework in action Utilising third party capital On balance sheet 1 2 • Retail ‘bolt-on’ acquisitions FY24 Transactions • Strategically located battery sites • Brownfield battery sites 1 • ~500 MW Supernode battery offtake agreement with attractive contract price • Gas fired gene
Slide 28: Energy Markets Underlying EBITDA up $617 million to $1,655 million
Energy Markets Underlying EBITDA up $617 million to $1,655 million Movements in Underlying EBITDA ($m) Electricity gross profit1 up $1,122 million to $1,654 million (263) (214) • Recovery of higher wholesale prices flowing into 1,655 (28) customer tariffs (+$940 million) 1,122 • Lower coal costs, pa
Slide 29: Integrated Gas Underlying EBITDA up $32 million to $1,951 million
Integrated Gas Underlying EBITDA up $32 million to $1,951 million Movements in Underlying EBITDA ($m) Share of APLNG EBITDA down $310 million: 95 36 • Higher LNG volume reflecting higher production 451 305 • Lower realised oil prices of US$86/bbl (A$132/bbl) vs 3 8 41 US$103/bbl (A$154/bbl) in FY23
Slide 30: Share of Octopus Energy
Share of Octopus Energy Movements in Underlying EBITDA ($m) UK Retail (103) • Earnings positive business with lower earnings in 49 FY24 primarily impacted by the non-repeat of the (101) lagged recovery of higher wholesale prices through 240 the price cap in FY23 6 • Strong customer growth, including
Slide 31: Operational Review
Operational Review Frank Calabria, CEO
Slide 32: Energy Markets
Energy Markets of -, -
Slide 33: Electricity margin recovery driven by higher tariffs and lower fuel cost
Electricity margin recovery driven by higher tariffs and lower fuel cost Electricity prices Coal prices Electricity gross profit 250 NSW electricity forward price ($/MWh) 700 A$/t 50 $/MWh 600 Target range 200 40 500 FY2024 150 30 Average 400 FY2025 300 100 20 FY2023 200 50 10 100 - - - Forward swap
Slide 34: Gas margin moderating to longer-term average driven by lower prices
Gas margin moderating to longer-term average driven by lower prices Gas prices Gas gross profit A$/GJ $/GJ 70 6 Higher prices allow for opportunistic trading 60 5 margin and JKM hedge benefits in FY23 gas Target range 50 margins 4 Average 40 Higher JKM costs and lower opportunistic 3 30 trading sale
Slide 35: Retail: Unrelenting focus on the customer
Retail: Unrelenting focus on the customer Strong Brand Improving customer experience Brand health – Preference %1 Monthly CHI score % 80% 24% 22% 75% 15% 70% 12% 65% 5% 60% 55% Origin Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Jun-24 FY23 average FY24 average • Highest brand awareness, consideration
Slide 36: Retail: Growing share and value
Retail: Growing share and value Growing customer base 7% lower than FY24 market churn Customer accounts (‘000) Monthly churn rate (%) 30% +3% CAGR 4,631 25% 4,496 4,427 4,235 20.1% 4,153 20% 18.7% 18.2% 15% 13.4% 12.7% 13.1% 10% Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr FY22 FY23 FY24 FY18 FY2
Slide 37: Retail: Accelerating growth
Retail: Accelerating growth Community Energy Services Broadband Products and Solutions Gross Profit ($m) Customer accounts (‘000) 152 Customer accounts (‘000) 200 464 500 442 403 400 150 96 280 257 300 100 61 200 148 139 33 50 98 82 100 20 75 - - FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24 • C
Slide 38: Origin Zero: Growing a broad suite of services
Origin Zero: Growing a broad suite of services Connected Broad suite of E-mobility Distributed Energy Resources integrated energy services Large business on VPP (MW) # of EVs under management Large business customers on broader 300 1,000 15% services 250 800 200 10% 600 150 400 100 5% 200 50 - - - F
Slide 39: Focused on reducing cost to serve
