Origin Upgrades Earnings Guidance for Energy Markets Business

By David Winning

SYDNEY–Origin Energy Ltd. upgraded earnings guidance for its Energy Markets business, citing a stronger-than-expected contribution from Octopus Energy in the U.K. and a better underlying performance.

Origin said it now expected underlying earnings before interest, tax, depreciation and amortization from the division of between 950 million Australian dollars (US$633.8 million) and A$1.2 billion in the 12 months through June. Previously, the company had forecast underlying Ebitda at the higher end of a A$600 million-A$730 million range.
Origin said its improved outlook also reflected a benefit from securing more coal at a lower cost following the New South Wales state government’s move to cap local coal prices to ease pressure on power bills.
“In the U.K., following a volatile first half, market conditions have stabilized over the winter period and Octopus has seen a rapid return to more normal trading conditions,” said Origin in a regulatory filing. “With the more volatile shoulder period concluded, Origin now expects to record a significant positive Ebitda contribution from Octopus in FY 2023.”
Turning to Australia, Origin said forward wholesale power prices have fallen, in part due to the coal-price cap.
Origin said it has been able to contract additional coal supply at the capped price of A$125 a metric ton “which, together with higher than anticipated deliveries of legacy-priced coal, has resulted in lower coal supply costs for FY 2023.”
Write to David Winning at david.winning@wsj.com