(Reuters) - Australia's Origin Energy Ltd ORG.AX warned of lower earnings from its energy markets business in fiscal 2021 on Thursday, as it grappled with lower wholesale energy prices and reduced fuel demand due to the coronavirus outbreak, sending its shares down 6.3% in early trade.
The electricity and gas retailer said it expected A$1.15 billion to A$1.30 billion ($826.28 million-$934.05 million) in core underlying earnings from its energy markets business in fiscal 2021, compared with A$1.46 billion for the year ended June 30.
“In the near term, COVID-19 has impacted the outlook for economic growth at the macro level as well as the specific markets in which we operate domestically and internationally,” the company said in a statement.
Coronavirus lockdowns have dried up demand and driven oil prices lower, prompting energy companies around the world to book large asset writedowns and cut back on spending.
Origin also said average electricity and gas demand fell 5% to 10% in the fourth quarter due to the impact of COVID-19, while bad debt costs increased as customers struggled to pay their bills on time due to the broad economic impact of the lockdowns.
Including a A$746 million writedown in its equity investment in its Australia Pacific Liquefied Natural Gas (APLNG) joint venture, statutory profit fell 93% to A$83 million for the full year ended June 30.
Origin said it anticipated reduced oil prices in the final quarter of this year to affect APLNG revenue in FY2021.
The company added that it planned to cut costs in the coming financial year, reducing capital expenditure and targeting cost reductions of A$300 million to A$500 million in its APLNG segment.
Underlying profits declined only slightly to A$1.02 billion for the year, compared with A$1.03 billion a year earlier.
Reporting by Arpit Nayak in Bengaluru; Editing by Devika Syamnath and Rashmi Aich
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