We're into the thick of reporting season, and soon, it's going to be the turn of Australia's largest ASX energy share. Owners of Woodside Energy Group Ltd (ASX: WDS) shares will soon get to see how their business performed over the 12 months to 31 December 2024.
As we can see on the chart above, the last 12 months have been tough for the company after a fall of around 25%.
With how the market is normally forward-looking, investors seem to be suggesting with the downward trend of the Woodside share price that they're not expecting the upcoming results to be strong.
Let's have a look at what experts think about the imminent report.
According to reporting by the Australian Financial Review, MST Marquee energy analyst Saul Kavonic forecasts that core net profit for Woodside for FY24 could be approximately US$2.8 billion based on its update announced earlier this week.
Kavonic suggests a possible final dividend of US 49 cents per share, based on an 80% dividend payout ratio, which is about 20% below what a consensus of analysts are forecasting. A lower-than-expected dividend could disappoint investors.
The Marquee analyst suggested that considering the strong performance of Woodside's new Sangomar oil project in Senegal and the inclusion of the second-half profits from the sell-down of the Scarborough LNG project, the company has "snatched defeat from the jaws of victory."
Kavonic suggested that a potential US$200 million miss on the dividend could overshadow "very strong positives emanating from the resource base and Sangomar."
Broker Citi is also negative on Woodside shares, with a sell rating. According to the The Australian, Citi analyst James Byrne said:
We expect potential consensus downgrades from financial line item guidance that affects dividend expectations.
The higher restoration costs will see free-cash-flow downgrades, and the potential earlier Sangomar decline would also be a cash drag. This will raise questions about the sustainability of the payout ratio.
We think the incremental buyer in the stock in the past ~15 months has been retail, so to the extent dividends disappoint, there may be pronounced selling pressure.
Fundamentally, we think the company risks cannibalising the portfolio from its payout ratio.
Since the start of this calendar year, the Woodside share price has dropped by 6.38%.
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