Power generation group Drax reported an increase in profit in the first half and forecast that its earnings for the full year would come at the “top end” of expectations.
The company also said that a two-year share buyback, worth up to £300m, would commence in the third quarter, helping shares to rise 14 per cent in early trade.
The British power company reported a pretax profit of £463m in the first half of the year, up from £338m in the same period last year
Drax’s adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose to £515m, up from £417m last year. The firm put this down to strong renewable generation and pellet production.
Earnings from Biomass Generation rose to £393m, up from £226m. Drax reported a 32 per cent increase in terawatt hours of electricity compared to last year.
On pellet production, Drax produced 2m tonnes of pellets in the first half, up slightly on 1.9m last year, and reported an “improved margin”.
The firm said there were options for around £4bn of growth investment by 2030 linked to the energy transition, with more likely to follow during the 2030s.
“Drax has delivered a strong operational performance, playing an important role supporting the UK energy system with dispatchable, renewable power, keeping the lights on for millions of homes and businesses, while supporting thousands of jobs throughout our supply chain,” boss Will Gardiner said.
“We look forward to working with the new UK Government to help grow the economy and take steps urgently to deliver a net zero electricity system by 2030,” he added.
On the back of its results, it announced an interim dividend of 10.4p per share, up from 9.2p per share last year. It expects a full year dividend of 26p, which would be nearly 13 per cent higher than last year.
Looking forward into the year, Drax said it expects its adjusted earnings to be around the “top end” of analysts’ consensus.