Energy Market Pressures and Octopus Losses Temper Origin’s Strong Half-Year Gains

Strong Financial Performance Despite Sector Headwinds

Origin Energy Limited has unveiled its half-year results for the period ending 31 December 2024, showcasing a solid financial footing with statutory profit climbing to $1,017 million, up from $995 million in the previous corresponding period. Underlying profit saw an even more pronounced increase, rising to $924 million from $747 million, underscoring the company’s resilience amid a complex energy landscape.

The company’s interim dividend was lifted to 30 cents per share, fully franked, reflecting confidence in cash flow and ongoing shareholder returns. This marks an increase from the 27.5 cents paid in the prior half, signaling Origin’s commitment to rewarding investors despite market volatility.

Integrated Gas Drives Growth

The standout contributor to Origin’s improved profitability was the Integrated Gas segment, which saw underlying EBITDA rise 25% to $1,251 million. This growth was fueled by gains in LNG trading and robust sales volumes at Australia Pacific LNG, supported by favourable commodity prices and a new 10-year gas supply agreement. Australia Pacific LNG remains a cornerstone asset, pivotal to both Origin’s earnings and Australia’s east coast gas supply.

Energy Markets and Octopus Energy Face Challenges

Conversely, the Energy Markets division experienced a decline in underlying EBITDA to $738 million from $1,044 million, reflecting lower wholesale electricity prices and increased coal costs. Despite these pressures, Origin maintained a stable output from its Eraring Power Station and increased gas peaking capacity to support renewable integration and grid reliability.

Octopus Energy, Origin’s UK-based retail and technology arm, reported a wider EBITDA loss of $24 million, doubling the prior half’s loss. While UK retail and Kraken licensing businesses continue to expand rapidly, significant reinvestment into energy services and manufacturing capabilities weighed on near-term profitability.

Strategic Investments and Energy Transition

Origin is advancing its renewable energy ambitions with a $1.7 billion commitment to battery storage projects, including the Eraring battery expansion, now the largest under construction in the Southern Hemisphere. The company aims to add 4-5 GW of renewables and storage by 2030, aligning with broader decarbonisation goals and positioning Origin as a key player in Australia’s energy transition.

CEO Frank Calabria emphasized the company’s balanced approach, highlighting strong cash generation, a robust balance sheet, and ongoing cost reduction initiatives targeting $100-$150 million savings by FY26. These efforts aim to sustain shareholder value while supporting vulnerable customers amid cost-of-living pressures.

Outlook and Market Guidance

Looking ahead, Origin maintained its FY25 guidance for Energy Markets underlying EBITDA between $1.1 billion and $1.4 billion. Australia Pacific LNG production is forecast at 670-690 PJ, with steady capital and operating costs. LNG trading gains are expected near the upper end of the $400-$450 million range. Octopus Energy’s contribution is now anticipated to be up to $100 million, reflecting ongoing investments and a revised accounting treatment.

Overall, Origin’s half-year results reflect a company navigating sector headwinds with strategic agility, leveraging its integrated portfolio to deliver growth and shareholder returns while investing in the future of energy.