Drax profits beat forecasts

Drax, the operator of Britain’s largest coal-fired power station, reported a smaller-than-expected fall in full-year core earnings, as tighter cost controls helped it offset the impact of volatile commodity markets.
By The Newsroom
Published 21st Feb 2012, 08:18 BST

Drax, whose coal-fired power station in North Yorkshire supplies about seven per cent of Britain’s electricity, said earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 15 per cent to £334m but beat analysts’ estimates of about £326.2m.

The company said coal prices moved within a relatively narrow range throughout the year, but noted that carbon prices reached their lowest point for two years amid the euro zone crisis.

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“Looking ahead, the introduction of the carbon price support mechanism by the UK government from April 2013 is likely to erode the competitive position in the market of our coal-fired generation business, but at the same time it strengthens the case for biomass generation,” Drax said in a statement.

However, the company said it continued to operate at less than installed biomass capacity, but added that it could transform into a predominantly renewable generator if given appropriate regulatory support.

Shares in Drax closed at 526 pence on Monday, valuing the company at £1.92bn.

Related topics:BritainNorth Yorkshire