Focused on reducing cost to serve Energy Markets Cost to Serve and Retail capex • Original cash cost target $200 -$250 million reduction by $m FY241 $100 – 150m 800 reduction • Our ability to meet this target has been impacted by: – Growth: products, customer accounts, investment in 600 data and ana
Slide 40: Integrated Gas
Integrated Gas of -, -
Slide 41: Strong resource base provides potential for additional sales
Strong resource base provides potential for additional sales Resource Base PJ 24,000 20,000 Additional LNG & domestic sales opportunity beyond life of 16,000 existing contracts2 • Large resource base near 12,000 existing infrastructure provides opportunity for low-cost tie in of new wells 8,000 Stro
Slide 42: Strong production
Strong production Production up 3% Production recovery APLNG production (100%) (PJ) 1,700 Operated production (TJ/d) 800 700 1,600 600 1,500 500 Sustained daily 1,400 operated 400 production rates 300 1,300 Workovers, well & field optimisation activities 200 1,200 100 APLNG LNG Vessel 1,100 Turndown
Slide 43: Lower average oil prices on export contracts driving lower revenue
Lower average oil prices on export contracts driving lower revenue Commodity Prices Revenue Costs A$/GJ $m $m Capex + Opex2 $/GJ 60 12,000 3,000 4.5 4.0 50 10,000 2,500 3.5 40 8,000 2,000 3.0 2.5 30 6,000 1,500 2.0 20 4,000 1,000 1.5 1.0 10 2,000 500 0.5 - 0 - 0.0 FY22 FY23 FY24 FY22 FY23 FY24 FY19
Slide 44: Low cost of supply initiatives, delivering daily production record
Low cost of supply initiatives, delivering daily production record Optimise the base Find & develop low-cost supply • Highest operated production day achieved of 1,632TJ/d • Successfully commissioned first tower unit in Australia, and continuing to trial new technology to prolong operating life of •
Slide 45: LNG Trading expected to provide large benefit in FY25
LNG Trading expected to provide large benefit in FY25 European and US Gas prices US/mmbtu 100 • Origin’s LNG trading business comprises: – Cameron contract – purchase of 0.25mtpa 80 Henry Hub linked gas on a long term (20 year) Majority of contract hedging activity – Portfolio of contracts and finan
Slide 46: Octopus Energy
Octopus Energy of -, -
Slide 47: Leading brand and service excellence strengthens competitive advantage
Leading brand and service excellence strengthens competitive advantage Strong and trusted brand Artificial Intelligence Strong customer growth UK energy retailer NPS # of messages sent (‘000) Retail customer accounts (‘000) 400 14,000 30 12,000 20 300 10,000 10 8,000 - 200 6,000 (10) 4,000 100 (20)
Slide 48: Kraken: Advanced energy SaaS platform
Kraken: Advanced energy SaaS platform Kraken Customer Kraken Flex Contracted Kraken customer accounts (m) Smartflex devices connected (000’s) Infraflex capacity (GW) 60 200 8 50 160 6 40 120 30 4 80 20 2 40 10 - - - Live Capacity Contracted Capacity • Total live accounts grew by 13 million since • S
Slide 49: Scaling International Retail and Energy Services businesses
Scaling International Retail and Energy Services businesses International Retail Energy Services Customer accounts (‘000) 1,500 5,000 5,000 50,000 4,000 4,000 40,000 1,000 3,000 3,000 30,000 143% CAGR 2,000 2,000 20,000 500 1,000 10,000 1,000 - - H1 H2 H1 H2 H1 H2 FY22 FY23 FY24 - Jun-22 Dec-22 Jun-
Slide 50: Outlook & Wrap Up
Outlook & Wrap Up Frank Calabria, CEO
Slide 51: Guidance – Energy Markets and Octopus Energy
Guidance – Energy Markets and Octopus Energy The following guidance is provided on the basis that market conditions and the regulatory environment do not materially change Energy Markets • FY25 EBITDA is expected to be $1,100 – $1,400 million − Electricity gross profit is expected to decrease, with
Slide 52: Guidance – Integrated Gas
