Origin Energy Delivers Strong FY25 Profit, Eyes Renewable Growth: Buy Rating

Key Takeaways: Origin Energy had a strong FY25, posting an underlying profit of A$1,490 million and a statutory profit of A$1,481 million, supported by LNG trading gains and fully franked dividends from APLNG. While Energy Markets and Octopus Energy saw slight EBITDA dips, the business added 104,000 customer accounts and advanced renewable projects, including battery storage at Eraring and Mortlake. With a healthy balance sheet, robust cash flow, and Australia’s electricity demand set to rise, we see Origin well positioned for ongoing earnings, dividends of 60 cents per share, and a target price of A$15, making it a compelling long-term buy. --- Origin Energy (ASX: ORG) has posted a robust performance for FY25, with underlying profit rising to A$1,490 million and statutory profit reaching A$1,481 million, up from the previous year. The company’s fully franked dividend policy, boosted by a favourable shift from Australia Pacific LNG (APLNG), reflects both operational strength and a commitment to shareholder returns. The broader Energy Markets and Octopus Energy segments saw a slight decline in underlying EBITDA, but this was more than offset by solid earnings from Integrated Gas, particularly LNG trading. Origin’s investments in renewable energy and battery storage projects underline its strategic focus on the energy transition, a move aligned with the growing push for decarbonisation in Australia’s energy market. Shares in ORG.AX have shown resilience, hitting a decade-high of A$12.78 in August 2025 following the full-year results, before experiencing minor short-term softness. Over the past year, the stock has returned nearly 19%, outperforming the ASX All Ordinaries Index, highlighting sustained investor confidence in the company’s strategy and fundamentals. Looking ahead, rising electricity consumption and infrastructure growth in the National Electricity Market offer a strong tailwind for Origin. Its expanding renewable portfolio, battery storage developments, and optimisation of gas assets position the company to benefit from Australia’s shift towards cleaner energy, supporting ongoing earnings and shareholder returns. The combination of operational strength, strategic clarity, and a robust balance sheet makes Origin Energy a compelling long-term buy.

Origin Energy continues to stand out as one of Australia’s leading integrated energy companies, operating across natural gas exploration and production, electricity generation, and the wholesale and retail sale of electricity and gas, including liquefied natural gas. The company’s operations span three main segments: Energy Markets, its share in Octopus Energy, and Integrated Gas. Origin’s strength comes from its full value-chain presence, from upstream gas operations to a large and diversified retail customer base. The company has also made notable strides in reducing carbon emissions, with significant investments in solar and wind farms, as well as utility-scale battery storage, positioning it as a key player in Australia’s energy transition. Robust FY25 Financial Performance Reinforces Strategic Path Towards a Decarbonised Future Origin delivered a strong set of results for FY25, highlighting operational resilience and strategic focus. Key figures include: - Statutory profit of A$1,481 million, up from the previous year, reflecting solid overall performance. - Underlying profit of A$1,490 million, driven largely by lower income tax expenses as dividends from the Australia Pacific LNG (APLNG) venture became fully franked. - Integrated Gas segment underlying EBITDA of A$2,202 million, rising A$251 million, reflecting higher LNG trading gains despite a slight decline in APLNG production. - Energy Markets growth, expanding the customer base by 104,000 accounts while maintaining a churn rate well below the market average. Strategic investments in battery storage at Eraring and Mortlake and securing transmission rights for the Yanco Delta wind farm, enhancing renewable capacity and grid stability. These results support expectations for stable electricity gross profit and moderately improving gas gross profit in FY26, while reinforcing Origin’s clear path towards a decarbonised energy future. Australian Energy Market Transforming Rapidly as Renewables Gain Momentum The Australian energy sector is undergoing a rapid shift, with renewables capturing an increasing share of the market while electricity demand grows. AEMO forecasts electricity consumption to rise by 28% from FY25 to FY35, driven by electrification and data centre expansion. Renewable energy accounted for 43% of generation in Q1 2025, supported by record grid-scale solar, wind, and battery output, while coal continues its decline. Government initiatives, including Victoria’s A$4.3 billion transmission plan to reach 95% renewable electricity by 2035, further accelerate the transition. Origin’s mix of renewable investments and firming gas capacity aligns directly with these trends, and its battery storage projects are critical to addressing grid reliability concerns, particularly in Queensland and South Australia, underscoring the company’s central role in sustainable energy growth. Strong Earnings and Dividends Highlight Operational Efficiency and Shareholder Rewards FY25 earnings underline Origin’s capacity to deliver both growth and returns. Key figures include: - Revenue of A$17.3 billion, reflecting efficient operations despite challenging market conditions. - Underlying profit of A$1,490 million, maintaining strong profitability across segments. - Fully franked final dividend of 30 cents per share, bringing total FY25 dividends to 60 cents per share, up from 55 cents in FY24, representing 86% of adjusted free cash flow. Cost-to-serve savings of A$50 million already realised, with a target of A$100–150 million by FY26, expected to support margins, dividend growth, and investment in renewable infrastructure. While underlying EBITDA dipped slightly, LNG trading gains offset softer Energy Markets earnings, ensuring strong overall profitability and capacity for continued shareholder returns. Healthy Balance Sheet and Cash Flows Provide a Strong Platform for Ongoing Expansion Origin’s financial position supports both its transition strategy and shareholder returns. Adjusted net debt/EBITDA stood at 1.9x, up from 1.0x, reflecting increased investment in growth projects, while a debt-to-equity ratio of 43.9% indicates manageable leverage. Strong statutory and underlying profits contribute to healthy retained earnings, supporting further capital expenditure. Cash flow remains robust, enabling dividend payments and reinvestment into battery storage and wind farms. The company’s ability to maintain strong cash flow while undertaking significant capital expenditure highlights its financial robustness and capacity to fund long-term growth without excessive reliance on external financing. Positive Outlook with Target Price of A$15 Reflects Strong Fundamentals and Long-Term Growth Potential Valuation points to a positive trajectory for ORG.AX. Strong FY25 results, a solid dividend payout, and strategic positioning in a growing energy market support a target price of A$15 per share. Technical indicators show some short-term pullbacks, yet longer-term weekly and monthly trends remain positive. The share price is trading over 9% above its 200-day moving average and reached a 10-year high of A$12.78 in August 2025. The combination of strong fundamentals, a clear strategic direction, and favourable long-term momentum presents an attractive entry point for investors seeking exposure to a well-managed and strategically positioned energy company.