According to Citi analyst Tom Wallington, both Origin Energy and AGL are expected to face earnings headwinds due to subdued wholesale prices and low volatility during the December half. This is despite both companies demonstrating strong operational reliability. Origin Energy is an integrated energy company focused on power generation and retailing. AGL is one of Australia’s leading energy companies, providing electricity and gas to millions of customers.
Wallington noted that while retail procurement books are largely hedged and tariffs are fixed, lower spot prices negatively affect physical generation revenue and market contracts. Furthermore, low volatility will restrict cap pay-offs, turning sunk premiums into a cost drag rather than a revenue source. Shares in Origin Energy were down by 0.3 per cent, while AGL shares increased by 0.7 per cent in Thursday afternoon trade.
Wallington stated, “We therefore expect first-half earnings to track below FY26 guidance mid-point run rate. Importantly, this reflects market conditions rather than operational challenges.” He anticipates a stronger second-half performance, driven by a return of market volatility.
Wallington believes Origin is comparatively better positioned due to its more diversified earnings base, while AGL has a higher leverage to volatility.
