The share price of Origin Energy Ltd (ASX: ORG) gained around 1% by lunchtime on Wednesday after the energy group released its Investor Day presentation to the ASX.
The share price rise follows five days of losses which has seen the stock fall from over $13.40 to around $12.70. In comparison, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is barely in positive territory today.
Here are four key takeaways from today's presentation:
- Expanding Natural Gas and maintaining Electricity margins: Origin highlighted that its gas portfolio is benefiting from increased demand for gas and rising gas prices in all markets. This situation and maximising the potential of its generation portfolio is set to deliver solid margins to the group.
- Building customer loyalty and trust: Origin is focussed on client acquisition and retention through the use of its own internal sales channels rather than relying on external parties – this is helping to lower the churn rate. This 'retail transformation' is also set to lower the cash cost by an estimated $80 million by FY 2016.
- Reducing operating costs and capital expenditure: Increased operating cash flow and reduced capital expenditure are improving returns with a $100 million reduction in the Natural Gas and Electricity cash cost expected over the current and next financial year (FY). Tallied up, Origin is looking to remove $50 million in total capital expenditure from its core Energy Markets business by the end of FY 2016.
- Growing Solar and Energy Services: Origin is aiming to become the leader in the solar market with the objective of reaching breakeven in this business by FY 2017.
While the stock is up today, it is still down over 12% in the past year. Today's presentation might go some way to restoring the faith of the market in the future potential of Origin's business.