Guidance – Integrated Gas The following guidance is provided on the basis that market conditions and the regulatory environment do not materially change APLNG 100% FY24 FY25 guidance Production PJ 694 685 – 710 Capex and opex, excluding purchases1 A$b 2.8 2.8 – 3.0 Unit capex + opex, excluding purch
Slide 53: Summary of structural tailwinds and competitive advantage
• Structural tailwinds – Energy transition presents growth opportunities • Competitive advantage – Customer position, world class platform, energy supply • Global growth exposure – Octopus Energy • Strong cash flow – Energy Markets and Integrated Gas • Strong Balance Sheet – Financial flexibility to
Slide 54: Appendix
Appendix -, -
Slide 55: Origin’s exposure to ‘energy prices’ in the NEM
Origin’s exposure to ‘energy prices’ in the NEM Illustrative Origin energy position ‘Energy prices’ are defined here as NEM pool prices TWh <$300/MWh • Exposure within a financial year Losses − Customer tariffs largely fixed at start of financial year Short Not hedged to in-year pool price movements
Slide 56: Origin’s exposure to ‘capacity prices’ in the NEM
Origin’s exposure to ‘capacity prices’ in the NEM Illustrative Origin capacity position MW ‘Capacity prices’ are defined here as prices for contracts that strike at NEM pool prices >$300/MWh • Exposure within a financial year Capacity Only hedges in-year pool − Customer tariffs largely fixed at star
Slide 57: Wholesale electricity cost allowance in regulated tariffs declined in FY25
Wholesale electricity cost allowance in regulated tariffs declined in FY25 The purpose of below table is to provide a simple illustration of the average DMO/VDO wholesale energy cost allowance, weighted to Origin’s customer distribution FY24 ($/MWh)1 FY25 ($/MWh)2 ($/MWh) FY24 (TWh) ($/MWh) Other Ot
Slide 58: Total Scope 1, 2 and 3 emissions down 10% in FY24
Total Scope 1, 2 and 3 emissions down 10% in FY24 Target: Reduce Scope 1, 2 and 3 absolute equity emissions1 Target: Reduce Scope 1, 2 and 3 equity emissions1 intensity by 20 mt by 2030 against FY2019 baseline by 40% by 2030 against FY2019 baseline 53 50 2030 Target: 20 mt CO2-e 45 33 FY19 FY23 FY2
Slide 59: Items excluded from Underlying Profit
Items excluded from Underlying Profit Reconciliation from Statutory to Underlying Profit ($m) • $477 million reversal of prior APLNG impairment, partly offset by $16 million impairment of Carisbrook 5 solar farm development project (461) (6) 85 (114) 145 • $132 million business restructuring, 132 in
Slide 60: Capex
Capex Origin capex ($m) 700 FY24 Capex 600 • Generation sustain: Eraring Unit 2 maintenance outage ($68 million), Eraring Ash Dam ($68 million), Mortlake major 500 inspection ($29 million), Darling Downs outage ($16 million) 400 • Other sustaining capital: LPG, CES and other assets 300 • Productivit
Slide 61: Octopus Energy – Renewable energy and regulated energy efficiency costs increased
Octopus Energy – Renewable energy and regulated energy efficiency costs increased Renewable Energy Guarantees of Origin (REGO) Energy Company Obligation (ECO) £/certificate ECO Unit rate over time (£/ABS) 30 25 20 15 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 FY23 Average FY24 Average • REGO s
Slide 62: Australia Large-scale Generation Certificates strategy – refund of shortfall charge
Australia Large-scale Generation Certificates strategy – refund of shortfall charge LGC strategy benefit $/certificate • Over FY21 to FY23, we deferred the surrender of ~9 million 80 certificates, incurring a shortfall charge of $65/certificate or $602 million in total 70 • This shortfall charge was
Slide 63: Large-scale Generation Certificates (LGC) strategy
