Origin shares hit after downgrade
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Investors have punished shares in Australia's largest electricity retailer Origin Energy following the company's profit downgrade.
Origin released a statement to the Australian Securities Exchange (ASX) after the close of trading on Thursday, warning that regulatory and pricing decisions would wipe up to 10 per cent off its underlying profit this financial year.
At 1220 AEDT the company's shares were down 57 cents, or 5.16 per cent, at $10.48, after earlier sinking to an intra-day low of $10.15.
The falls represent a loss in market capitalisation of more than $623 million for the company, among the top 20 in size on the ASX.
Origin had previous forecast that its underlying profit in the current fiscal year would be in line with the $893 million figure it posted for the year to June, 2012.
City Index chief market analyst Peter Esho said he thought the negative market sentiment about the company related more to concerns about Origin's balance sheet and debt level, although the profit downgrade certainly contributed.
Origin reported about $5.9 billion in debt on June 30, but was carrying another $1.3 billion in other liability and derivatives exposures, Mr Esho said.
Despite it being a utilities company, much of its assets are tied to the massive $US23 billion ($A22.20 billion) Australia Pacific LNG project that it is a joint venture partner in, but is not yet in production.
"When the underlying bread and butter of the business starts to hit earnings growth pressures, which is what came out yesterday, it just further compounds the unease around that debt situation," Mr Esho told AAP.
Origin is legally challenging pricing decisions made by the Queensland Competition Authority stopping it from significantly increasing electricity prices.
It also says an increase in the second half of the current financial year from the revised estimates for cost of the Small-scale Technology Certificates made by the Clean Energy Regulator would cost an extra $40 million.