Origin Energy Enters Into Agreement With Uber Eats
Despite the strong performance from its LNG project in Queensland, Origin Energy has declared a 25 per cent dip in net profit for the six months ending 31 December. Specifically, the project failed to cover up for the hits from the re-regulation of power plant outages and retail electricity prices. Net profits plummeted to $599 million, compared to $796 million from the year before. Additionally, underlying profits fell 11 per cent to sit at $528 million on sales that slid 12 per cent to $5.73 billion.
The reregulation of electricity prices and plant outages subsequently led to the introduction of default offer prices dedicated to households. As a result, this removed $55 million from earnings within the energy sector in the December half, accounting for a $170 million dip in electricity retailing profits. The default market offers were initiated by the Victorian and federal governments on 01 July 2019 to protect consumer’s interests. Consequently, both Origin and AGL cautioned that the change would pose a challenge for earnings.
The half-year performance also witnessed a drop of 10,000 customer numbers for Origin, relative to AGL energy as Origin transited to making higher-value customers their target audience. However, chief executive Frank Calabria was of the view that the strategy could be tweaked to fend off market share while taking into consideration existing competition levels.
Meanwhile, the firm remains positive regarding its full-year guidance for underlying earnings from its energy market and power station operations, highlighting an impending improvement in performance from its power plants. Furthermore, costs have been brought down at the LNG project, which is expected to yield a cash distribution for the company of between $1.1- $1.3 billion for 2019 – 20.
On a positive note, Origin Energy has been releasing a series of good news to attract consumers. The firm has entered into an agreement with Uber Eats catered to consumers who will be moving houses in the near term. The deal comprises of free delivery on 30 orders over a period of three months to help reduce stress at a time where convenience is of utmost importance. Residents who register for Origin’s ‘Basic’ gas or electricity plans will be able to indulge in the offer which will end on 31 March 2020.
Origin Energy has also looked towards increasing discounts on both its gas and electricity plans across New South Wales, Queensland, South Australia and Victoria. Collectively, these savings could translate to $79 annually. Aside to ramping up its efforts in incentivising consumers, Origin also abolished plans to make way for its online version. The move is further evidence of the firm’s intention of providing greater savings for consumers who register online and make payments through direct debit. While sign-up incentives are attractive for short-term value, caution must be exercised for underlying charges that could conceal hidden inflated rates.
By Caroline Wong
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