Large-scale Generation Certificates (LGC) strategy Adjustments to Statutory Profit Shortfall Statutory CY20 CY21 CY22 Underlying Impact across various financial years ($m) charge/ Profit surrender cost surrender cost surrender cost Profit (refund) FY21 – FY23 (602) 602 (46) (72) (58) (177) FY24 CY20
Slide 64: Customer account movements
Customer account movements 30 June 30 June Electricity ('000) Customer accounts ('000) as at Change 2024 2023 10 Electricity 2,763 2,742 21 5 Business 25 28 (4) - Retail – Mass Market 2,542 2,528 14 (5) Retail – Community Energy Services 196 185 11 (10) Gas 1,323 1,282 41 NSW QLD VIC SA Business 1 1
Slide 65: Electricity forward price by State ($/MWh)
Electricity forward price by State ($/MWh) NSW VIC 250 200 200 150 150 100 100 50 50 - - May-22 Oct-22 Mar-23 Aug-23 Jan-24 Jun-24 May-22 Oct-22 Mar-23 Aug-23 Jan-24 Jun-24 QLD 250 SA 250 200 200 150 150 100 100 50 50 - - May-22 Oct-22 Mar-23 Aug-23 Jan-24 Jun-24 May-22 Oct-22 Mar-23 Aug-23 Jan-24 J
Slide 66: Energy Markets segment revenue reconciliation
Energy Markets segment revenue reconciliation The table below reconciles the difference between segment revenue and customer revenue disclosed in the Electricity, Natural Gas, LPG, Solar & Energy Services and Future Energy tables. FY24 FY23 Change Change ($m) ($m) ($m) (%) Energy Markets segment rev
Slide 67: Managing oil price exposure
Managing oil price exposure FY25 Oil Price Sensitivity FY25 100 Origin share of APLNG JCC oil price and JKM gas price exposure is ~17 Effective Oil Price US$/bbl • 90 MMboe and ~20 tBtu 80 70 • As at 2 August 2024, we estimate that 41 per cent of JCC and 28 per cent 60 of JKM FY25 exposure has been
Slide 68: Segment summary
Segment summary Energy Markets Share of Octopus Integrated Gas Integrated Corporate Total Energy - Share of APLNG Gas - Other ($m) FY24 FY23 FY24 FY23 FY24 FY23 FY24 FY23 FY24 FY23 FY24 FY23 Underlying EBITDA 1,655 1,038 55 240 1,936 2,246 15 (327) (133) (90) 3,528 3,107 Underlying EBIT 1,152 535 (3
Slide 69: Underlying ROCE – 24 month rolling
Underlying ROCE – 24 month rolling 30 June 2024 30 June 2023 Change Change As at ($m) ($m) ($m) (%) Capital Employed Net Assets 9,489 8,911 578 6% Adjusted Net Debt 2,833 2,877 (44) (2%) Net derivative (asset)/liability (436) (601) 165 (27%) Origin's share of APLNG net debt (project finance less cas
Slide 70: Reconciliation of Adjusted Net Debt
Reconciliation of Adjusted Net Debt Issue Issue Hedged Hedged AUD $m AUD $m AUD $m $m Currency Notional Currency Notional Jun-24 Jun-24 Jun-24 Interest bearing Debt & CCIRS FV Adjusted net debt liabilities2 adjustments AUD debt AUD 1,126 AUD 1,126 1,110 1,110 USD Debt left in USD USD 525 USD 525 791
Slide 71: Financial Instruments and fair value adjustments
Financial Instruments and fair value adjustments Balance Sheet Impact Income Statement Impact Financial asset/(liability) Pre-tax Post-tax Gain/(loss) Inc/(dec) in Inc/(dec) in Gain/(loss) Gain/(loss) Total inc/(dec) included in 30 June 30 June financial other net excluded from excluded from ($m) in
Slide 72: Important notices
Important notices Forward looking statements This presentation 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 re
Slide 73: Important notices
Important notices All figures in this presentation relate to businesses of the Origin Energy Group (Origin, or the Company), being Origin Energy Limited and its controlled entities, for the reporting period ended 30 June 2024 (the period) compared with the reporting period ended 30 June 2023 (the pr
Slide 74: For more information
For more information Peter Rice General Manager, Capital Markets Email: [email protected] Office: +61 2 8345 5308 Mobile: + 61 417 230 306 Lindsay Donnelly Group Manager, Investor Relations Email: [email protected] Office: +61 2 8345 5502 Mobile: + 61 414 697 070 orig