23rd Feb 2016 07:59
LONDON (Alliance News) - Drax Group PLC Tuesday said its strong operations mitigated severe market deterioration and difficult regulatory challenges in 2015, but the power generation company still reported large falls in profit and earnings, leading to a large dividend cut.
The company said its pretax profit in 2015 plummeted to GBP59.0 million from GBP165.9 million in 2014 despite reporting a huge rise in revenue to GBP3.06 billion from only GBP2.80 billion.
Although revenue rose, Drax's gross margin was squeezed as the gross profit fell to GBP408.8 million from GBP449.8 million, leading to earnings before interest, tax, depreciation and amortisation of only GBP169.0 million compared to GBP229.4 million last year.
Larger charges related to depreciation & amortisation and a GBP109.0 million asset obsolence charge also dragged down profit, with higher tax gains partly offsetting those charges.
As a result, Drax slashed its dividend for the year to only 5.7 pence from 11.9 pence - in line with its policy to pay 50% of underlying earnings to shareholders, which dropped to GBP46.0 million in 2015 from GBP96.0 million.
The power generation division saw electricity output remain flat in 2015 but the amount of biomass generation has significantly increased thanks to its conversion programme toward biomass from coal, and said the contracts-for-difference scheme will "underpin acceleration" of the long-term supply chain development.
The retail division, Haven Power, saw an increase in sales to GBP1.30 billion from only GBP1.10 billion last year as it sold 13.8 terrawatt hours of electricity compared to 11.8 terrawatt hours last year.
By Joshua Warner; [email protected]; @JoshAlliance
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