Understanding Origin’s FY21 Guidance update in 30 seconds

We examine the key takeaways from the energy company’s latest market release.

The Origin Energy (ORG) share price fell 6.85% on Thursday, 4 February, after the company provided, what the market perceived as a poor FY21 guidance update.

Origin Energy share price: Understanding the guidance update in 30 seconds

For traders, here are the must-know points from Origin’s latest FY21 guidance update:

  • Full-year, FY21 Energy markets underlying earnings (EBITDA) are expected to come in at between $1,000-1,140 million, down from prior guidance of between $1,150-1,300 million
  • Australian Pacific LNG (APLNG) production has been raised to 685-705 petajoules, while distribution breakeven for APLNG was lowered to US$24-28 BOE
  • Cash distribution from APLNG (previously not provided), is now expected in the $575-675 million range
  • Full-year CAPEX is expected to be lower, while corporate costs are expected to be higher

Commenting on this guidance update, RBC analysts – who have a $5.50 price target on ORG – said:

‘Despite this downgrade, Origin continued to have a relatively strong FY21 FCF yield, and with a limited medium term capex spend outlook at ~$400-440m in FY21 per annum, implying potential for a solid dividend.’

However, the broker did add that:

‘Tax losses have also led to limited availability of franking credits and therefore we continue to expect an unfranked / partially franked FY21 dividend at the low end of Origin's targeted FCF range of 30-50% guidance.’

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