Origin energy reports 17-fold surge in underlying profit in July-December

Australia's Origin Energy on February 15 announced a 17-fold increase in underlying profit for the July-December period driven by higher earnings across all business segments, with a significant boost from the energy markets.

Origin’s underlying profit, which strips out extraordinary items, was A$747mn ($485mn) for the six months compared with A$44mn a year ago. The energy markets segment drove half-year earnings to an increase of A$813 million or 352%, totaling A$1.04bn. This surge reflects a recovery in earnings following a period of under-recovery of wholesale costs in the electricity business.

Origin's gas business, including its share in APLNG, reported a 5% year/year increase in underlying interest, tax, depreciation, and amortisation (EBITDA), reaching A$1bn. The growth is attributed to hedging gains, higher production, and an increase in APLNG production by 3% year/year. Seven spot LNG cargoes were delivered in the half, showing an increase from three cargoes in the previous year.

Despite production disruptions due to an unplanned turndown following an LNG vessel power outage at the Curtis Island LNG facility in November 2023, production successfully returned to pre-event levels by mid-December 2023.

Origin has revised its full-year outlook for the energy markets segment, now expecting full-year EBIDTA between A$1.6bn and A$1.8bn, compared with the prior forecast of A$1.3bn to A$1.7bn. The improved outlook is driven by lower electricity procurement costs, reflecting lower net pool costs and customer account growth, as well as improved gas gross profit following wholesale supply contract repricing.

A consortium led by Brookfield Asset Management and MidOcean Energy, a unit of EIG, recently attempted an acquisition of Origin. However, the deal, which included Brookfield's acquisition of Origin's energy markets business and MidOcean's acquisition of the integrated gas business, including a 27.5% interest in APLNG, faced an unsuccessful outcome.

AustralianSuper, Origin Energy's largest shareholder, played a significant role in this scenario. It had repeatedly stated its intention to vote against the takeover bid.