Drax’s annual earnings slip

DRAX reported a 10 per cent dip in full-year earnings, in line with expectations, as it gears up to transfer to biomass production and higher operating costs take their toll.
By The Newsroom
Published 19th Feb 2013, 08:44 BST

Drax, the owner of one of Europe’s largest coal-fired power stations, said earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell to £298m for the year ended December 31 from £334m a year ago.

Market expectations ranged between £284.2m and £314.2m, with the average at £292.9m, according to a poll of 13 analysts.

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Drax, which is based near Selby, secured financing last year which will enable it to push forward with its biomass investment plans.

“With Government support and our financing secured, both in the second half of 2012, we are on track to convert our first generating unit fully to biomass in April of this year, with the second to follow in 2014,” said chief executive Dorothy Thompson in a statement.

Drax is converting to biomass fuel as rising coal prices squeeze its profits and the British government offers subsidies to raise the amount of energy generated from renewable sources to hit EU targets of 15 per cent by 2020.

Ms Thompson said she is confident the group will deliver attractive returns for shareholders in spite of the “significant capital” which will be invested over the next two years, and EBITDA is likely to be adversely impacted by the increasing costs of carbon.

Related topics:Europe