Can Origin Sustain Growth as Energy Markets Weaken and Octopus Posts Loss?
Origin Energy reported a rise in statutory and underlying profits for FY25, driven by strong LNG trading gains that balanced softer Energy Markets earnings. The company also increased its fully franked dividend and outlined a positive outlook for FY26.
- Statutory profit up to $1.48 billion, underlying profit rises to $1.49 billion
- Underlying EBITDA declines slightly to $3.41 billion due to Energy Markets and Octopus Energy
- Final fully franked dividend increased to 30 cents per share, total 60 cents for FY25
- Energy Markets adds 104,000 customer accounts with reduced cost to serve
- Octopus Energy expands customer base but posts a loss due to international investments
Financial Performance Highlights
Origin Energy’s FY25 results reveal a company navigating a complex energy landscape with a blend of resilience and strategic agility. The statutory profit rose to $1.48 billion, up from $1.40 billion the previous year, while underlying profit saw a more pronounced increase to $1.49 billion, boosted by lower tax expenses linked to fully franked dividends from Australia Pacific LNG.
However, underlying EBITDA slipped modestly to $3.41 billion, reflecting softer earnings in the Energy Markets and Octopus Energy segments, partially offset by stronger Integrated Gas performance driven by LNG trading gains.
Operational Dynamics and Customer Growth
Within Energy Markets, Origin faced headwinds from lower electricity tariffs and higher coal costs, which reduced gross profits. Despite this, the segment added 104,000 new customer accounts, bringing the total to 4.7 million, and achieved a churn rate well below the market average. Cost efficiencies are also on track, with a $50 million reduction in cost to serve this year and further savings anticipated.
Integrated Gas delivered a standout performance, with underlying EBITDA rising by $251 million thanks to LNG trading gains, even as production and commodity prices declined slightly. Australia Pacific LNG’s reserves increased, underpinning future supply reliability.
Octopus Energy’s Growth Amid Investment
Octopus Energy, Origin’s UK-based affiliate, expanded its customer base significantly, adding 800,000 UK customers and nearly doubling international accounts. Yet, it reported an $88 million loss due to ongoing investments in non-UK retail and energy services. The Kraken platform, a key technology asset, grew its contracted accounts by 45% to 74 million, signaling strong long-term growth potential.
Strategic Progress and Energy Transition
Origin continues to advance its energy transition ambitions, investing in battery projects like Eraring and Mortlake, securing transmission rights for wind projects, and expanding customer solutions including home electrification through the acquisition of SolarQuotes. The company reaffirmed its 2030 emissions reduction targets and net zero ambition by 2050, balancing environmental goals with supply reliability and affordability.
Outlook and Dividend
Looking ahead, Origin expects stable to moderately improved earnings in Energy Markets and Integrated Gas, with further cost savings and capital expenditure focused on renewables and storage. The Board declared a fully franked final dividend of 30 cents per share, bringing total dividends for FY25 to 60 cents, up from 55 cents in FY24, reflecting confidence in cash flow and financial strength.
Bottom Line?
Origin’s FY25 results underscore a balanced approach to growth and transition, setting the stage for a pivotal FY26 amid evolving market dynamics.
Questions in the middle?
- How will Octopus Energy’s international investments impact Origin’s profitability in the near term?
- What risks could affect LNG trading gains given global energy market volatility?
- How quickly can Origin scale its battery and renewables projects to meet its climate targets?
