Drax Group (LSE:DRX) expects underlying profit this year to come in around the top end of forecasts, driven by the performances of its flexible generation and biomass pellet businesses.
The company also reaffirmed a £3 billion free cash flow target between 2025 and 2031, of which more than £1 billion is planned to be returned to shareholders and the rest allocated for investments in growth, including energy security and data centres.
Chief executive Will Gardiner said the operational and financial performance of the FTSE 250 group in the second half has been strong, with full-year adjusted EBITDA now expected to be around the top end of consensus estimates, which are currently in a range of £892-909 million.
As of 9 December 2025, Drax had secured £2.3 billion in contracted forward power sales through to the first quarter of 2027.
Drax is targeting post-2027 adjusted EBITDA of £600-700 million per year, before development expenditure, with the FlexGen business, using open cycle gas turbines (OCGTs) and battery energy storage systems, anticipated to become a larger contributor over time, driven by increasing UK demand and reliance on intermittent renewables.
Having previously evaluated options, including the potential sale of its OCGT projects, the group said OCGTs are effective and flexible grid-balancing assets, enabling the increased use of intermittent renewables across the UK system, such as wind turbines and solar farms.
Elsewhere in the group, a planning application is being prepared for a potential 100MW data centre at its North Yorkshire power station, with long-term ambitions to scale capacity to more than 1GW post-2031.
Drax said it has repurchased £216 million of its latest £450 million share buyback programme, having completed a £300 million buyback in October.