Origin Energy Boosts Revenue 10% While Accelerating Battery and Renewables Growth
Origin Energy reported a robust half-year result for December 2024, with revenue up 10% and profit rising 2%, while accelerating investments in battery storage and renewables.
- Total group revenue increased 10% to $8.77 billion
- Profit attributable to members rose 2% to $1.02 billion
- Declared fully franked interim dividend of 30 cents per share, up from 27.5 cents
- Energy Markets earnings declined due to lower wholesale prices and higher coal costs
- Integrated Gas earnings grew on higher LNG volumes and prices; Octopus Energy expanded customer base despite losses
Financial Performance Overview
Origin Energy delivered a solid half-year performance for the period ended 31 December 2024, with total group revenue climbing 10% to $8.77 billion and profit attributable to members increasing 2% to $1.02 billion. The company declared a fully franked interim dividend of 30 cents per share, up from 27.5 cents in the prior corresponding period, reflecting confidence in its cash flow generation and balance sheet strength.
Underlying profit rose 24% to $924 million, supported by strong contributions from the Integrated Gas segment, while Energy Markets experienced a 29% decline in earnings, primarily due to lower wholesale electricity prices flowing through to customer tariffs and increased coal costs following the end of the NSW coal price cap.
Segment Highlights and Operational Insights
The Energy Markets division saw electricity gross profit fall by $196 million, impacted by a $20/MWh reduction in wholesale prices and a $30/tonne increase in coal costs. Despite this, customer accounts grew by 57,000 across electricity, broadband, and Home Assist services, and the customer trust score remained high at 4.6 out of 5 stars. Cost-to-serve increased modestly but remains on track for targeted reductions by FY26.
Integrated Gas benefited from higher LNG volumes and prices, with Origin’s share of Australia Pacific LNG (APLNG) EBITDA rising 25% to $1.25 billion. LNG trading gains contributed $285 million in the half, with expectations to reach $400-$450 million for the full year. Production was steady, though slightly below previous guidance due to operational challenges in some fields. The company also announced its exit from the Hunter Valley Hydrogen Hub project, reflecting strategic prioritisation amid market uncertainties.
Octopus Energy continued its rapid customer growth, now serving over 15 million customers globally, and solidified its position as the UK's largest energy retailer. However, Origin’s share of Octopus Energy reported a $24 million loss, primarily due to increased investment in energy services such as heat pumps, EV chargers, and smart meters, which are expected to drive long-term customer value.
Energy Transition and Capital Management
Origin is advancing its energy transition strategy with significant capital expenditure of $889 million in the half, focused on battery storage projects including the Eraring and Mortlake batteries, and renewable developments like the Yanco Delta Wind Farm. The company has committed approximately $1.7 billion to battery storage projects, aiming for 4-5 GW of renewables and storage capacity by 2030.
Adjusted net debt increased to $4.03 billion, reflecting the capital investment program and higher tax payments, but the adjusted net debt to EBITDA ratio remains conservative at 1.5x, well within the target range. Origin maintains a strong investment-grade credit rating of Baa2 with a gearing ratio of 28%.
Legal and Regulatory Developments
Origin continues to defend ongoing litigation related to reversion claims by Tri-Star concerning APLNG's coal seam gas interests. The outcome remains uncertain and could materially impact future cash flows and asset access. The company also benefits from government support, including compensation related to the NSW coal price cap and agreements to delay Eraring Power Station’s retirement, enhancing supply security during the energy transition.
Outlook and Guidance
For FY25, Origin expects Energy Markets underlying EBITDA between $1.1 billion and $1.4 billion, with anticipated lower electricity gross profit offset by customer growth and cost efficiencies. APLNG production guidance was revised slightly lower to 670-690 PJ, with capital and operating expenditure forecast at $2.7-$2.9 billion. Origin’s share of Octopus Energy EBITDA is expected to be a positive contribution of up to $100 million, reflecting ongoing investments in energy services.
Capital expenditure for the full year is expected between $1.5 billion and $1.7 billion, predominantly directed towards battery storage and renewable projects. Tax payments are forecast to increase to approximately $1 billion in FY25, reflecting higher instalments and prior year earnings.
Bottom Line?
Origin Energy’s HY25 results underscore a resilient core business balancing near-term market pressures with strategic investments in the energy transition, though legal uncertainties and market volatility warrant close investor attention.
Questions in the middle?
- How will the Tri-Star litigation outcome affect APLNG’s asset base and Origin’s future cash flows?
- What is the timeline and expected return profile for Origin’s battery storage and renewable projects?
- How will Octopus Energy’s investments in energy services impact profitability and customer lifetime value over the next few years?
