What Origin Energy's FY26 Adjusted Free Cash Flow Surge and Lower Underlying Profit Mean for Shareholders

Sonal Goyal

29 September 2026 11:50 PM AEST

What Origin Energy's FY26 Adjusted Free Cash Flow Surge and Lower Underlying Profit Mean for Shareholders

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Origin Energy Limited (ASX:ORG) released its FY26 full-year results on 13 August 2026, reporting statutory profit of $1,574 million (up from $1,481 million in FY25) and underlying EBITDA of $3,220 million (down from $3,411 million). Underlying Profit declined from $1,490 million to $1,159 million, reflecting an expected reduction in commodity-linked Earnings from the Integrated Gas segment and higher Depreciation and amortisation. The standout positive in the result was adjusted free cash flow, which increased $867 million to $2,074 million, driven by strong cash from Energy Markets and Australia Pacific LNG (APLNG) combined with lower tax paid. A fully franked final Dividend of 30 cents per share was declared, bringing FY26 total dividends to 60 cents per share.

FY26 Financial Results

Statutory profit was $1,574 million, up from $1,481 million in FY25. Underlying profit was $1,159 million, compared to $1,490 million in FY25, reflecting lower realised oil prices, lower LNG trading gains, and higher depreciation and Amortisation in Integrated Gas. Underlying EBITDA was $3,220 million, compared to $3,411 million in FY25. Adjusted free Cash Flow was $2,074 million, up $867 million from $1,207 million in FY25, driven by strong cash from Energy Markets and APLNG and lower tax paid. Adjusted Net Debt to Adjusted Underlying EBITDA was 1.6 times. Energy Markets performance improved year-on-year. Octopus Energy contributed positively and improved. Integrated Gas declined due to lower realised oil prices and lower LNG trading gains.

Distribution

The Board determined a fully franked final dividend of 30 cents per share, bringing total FY26 dividends to 60 cents per share, fully franked.

Segment Performance

Energy Markets (Origin's Australian electricity and gas Retailing and generation business) improved both EBITDA and free cash flow contributions in FY26. Octopus Energy (in which Origin holds a significant investment) contributed positively and improved year-on-year. Integrated Gas (comprising APLNG and LNG trading activities) experienced lower earnings, driven by lower realised oil prices (which affect APLNG revenues under oil-linked LNG contracts) and lower LNG trading gains compared to the prior year's elevated trading environment. Increased depreciation and amortisation also affected the Integrated Gas segment result.

About the Company

Origin Energy Limited is one of Australia's largest integrated energy companies, operating across electricity and gas retailing (Energy Markets), LNG production and trading via Australia Pacific LNG (Integrated Gas), and energy technology Investment through Octopus Energy Group. APLNG, a joint venture with ConocoPhillips and Sinopec, is one of the largest coal seam gas to LNG operations in Australia.

Risks

The decline in Integrated Gas earnings from lower realised oil prices is an ongoing risk. APLNG revenues are substantially oil-linked, meaning any sustained decline in oil prices would further reduce LNG revenues and APLNG cash flows.

Higher depreciation and amortisation in Integrated Gas reflects the ongoing cost of the APLNG asset base — these non-cash charges will continue at current or higher levels as Assets are depreciated.

Octopus Energy Group, while improving, is a significant investment where the returns depend on its successful global energy retail expansion strategy. Any material Octopus performance deterioration could affect Origin's earnings.

The improvement in adjusted free cash flow (up $867 million) was partly driven by lower tax paid — this may not recur at the same magnitude in future years as tax timing normalises.

Energy Markets performance improvement depends on electricity and gas retail pricing, competition, and customer churn management — the competitive Australian energy retail market is challenging.

What to Watch Ahead

Oil price trajectory, which directly determines APLNG revenues and Integrated Gas earnings in FY27 — any recovery in oil prices from FY26's lower average would support earnings growth.

APLNG production volumes and LNG trading performance in FY27, which will be the key driver of whether Integrated Gas recovers toward FY25 levels.

Octopus Energy Group's international growth trajectory and any announcements of Capital requirements from Octopus that could affect Origin's investment.

Energy Markets earnings sustainability in FY27 — whether the FY26 improvement in electricity and gas retailing can be maintained in a competitive market.

Capital management outlook — the 60 cents per share fully franked FY26 dividend and the 1.6x Leverage Ratio give context for the sustainability of returns at current earnings levels.

FAQs

Q: What is APLNG and how does it affect Origin's earnings?

A: Australia Pacific LNG (APLNG) is one of Australia's largest LNG export projects, located at Curtis Island near Gladstone in Queensland. It is a joint venture among Origin Energy, ConocoPhillips, and Sinopec, producing LNG from coal seam gas in the Surat Basin. Origin holds approximately 27.5% of APLNG. APLNG exports LNG under long-term contracts primarily to Asian buyers at prices linked to oil prices. As a result, when oil prices are higher, APLNG revenues are higher — and vice versa. The decline in FY26 Integrated Gas earnings was partly attributable to lower realised oil prices in the period.

Q: What is Octopus Energy and why does Origin invest in it?

A: Octopus Energy Group is a UK-based energy technology company that provides retail electricity and gas through a technology platform called Kraken, which it licences to other utilities globally. Origin invested in Octopus as a strategic bet on energy sector digitalisation — Kraken's customer management platform is designed to handle the complexity of smart meters, dynamic tariffs, and renewable energy integration. Origin uses the Kraken platform for its own Australian retail operations and participates in Octopus's international growth through its equity stake. Octopus has expanded to multiple countries and became one of the UK's largest electricity retailers.

Q: Why is adjusted free cash flow a better measure of Origin's cash generation than underlying profit?

A: Underlying profit is affected by non-cash items like depreciation, amortisation, and working capital movements that can distort the picture of actual cash generated. Adjusted free cash flow measures the actual cash available after operating costs and capital expenditure, making it a better indicator of the company's ability to fund dividends, debt repayment, and investments. Origin's adjusted free cash flow of $2,074 million in FY26 was substantially higher than underlying profit of $1,159 million, reflecting strong cash conversion from APLNG (which generates significant cash dividends to Origin) and Energy Markets.

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