Origin Energy Shares Add 10% On The Week – The Latest

Origin Energy shares (ASX: ORG) capped off a stellar week with a 5.04% gain to A$12.08 on Friday, bringing its weekly advance to 9.92% following half-year results that exceeded market expectations despite a sharp decline in statutory profit.

The Origin Energy share price has rallied strongly since reporting on February 12, 2026, when the stock initially surged as much as 8.1% to A$11.97 before closing 4.5% higher at A$10.91. The momentum continued through the week, with Friday’s close at A$12.08 representing a significant vote of confidence from markets on an otherwise difficult day for Australian equities. The share price performance stands in stark contrast to broader market weakness, suggesting investors are looking past near-term profit pressures to focus on improved operational metrics and management’s more optimistic outlook.

Core Financial Results

Origin Energy’s half-year results for the period ending December 31, 2025, revealed a mixed picture of declining profits offset by stronger cash generation and improved guidance. The company reported a statutory profit of A$557 million, down 45% from A$1,017 million in the prior corresponding period, while underlying profit fell 36% to A$593 million from A$924 million. Underlying EBITDA came in at A$1,589 million compared to A$1,926 million in the first half of 2025.

However, the headline profit declines masked several positive developments. Adjusted free cash flow strengthened significantly to A$705 million from A$518 million in the prior half, demonstrating improved cash conversion despite lower earnings. Management maintained the interim dividend at 30 cents per share, fully franked, signalling confidence in the balance sheet and ongoing cash generation capacity.

The most significant development was the upgrade to full-year underlying EBITDA guidance for the Energy Markets segment, now expected to range between A$1.55 billion and A$1.75 billion, up from the previous A$1.4 billion to A$1.7 billion range. This revision reflects stronger-than-expected performance in the electricity business and the benefits of ongoing cost reduction initiatives.

Operational Performance Across Segments

The Energy Markets division delivered the standout performance, generating underlying EBITDA of A$860 million for the half. This result was underpinned by higher electricity gross profit and disciplined cost management, with the company successfully navigating volatile wholesale electricity markets while maintaining retail margins. The division also added 96,000 new customer accounts during the period, extending a growth streak that has now lasted more than ten consecutive half-year periods.

Origin’s renewable energy investments are beginning to bear fruit, with the company successfully commissioning the Eraring battery Stage 1 on time and within budget. This 460MW battery energy storage system enhances portfolio flexibility and supports the company’s broader energy transition strategy, positioning Origin to capitalise on growing demand for firming capacity as coal-fired generation exits the market.

The Integrated Gas segment faced headwinds, reporting underlying EBITDA of A$860 million as lower LNG prices and reduced volumes at Australia Pacific LNG weighed on results. The global LNG market has experienced significant volatility, with Asian spot prices fluctuating amid changing demand patterns and increased global supply.

The Octopus Energy division posted an underlying EBITDA loss of A$89 million, reflecting continued investment in international expansion and product development. While loss-making in the near term, this segment represents Origin’s strategic bet on technology-enabled energy retail and the transition to distributed energy resources.

Strategic Direction and Cost Management

Origin’s ability to upgrade guidance despite profit declines speaks to the effectiveness of its cost reduction program and operational improvements across the Energy Markets business. The company has systematically reduced operating expenses while investing selectively in growth areas such as battery storage and customer acquisition. This disciplined approach has allowed Origin to protect margins even as commodity price volatility and competitive pressures persist in core markets.

The customer growth trajectory is particularly noteworthy in a highly competitive Australian energy retail market. Adding nearly 100,000 accounts in a single half demonstrates that Origin’s brand strength and service proposition continue to resonate with consumers, providing a stable platform for future earnings growth.

Outlook and Market Positioning

Markets are now pricing in expectations that Origin can deliver on its upgraded Energy Markets guidance while managing the challenges in its gas and Octopus divisions. The company’s diversified portfolio provides some insulation against volatility in any single segment, though the ongoing losses at Octopus Energy and pressure on LNG margins remain areas of concern.

The renewable energy transition presents both opportunities and risks for Origin. The Eraring battery project demonstrates the company’s capability to execute on large-scale storage infrastructure, positioning it to benefit from the firming capacity gap that will emerge as coal plants retire. However, the capital intensity of these investments and the uncertain regulatory environment surrounding the energy transition create execution risks.

The upgraded guidance suggests management has greater confidence in electricity market conditions for the second half of the financial year, though the basis for this optimism beyond cost savings remains somewhat unclear given the inherent volatility in wholesale power markets. The sustainability of customer growth rates will also be critical, as acquisition costs can quickly erode the profitability gains from adding new accounts.

Origin Energy’s strong week reflects market approval of management’s ability to navigate a challenging operating environment while maintaining dividends and investing in future growth. The upgraded guidance provides a positive near-term catalyst, though the company must still contend with structural headwinds in gas, ongoing investment requirements in Octopus Energy, and the execution risks inherent in Australia’s complex energy transition.