ORIGIN ENERGY has blamed regulatory decisions and unusually high wholesale electricity prices for the squeeze on its December half earnings, which has prompted it to slash the full-year profit forecast.
The group's managing director, Grant King, described the first-half result as "poor", and the full-year outlook as "tough".
Net profit fell to $524 million from $794 million, and underlying profit to $362 million from $489 million. The full-year forecast reflects an earnings decline of 10 per cent to 15 per cent.
The shares fell 8.5 per cent to $11.33, despite assurances by the company that it would not raise fresh funds from shareholders to finance its remaining $4.4 billion liability for its share of the $24.7 billion Queensland gas export venture. The project cost has risen 7 per cent.
"It has been a poor half," Mr King said.
Earnings were hit by high wholesale power prices and a freeze on electricity tariffs in Queensland, which triggered intense competition in other markets, and a loss of market share in NSW.
"We have not been able to absorb this effect on our guidance," Mr King said.
The higher market prices in Queensland wiped off between $30 million and $35 million from the gross profit, he said.
Origin was also hurt by a prolonged outage at its Eraring power plant in NSW in November, which is the subject of a damages claim with the NSW government. It would not indicate the size of the claim, but said it was expected to be resolved in its favour by midyear.
In NSW, Origin's electricity customer numbers fell from 1.42 million at the end of June to 1.38 million at the end of December. In Victoria, this dropped to 623,000 from 641,000.
"Will we get back to 13 per cent margins [in the electricity business]? I'm not sure. But we should be doing better than 9 per cent," Mr King said.
Earnings were boosted by the forward sale of oil, which raised $284 million. The company also said it would consider selling non-core assets.
Origin disclosed a 7 per cent rise in the cost of its export gas project. "That $24.7 billion number is deliverable ... both as per schedule ... and cost," Mr King said of the revised estimate for the project.
This financial year was "going to be a tough", he said. "For 2014-15, towards the end will see APLNG [Australia Pacific LNG] coming on. It will be a cracker.
"For 2013-14 ... we will go into it with the same pressures on the business. We will be more efficient and competitive, but structurally, nothing for it to be a cracker of a year."
Analysts expressed disappointment with the earnings.