12th Nov 2024 10:19
(Alliance News) - Drax Group PLC on Tuesday predicted full-year adjusted earnings will be at the top-end of City expectations after a continued strong performance across the business.
In a trading update, the Selby, Yorkshire based electricity generator reported strong showings in its Flexible Generation, Pellet Production, and Biomass Generation operations, making progress towards its targets for 2027.
Chief Executive Will Gardiner said: "Our Flexible Generation and Pellet Production businesses are making good progress towards our target to deliver post 2027 recurring [earnings before interest, tax, depreciation and amortisation] over GBP500 million, and we are continuing to develop options for growth, while remaining disciplined on capital allocation."
Reflecting the strong performance, Drax now expects 2024 full year adjusted Ebitda to be around the top end of analysts' consensus estimates. As of last week, a company compiled consensus for 2024 adjusted Ebitda was GBP1.00 billion, with a range of GBP993 million to GBP1.04 billion.
In 2023, Drax reported adjusted Ebitda of GBP1.01 billion.
Drax expects net debt to adjusted Ebitda to be around 1 times at the end of 2024.
In response, shares in Drax rose 6.0% to 680.50 pence each in London on Tuesday morning. It was the best performing stock on the FTSE 250 which was down 0.8%.
Drax said its pumped storage and hydro business is performing well, providing flexible and renewable power generation and a wide range of system support services.
Building on increased production and improved margin in the first half of 2024, the Pellet Production business is continuing to performing well, Drax said. Here, the firm continues to target post 2027 recurring adjusted Ebitda over GBP250 million from the division.
Drax said that, as of last Friday, it had over GBP3.2 billion of contracted forward power sales between 2024 and 2026 on its renewable obligation biomass, pumped storage and hydro generation assets.
By Jeremy Cutler, Alliance News reporter
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