Origin Energy Tightens FY25 EBITDA Forecast Amid UK Weather Challenges

Origin Energy Refines FY25 Earnings Outlook

Origin Energy has updated its FY25 guidance, narrowing the expected Energy Markets underlying EBITDA range to between $1.3 billion and $1.4 billion. This adjustment reflects operational improvements, particularly within its wholesale generation portfolio, and favourable electricity market conditions that have emerged since the previous forecast.

The company attributes the upward revision primarily to stronger-than-anticipated performance in wholesale electricity volumes and green certificate markets, alongside lower costs. These factors have collectively bolstered Origin's earnings outlook, positioning it towards the upper end of its guidance range.

Octopus Energy Faces Weather-Driven Earnings Pressure

Conversely, Origin’s subsidiary Octopus Energy has revised its FY25 EBITDA guidance to reflect a potential loss of up to $100 million, a notable shift from prior expectations of a positive contribution. This downgrade is largely due to unseasonably warm weather in the United Kingdom during March and April, which significantly reduced electricity and gas consumption.

The warm conditions, the third warmest on record since 1884, combined with the UK government's price guarantee subsidy discussions, have created a challenging environment for Octopus Energy’s retail operations. These factors have led to an estimated $50 million negative impact on earnings, particularly affecting the retail businesses of Octopus and Kraken.

Growth Amidst Adversity

Despite these headwinds, Octopus Energy continues to demonstrate robust growth in its retail customer base. Over the 12 months to April 30, 2025, its UK retail segment grew organically by more than 10%, reaching 7.5 million retail accounts. Meanwhile, its non-UK retail accounts, including those under the Kraken brand, have doubled to approximately 2.5 million.

Notably, Kraken has recently secured its first customer in the United States National Grid market, marking a significant milestone in Octopus Energy’s international expansion strategy. This growth trajectory suggests that while short-term earnings face pressure, the company is positioning itself well for future market opportunities.

Looking Ahead

Origin Energy’s FY25 guidance update underscores a mixed but cautiously optimistic outlook. The company benefits from operational strengths in its core Energy Markets segment, yet must navigate the volatility introduced by weather patterns and regulatory frameworks impacting its UK retail operations. Investors will be watching closely how these dynamics unfold in the coming quarters.