The Origin Energy Ltd (ASX: ORG) share price is falling on Monday morning.
At the time of writing, the energy giant's shares are down 4% to $10.57.
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Why is the Origin Energy share price sinking?
Investors have been selling the company's shares this morning following the release of an update on its guidance for FY 2025.
According to the release, on the basis that market conditions and the regulatory environment do not materially change and adversely impact its operations, the company expects Energy Markets underlying EBITDA to be $1,300 million to $1,400 million in FY 2025. This is up from its previous guidance range of $1,100 million to $1,400 million.
Management notes that the narrowing of its FY 2025 Energy Markets underlying EBITDA guidance towards the top end of its range is attributable primarily to operational improvements and wholesale portfolio benefits.
It also notes that generation performance and electricity volumes have been strong, market conditions favourable, and green certificate costs lower.
Octopus update disappoints
Offsetting the good news is an update on its Octopus Energy business.
Management advised that it now expects its share of Octopus Energy FY 2025 underlying EBITDA to be a loss of up to $100 million. This compares unfavourably to its previous guidance of a positive contribution of up to $100 million.
It notes that key factors driving the lower FY 2025 guidance include unseasonably warm weather across March and April in the United Kingdom, as well as one-off impacts under discussion relating to the government's price guarantee subsidy from the energy crisis of 2022.
In respect to weather, Origin Energy highlights that the UK recorded its third warmest April since 1884. Unsurprisingly, this resulted in a significant decrease in electricity and gas volumes, adversely affecting earnings by approximately $50 million.
It also highlights that the expected loss for FY 2025 reflects strong earnings from the UK retail and Kraken businesses offset by continued investment in Energy Services and non-UK retail markets.
Nevertheless, Origin Energy continues to see rapid growth across many of Octopus Energy's segments.
For example, in the 12 months to 30 April 2025, UK retail grew organically by more than 10% to 7.5 million customers, non-UK retail doubled to 2.5 million accounts, and Kraken now has approximately 74 million contracted accounts after recently securing its first major customer in the United States with National Grid.
The Origin Energy share price is now up just 2% over the past 12 months.
