Adds details and background throughout, analyst comments in para 5&6
Hikes FY26 Energy Markets underlying EBITDA outlook
Shares jump as much as 8%, mark best day in three years
Interim dividend of 30 Australian cents
By Rajasik Mukherjee and Kumar Tanishk
Feb 12 (Reuters) - Australia's Origin Energy ORG.AX raised its full-year earnings outlook for its energy retail division on Thursday, citing stronger electricity margins, which helped the firm beat market expectations for first-half earnings.
Shares of the electricity and gas retailer rose as much as 8.1% to A$11.970, their biggest intraday percentage gain in nearly three years.
Slower rollout of wind and solar on both coasts, tight gas markets and rising power demand are forcing Australia's state governments to keep coal plants running longer than planned, even as demand shifts and policy reforms are leaning towards renewable energy.
New South Wales recently extended the life of Origin Energy’s Eraring station to 2029, underscoring the energy market division's performance for the year.
"The extension of the Eraring coal plant to 2029 gives Origin more certainty and stability in its domestic power business, which was reflected in the outlook upgrade," David Tuckwell, chief investment officer at ETF Shares.
The energy firm forecast full-year operating earnings at its energy markets division between A$1.55 and A$1.75 billion ($1.25 billion), compared with previous view of A$1.40 to A$1.70 billion. The midpoint of the new outlook is above the Visible Alpha consensus of A$1.62 billion.
The energy market division, which comprises Australia's largest energy retail business by customer accounts, reported operating earnings of A$860 million for the six months to December 31, up 17% from a year earlier.
Origin reported an underlying profit of A$593 million, above Visible Alpha estimate of A$577.9 million, but down from A$924 million reported a year earlier.
Operating earnings at the integrated gas division, which includes Origin's stake in the Australia Pacific LNG (APLNG) project and LNG trading operations, fell over 31% to A$860 million on weaker realised prices and lower production.
Tuckwell said investors largely looked past APLNG’s earnings, given gas profits swing with commodity prices.
Origin also declared an interim dividend of 30 Australian cents per share, unchanged from last year.
($1 = 1.4039 Australian dollars)
(Reporting by Kumar Tanishk, Nichiket Sunil, Rajasik Mukherjee in Bengaluru & Christine Chen in Sydney; Editing by Alan Barona, Sriraj Kalluvila and Harikrishnan Nair)
((Nichiket.Sunil@thomsonreuters.com;))