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Drax Group

Drax shares power up as it reports jump in quarterly earnings

The company also gave its support to new emissions targets

Drax
The company left its guidance for the year unchanged

UK power generator Drax Group PLC (LON:DRX) reported a 35% increase in adjusted earnings for the first quarter, supported by the acquisition of gas, hydro and pumped storage power plants from Spain’s Iberdrola.

Adjusted earnings (EBITDA) rose to £138mln in the six months ended June 30 from £102mln a year ago, including a £36mln contribution from the new assets.

Drax purchased the power generation assets from Iberdrola’s Scottish Power in January in a deal valued at £702mln.

“Integration of our new hydro and gas generation assets is progressing well and the value the group delivers from supporting the energy system has almost doubled,” said chief executive Will Gardiner.

Full-year guidance maintained 

He added that the group’s strategy to lower biomass costs and expand biomass self-supply are “going well”.

The first-half figures exclude £34mln of revenue the group expects from the government under Britain’s back-up power scheme that aims to avoid electricity shortages.

The company left its EBITDA expectations for the year unchanged.

Drax supports Britain's 2050 zero emissions goal

Last month, the UK became the first G7 country to set a target to reach net zero emissions by 2050. The plan will require a move away from fossil fuels and into low-carbon electricity such as solar and wind.

However, Drax said the country would need new, efficient gas plants while it transitions more renewable electricity.

"Drax wholeheartedly supports the UK's target of achieving net zero carbon emissions by 2050,” CEO Gardiner said.

“Reducing our greenhouse gas emissions by half in the past year underscores Drax's commitment to this goal.

“With the right investment and regulatory framework we could go further and Drax could become the world's first carbon negative power station - something the UK Committee on Climate Change recognises will be crucial."

Drax plans to build new gas-fired power plants and earlier this year won approval to build a nearly 300 megawatt so-called plant that only fires up for operation during peak times of demand.

The company said the plant could be generating electricity by 2022 but this is subject to it securing a capacity market subsidy.

Shares rose 4% to 298p in morning trading. 

Quick facts: Drax Group

Price: £3.01

Market: LSE
Market Cap: £1.19 billion
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