* Underlying profit A$184 mln v A$332 mln forecast
* Debt reduction remains priority
* No dividend paid, as expected (Adds CEO comment)
MELBOURNE, Feb 16 (Reuters) - Origin Energy Ltd fell far short of analysts’ forecasts on Thursday, reporting a 28 percent drop in half-year underlying profit as weak oil prices hit revenue at its Australia Pacific liquefied natural gas (APLNG) project.
The blow came a day after Australia’s top power and gas retailer flagged it was taking a A$1 billion ($770 million) impairment charge on its 37.5 percent stake in APLNG, which the market shrugged off given that rival LNG projects had been hit by writedowns earlier.
Still, Managing Director Frank Calabria, reporting his first results since taking the reins last October, said earnings were growing from the company’s power and gas retail business, thanks to higher volumes and better profit margins.
“We continue to focus on accelerating debt reduction and improving returns to shareholders, so we can position Origin for growth in a rapidly changing market,” Calabria said in a statement.
Gas prices have been rising sharply in Australia, as gas has been drained from the domestic market to feed new LNG export plants, including APLNG. At the same time, electricity prices have rocketed on the back of rising use of wind and solar energy.
Origin said it was on track to go ahead with an initial public offering of its exploration and production assets, excluding gas aimed for exports, in 2017.
Underlying profit after tax sank to A$184 million for the six months to December from A$254 million a year earlier. That compares with a forecast of around A$332 million from two analysts.
Weakened revenue from APLNG meant the project was unable to cover increases in interest, tax, depreciation and amortisation, it said.
Origin paid no interim dividend, as expected. It stopped paying dividends last August to focus on paying down debt to help it weather weak oil and gas prices.
$1 = 1.2974 Australian dollars Reporting by Sonali Paul; Editing by Richard Pullin