Origin Energy reports a 45% drop in half-year profit amid lower gas earnings and ongoing investments, while extending Eraring Power Station operations to 2029 to support NSW energy security.
- Profit attributable to members down 45% to $557 million
- Total group revenue decreased 9% to $7.993 billion
- Interim fully franked dividend maintained at 30 cents per share
- Eraring Power Station life extended to April 2029
- Underlying EBITDA impacted by Integrated Gas and Octopus Energy performance
Financial Performance and Dividend
Origin Energy Limited has released its half-year results for the period ending 31 December 2025, revealing a significant 45% decline in profit attributable to members of the parent entity, down to $557 million from $1.017 billion in the prior corresponding period. Total group revenue also fell by 9% to $7.993 billion. Despite these declines, the company declared an interim fully franked dividend of 30 cents per share, consistent with the previous year.
The decrease in profitability was primarily driven by lower earnings from the Integrated Gas segment, reflecting reduced LNG prices and volumes at Australia Pacific LNG (APLNG), as well as diminished returns from the Octopus Energy investment. These were partially offset by improved performance in the Energy Markets segment, which saw higher electricity gross profit and cost efficiencies.
Operational Highlights and Strategic Initiatives
Origin reported growth in customer accounts by 96,000, with increases across electricity, gas, and internet services. The company commissioned significant battery storage projects, including stages 1 and 3 of the Eraring battery, and is progressing the Yanco Delta Wind Farm development. These investments align with Origin’s commitment to a cleaner energy transition and its target of 4 to 5 gigawatts of renewables and storage capacity by 2030.
A notable operational development is the extension of the Eraring Power Station’s operational life to 30 April 2029, announced in January 2026. This move aims to bolster energy supply and system security in New South Wales during the ongoing energy transition. The extension is not expected to affect Origin’s 2030 emissions reduction targets or its long-term net zero ambition by 2050.
Capital Management and Cash Flow
Adjusted free cash flow rose to $705 million, supported by strong cash generation in Energy Markets and lower tax payments. However, adjusted net debt to adjusted underlying EBITDA increased slightly to 2.0 times, remaining within the company’s target range of 2.0 to 3.0 times. Origin also refinanced and extended bank facilities, increasing capacity and lengthening maturities to support ongoing capital requirements.
Capital expenditure for the half-year was $489 million, down from $889 million in the prior period, reflecting reduced spend on major growth projects. The company continues to invest in battery and wind projects, Origin Zero initiatives, and other growth and productivity programs.
Legal and Regulatory Risks
Origin’s investment in APLNG remains subject to ongoing litigation initiated by Tri-Star, which claims reversionary rights over certain coal seam gas interests. The outcome of these proceedings could materially impact APLNG’s reserves and Origin’s future earnings and cash flows. The company is vigorously defending these claims, but the uncertainty presents a significant risk to investors.
Additionally, Origin continues to navigate regulatory environments affecting its operations, including the expansion of the UK Government’s Warm Home Discount scheme impacting Octopus Energy’s UK retail earnings.
Outlook and Market Position
Origin reaffirmed its 2030 emissions reduction targets and net zero by 2050 ambition, emphasizing its role in powering Australia’s energy transition. The company expects Energy Markets EBITDA for FY26 to be between $1.55 billion and $1.75 billion, upgraded from prior guidance due to improved electricity business performance. Integrated Gas production guidance was updated slightly upward, with ongoing optimisation efforts to offset natural field declines.
Octopus Energy continues to expand globally, with customer accounts growing to approximately 18 million and Kraken Technologies progressing towards a formal separation and equity raising. Origin’s strategic investments in these businesses underpin its technology and innovation focus.
Bottom Line?
Origin’s half-year results underscore the challenges of transitioning energy markets, with profit pressures balanced by strategic investments and operational resilience.
Questions in the middle?
- How will the ongoing Tri-Star litigation affect Origin’s future cash flows and asset base?
- What impact will the Eraring Power Station extension have on depreciation and restoration costs in coming periods?
- How will Octopus Energy’s planned separation and Kraken’s equity raise influence Origin’s investment returns?