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Origin downgrades FY profit forecast

Energy producer and retailer Origin Energy fears its full year earnings will drop by up to 15 per cent after its interim profit fell by a third.

Origin on Thursday said its net profit dropped 34 per cent to $524 million in the half year to December 31, from $794 million in the previous corresponding period.

Revenue rose 14 per cent to $7.4 billion, from $6.5 billion.

Origin now expects its full year profit to fall by between 10 and 15 per cent, instead of its previously forecast drop of five to 10 per cent.

It blamed the profit downgrade on a combination of weather, demand and plant availability in January which resulted in an extended period of high wholesale electricity prices in Queensland.

"Origin now estimates that the cost of this event, including additional hedges to reduce exposure to such events in the second half, is approximately $30 to $35 million in underlying profit," the company said in a statement.

"The consequence of this event cannot be absorbed in the guidance range issued in November 2012 and, therefore, based on prevailing market conditions, guidance for underlying profit for the 2013 financial year is now 10 to 15 per cent below the prior year."

Origin's underlying profit in 2011/12 was $893 million.

The company maintained its fully-franked interim dividend at 25 cents.

Origin managing director Grant King said it planned to cut another 350 jobs in 2013, taking the total number for the year to 850.

"This will result in more focused operations and a lower cost base in the 2014 financial year," he said.

"We also continue to review our activities and close, discontinue or divest non-core assets, which will improve our available cash flow in the short to medium term."

Origin expects regulatory and market competitive pressures that affected its first half result for its energy markets division to continue for the remainder of the year.

However it expects a strong increase in the contribution of its exploration and production business for the full year, driven by higher levels of plant availability and production in the second half.

Origin has been hit by weakening demand in electricity use at a time when regulators in some states are cracking down on rising prices.

The company lost a Queensland Supreme Court battle last December over the state's electricity prize freeze.

Meanwhile, Origin expects its main driver for growth in the future will be its investment in the Australia Pacific LNG project, in which it is a 37.5 per cent stakeholder.

Origin on Thursday said it expected the project would be delivered on or ahead of schedule at a cost of $24.7 billion, with the company's investment expected to peak at $4.4 billion.

Origin had initially expected to contribute $3.6 billion to the project, which was originally estimated to cost $23 billion.

Origin's shares were $1.00, or eight per cent, lower at $11.39 at 1119 AEDT.