18th Feb 2014 08:31
LONDON (Alliance News) - Drax Group PLC Tuesday said its pretax profit fell significantly during the calendar year 2013 as expected increased costs offset positive revenues.
The UK energy provider said its pretax profit fell 83% to GBP31.8 million for the full-year from GBP190.2 million in 2012, blaming the loss predominantly on increased carbon costs.
The company said its revenues increased 15.7% to GBP2.06 billion from GBP1.78 billion as its retail business Haven Power Ltd delivered 8.1 terrawatt hours of sales in 2013 compared from 5.1 terrawatt hours the previous year.
However, the company said its total cost of sales increased 28% to GBP1.62 billion from GBP1.27 billion as it was hit by increased carbon costs from both the end of the carbon emissions allocation in the EU Emissions Trading System and the introduction of the UK Government's carbon price support mechanism in April 2013.
Drax said its underlying earnings, which exclude unrealised losses on derivative contracts, were ahead of expectations at GBP142 million compared from GBP193 million the previous year.
The company also said it decreased its final dividend 18% to 8.9 pence from 10.9 pence in line with the company's policy to distribute 50% of underlying earnings.
Drax said that, in response to increasing carbon costs, it has been investing significant capital to transform Drax into one of the world's largest renewable generators, burning sustainable biomass. It expects that half of its operations, 4% of UK's total electricity, will be fuelled by sustainable biomass by 2016.
The company said its construction of two 450,000 tonnes per year wood pellet plants in the US, Amite and Morehouse, and a port facility at Baton Rouge progressed well during the year with all three construction projects progressing to schedule and budget.
It is targeting the first quarter of 2015 for the start of commercial operations at Amite and Baton Rouge and the second quarter for Morehouse, with full capacity reached six months later.
"In delivering this transformation, we will provide cost-effective, reliable renewable power to consumers, secure jobs at Drax and across the UK supply chain and deliver attractive returns for our investors," Chief Executive Dorothy Thompson said in a statement.
Drax Group shares were up 01.2% to 815.5 pence in early trading Tuesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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