Full Year 2026 Origin Energy Ltd Earnings Call Transcript
Key Points
- Origin Energy Ltd (OGFGF) delivered a strong financial performance with underlying EBITDA of $3.22 billion, exceeding expectations, and adjusted free cash flow surging by over $700 million to exceed $2 billion.
- The company achieved its $100 million to $150 million cost-out target, reducing cost to serve by $126 million since FY24, while also lowering bad debt through improved collections.
- Energy Markets EBITDA grew 21% to $1.701 billion, at the upper end of guidance, driven by higher electricity and gas earnings and a strong customer growth of 243,000 accounts.
- APLNG delivered strong operational performance with improved availability to 96%, increased 2P reserves by 332 petajoules, and paid $911 million in fully franked dividends, with higher oil prices expected to boost FY27 cash flows.
- The balance sheet remains strong with net debt to EBITDA at 1.6 times, below the target range, supporting a stable fully franked dividend of $0.60 per share and continued investment in growth projects like batteries and Kraken.
- Octopus Energy and Kraken are well-positioned for growth, with Octopus growing non-UK accounts by over 50% and Kraken increasing revenue by 19%, following the completion of their legal separation and a $1 billion equity raise.
- Origin Energy Ltd (OGFGF) experienced a data security incident in July, affecting 900,000 customers, which is subject to an ongoing criminal investigation and may lead to reputational and financial costs.
- Integrated Gas earnings declined as expected, with lower sales volumes and realized prices, and costs increased by 5% to $3 billion due to higher investment in well optimization and exploration.
- The company faces challenges in new build economics due to rising costs and low wholesale electricity prices, making projects like Yanco Delta increasingly difficult to justify despite government support.
- Octopus Energy and Kraken recorded a combined EBITDA loss of $8 million, as investments in non-UK retail markets and Kraken migrations outpaced profitability, with UK retail contributing $134 million.
- The company expects lower LNG trading gains in FY27 and anticipates a moderation in electricity gross profit by FY28 as lower forward prices flow through to tariffs, potentially impacting future earnings.
- There is uncertainty around the gas reservation scheme and its potential impact on domestic gas prices and investment decisions, which could affect the profitability of the gas business and APLNG's expansion plans.
Okay, good morning, everyone, and welcome to Origin Energy's results for the 2026 financial year. It's Frank Calabria here, and I'm joined by my executive leadership team.
I want to welcome a few people. Firstly, you all know Andrew Thornton, but welcome him in his new role of Executive General Manager, Energy Supply and Operations. We welcome Aleta Nicoll as the Energy General Manager for Integrated Gas; and also welcome Alicia Purtell, our new Executive General Manager of People and Culture.
I'll provide a brief overview of performance and outlooks. Tony will speak to the financial results, and this will be followed by an opportunity for all of you to ask questions.
Turning to slide 2, Origin's delivered a good result for the 2026 financial year. The Energy Market EBITDA of $1.701 million EBITDA is towards the upper end of guidance. Integrated Gas at 1.26 -- $1.62 billion, EBITDA is in line with expectations for APLNG and LNG trading. And in relation to Octopus Energy and
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