Origin warned its investors that it's expecting its energy markets business to drop in revenue 16-34% in revenue.
👉 Background: Origin Energy is the largest energy retailer in Australia with over 4.2 million customers. Late last year, Origin was hot topic after rejecting a $20 billion takeover offer.
👉 What happened: Origin announced an underlying profit of $1.18 billion for the last financial year. However, it warned its investors that next year it's expecting its energy markets business to drop in revenue - somewhere between 16-34%.
👉 What else: Origin forecasts an increase in coal costs and decreased revenue from households and businesses. Throw on top of that its underwhelming dividend of 27.5c per share - and Origin's shares dropped 10%.
💡The art of dividend policy is a delicate dance - if a company is too generous, and it can short-circuit its future growth. But, if a company is too stingy, it risks losing investor loyalty.
💡A company’s dividend policy determines how much profit it returns to shareholders via dividends. Last year, Origin Energy paid 20c per share and this year, 27.5c per share. But this jump wasn’t enough to satisfy some shareholders who were hoping for even higher returns.
💡For Origin, the challenge will be how to continue rewarding investors while also navigating the transition to renewable energy, which will require significant investment.
Sign up for Flux and join 100,000 members of the Flux family
