Origin Energy reported a solid half-year performance with statutory profit rising to $1.02 billion and underlying profit up 24% to $924 million, driven by strong LNG trading and APLNG operations. The company is advancing its renewable energy investments and technology platforms while maintaining dividend growth.
- Statutory profit increased to $1,017 million, underlying profit up 24% to $924 million
- APLNG earnings rose 14% with higher prices and volumes; LNG trading EBITDA surged 270%
- Energy Markets EBITDA declined but remains within guidance; cost reduction initiatives on track
- Octopus Energy expanded UK retail base and Kraken platform nearing 100 million accounts
- Strong balance sheet supports increased dividends and $1.5-$1.7 billion capex focused on renewables and storage
Robust Financial Performance Despite Market Challenges
Origin Energy Limited has delivered a resilient half-year result for the period ending 31 December 2024, with statutory profit climbing to $1,017 million, up from $995 million in the prior corresponding period. Underlying profit rose 24% to $924 million, reflecting strong operational execution across its integrated gas and LNG trading businesses.
The company’s Australia Pacific LNG (APLNG) joint venture saw earnings increase by 14%, buoyed by higher realised prices and increased sales volumes. Meanwhile, LNG trading EBITDA soared 270% to $285 million, underscoring Origin’s growing capabilities in commodity trading amid volatile global energy markets.
Energy Markets Segment Faces Headwinds but Remains on Track
Energy Markets EBITDA declined to $738 million from $1,044 million in the prior year, primarily due to lower wholesale electricity and gas prices flowing through to retail tariffs and higher coal costs following the removal of the legislated price cap. Despite this, Origin remains confident in its medium-term targets, with cost-to-serve initiatives expected to deliver $100-$150 million in savings by FY26.
The company’s retail business continues to expand, with a 3% compound annual growth rate in customer accounts and a notable reduction in churn, supported by technology-driven improvements in customer experience and operational efficiency.
Octopus Energy and Kraken Drive International Growth
Origin’s 23% stake in Octopus Energy is proving a significant growth engine. Octopus is now the largest energy retailer in the UK with 13.3 million accounts, growing 10% year-on-year. The Kraken technology platform, which supports Octopus and other clients globally, has contracted 62 million customer accounts, up 22% in 12 months, and is on track to reach 100 million accounts ahead of schedule.
Investment in energy services, including heat pumps, EV chargers, and smart home technologies, is accelerating customer lifetime value, although this has moderated Origin’s share of Octopus EBITDA to a positive contribution of up to $100 million for FY25, down from previous guidance.
Strategic Investments in Renewables and Storage
Origin is advancing its energy transition strategy with committed investments of approximately $1.7 billion in grid-scale batteries and renewables, targeting 4-5 GW of renewables and storage capacity by 2030. Key projects include the Eraring and Mortlake battery expansions and the Yanco Delta Wind Farm development, which is progressing through early-stage financing and contractor selection.
The company’s flexible generation portfolio, including 3 GW of gas-fired peaking plants and a growing virtual power plant (VPP) capacity of 1.5 GW, positions it well to manage the National Electricity Market’s transition to renewables and increasing demand for dispatchable capacity.
Balance Sheet Strength and Dividend Growth
Origin’s adjusted net debt increased to $4 billion, reflecting growth capital expenditure and higher tax payments, but remains within a comfortable leverage ratio of 1.5x net debt to underlying EBITDA. The company declared a fully franked interim dividend of 30 cents per share, up 2.5 cents from the previous year, supporting a dividend yield of 5.4% pre-franking.
Looking ahead, Origin expects FY25 Energy Markets EBITDA of $1.1-$1.4 billion and LNG trading EBITDA at the upper end of $400-$450 million, with capital expenditure guidance of $1.5-$1.7 billion focused on growth projects. The company is navigating near-term operational challenges at APLNG with a revised production guidance of 670-690 PJ, slightly below previous forecasts due to field optimisation setbacks.
Bottom Line?
Origin’s half-year results underscore its dual focus on delivering shareholder returns and leading the energy transition, but execution risks in production and market volatility remain key watchpoints.
Questions in the middle?
- How will Origin manage the operational challenges at APLNG to meet production targets?
- What impact will Octopus Energy’s continued investment in energy services have on profitability?
- How sensitive is Origin’s outlook to fluctuations in LNG and wholesale electricity prices?