Why are Origin Energy shares sinking on Monday?

Origin Energy Ltd (ASX: ORG) shares are taking a tumble today.

Shares in the S&P/ASX 200 Index (ASX: XJO) energy provider closed on Friday trading for $12.77. In late morning trade on Monday, shares are changing hands for $12.42 apiece, down 2.7%.

For some context, the ASX 200 is down 0.6% at this same time.

This underperformance follows the release of Origin Energy’s March quarter update (Q3 FY 2026).

Here’s what we know.

Origin Energy shares slide on revenue decline

Starting with its Integrated Gas segment, the ASX 200 energy stock reported a drop in production from Q2 FY 2026 to 164.5 petajoules (PJ). This was partly driven by natural field decline.

Origin Energy shares are likely catching some headwinds, with revenue down 13.3% quarter-on-quarter to $1.86 billion. Revenue was impacted by lower realised LNG prices due to a rising Aussie dollar over the quarter as well as lower sales volumes.

In its Energy Markets segment, the company reported a 4% year on year increase in electricity sales volumes. Gas volumes were down 32% year on year, which management said was mainly due to lower trading volumes and lower gas demand for power generation.

And despite adding some 700,000 customers over the March quarter, Origin said it now expects its share of Octopus Energy segment FY 2026 earnings before interest, taxes, depreciation and amortisation (EBITDA) to be negative $70 million to positive $30 million. That’s down from prior guidance of zero to $150 million.

Notwithstanding Octopus Energy’s continued strong growth in UK and international customers, and Kraken increasing contracted accounts to 90 million, we are now expecting lower earnings from Octopus for FY26. This is primarily due to impacts from UK regulatory changes as well as adverse weather in February and March in the UK

Commenting on the earnings downgrade that looks to be pressuring Origin Energy shares today, CEO Frank Calabria said:

Notwithstanding Octopus Energy’s continued strong growth in UK and international customers, and Kraken increasing contracted accounts to 90 million, we are now expecting lower earnings from Octopus for FY26. This is primarily due to impacts from UK regulatory changes as well as adverse weather in February and March in the UK.

What else did management say?

“Global commodity markets have experienced significant volatility this quarter, with the conflict in the Middle East affecting oil and LNG supply,” Calabria said.

He added that changes in oil prices have a lagged effect on Australia Pacific LNG’s long-term export contracts, noting that Origin Energy does not expect this to flow through to its results until FY 2027.

Looking ahead, Calabria added:

In Energy Markets, Origin continued to grow its share of Australia’s data centre market, and we’re well positioned to support the further growth in demand from this sector through grid connections, long-term renewable contracts, and on-site solar and batteries.

Our generation fleet maintained good reliability, and we’ve secured most of the coal supply for Eraring for FY27.

With today’s intraday dip factored in, Origin Energy shares remain up 18.7% since this time last year.

The post Why are Origin Energy shares sinking on Monday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.