Origin Energy reported a significant drop in half-year profits but upgraded its Energy Markets guidance, maintaining a steady dividend amid strong customer growth and strategic investments.
- Statutory profit halved to $557 million in HY26
- Energy Markets EBITDA rose by $122 million, driving upgraded FY26 guidance
- Octopus Energy posted a loss due to growth investments and regulatory costs
- Adjusted free cash flow increased to $705 million, supporting a 30 cents per share dividend
- Capital expenditure guidance raised, reflecting battery storage expansion
Profit Decline Amid Mixed Segment Performance
Origin Energy’s half-year results for the period ending December 31, 2025, reveal a notable decline in statutory profit, which fell to $557 million from $1.017 billion in the previous corresponding period. Underlying profit and EBITDA also contracted, reflecting a challenging environment for parts of the business. However, the company’s Energy Markets division bucked the trend with improved earnings and robust customer growth, prompting an upgrade to its full-year guidance.
Energy Markets Strength Drives Confidence
The Energy Markets segment delivered an underlying EBITDA of $860 million, up $122 million from HY25. This increase was largely driven by higher electricity gross profit, which benefited from lagged wholesale cost pass-throughs and reduced green scheme expenses. Customer accounts grew by 96,000, with churn rates significantly below market averages, underscoring the strength of Origin’s retail offerings and brand loyalty. Cost-to-serve improvements also contributed to the segment’s positive momentum, with Origin on track to meet its targeted savings by fiscal year-end.
Integrated Gas and Octopus Energy Challenges
Conversely, the Integrated Gas business experienced a decline in EBITDA to $860 million from $1.251 billion, reflecting lower LNG prices and volumes at Australia Pacific LNG. Despite steady production supported by new wells and infrastructure upgrades, increased capital and operating expenditures weighed on profitability. Meanwhile, Octopus Energy reported an $89 million loss, attributed to ongoing investments in international expansion, regulatory costs in the UK, and development of smart tariffs. Nevertheless, Octopus continued to expand its customer base, reaching 14.5 million accounts in the UK and growing its international footprint by 28%.
Cash Flow and Dividend Stability
Adjusted free cash flow rose by $187 million to $705 million, driven by strong cash generation in Energy Markets and lower tax payments. This robust cash position allowed Origin to declare a fully franked interim dividend of 30 cents per share, unchanged from the prior half. The company also reaffirmed its Dividend Reinvestment Plan with no discount, signalling confidence in its financial stability despite profit pressures.
Strategic Investments and Outlook
Capital expenditure guidance was increased to $900–$1,100 million, primarily reflecting the extension of battery storage projects such as Eraring battery 2. Origin highlighted ongoing investments in technology, data analytics, and artificial intelligence as key enablers for operational efficiency and customer experience enhancements. The company remains optimistic about its positioning through the energy transition, balancing domestic cash flow generation with international growth prospects via Kraken Technologies and Octopus Energy’s planned separations.
Bottom Line?
Origin’s solid Energy Markets performance and strategic investments set the stage for a pivotal year amid evolving energy dynamics.
Questions in the middle?
- How will regulatory changes in the UK impact Octopus Energy’s profitability going forward?
- What are the prospects and risks associated with the Golden Beach gas storage project?
- How will Origin balance capital expenditure growth with maintaining dividend stability?