24th Jul 2019 09:04
(Alliance News) - Drax Group PLC on Wednesday hiked its payout after reporting a swing to profit in the first half of 2019.
The stock was trading 4.3% higher on Wednesday in London at 299.20 pence a share.
The electrical power generation company said it swung to a pretax profit of GBP3.5 million in the six months to the end of June from GBP11.3 million loss reported a year earlier, as revenue increased 7.7% to GBP2.23 billion from GBP2.07 billion.
On a divisional basis, Drax said its Pellet Production unit saw adjusted earnings before interest, taxes, depreciation, and amortization of GBP8 million, down from GBP10 million a year earlier.
In the first half of 2019, the level of pellets produced was lower versus the same period last year, the company said, reflecting high levels of rainfall in the US Gulf, which restricted the level of commercial forest extraction, restricted wood pellet production and impacted the shipment of pellets out of the port of Baton Rouge.
However, in recent months, Drax said both commercial forestry processes and pellet production have increased.
The Generation segment delivered Adjusted Ebitda of GBP148 million, up 68% year-on-year.
During the period Drax said it completed two planned biomass unit outages, with "encouraging" operational experience with this low-cost conversion.
Meanwhile, Drax's Customers business has continued to grow meter numbers during the period, it said. The total level of energy sold was down versus the first half of 2018, reflecting mild winter weather and greater focus on margin per megawatts per hour, which has increased.
Adjusted Ebitda in the Customers unit was GBP9 million, lower than GBP16 million a year before.
The FTSE 250-listed company declared an interim dividend of 6.4p a share, up from 5.6p paid the year ago.
Looking ahead, Drax said it remains focused on opportunities to expand capacity and use a greater proportion of the very cheapest wood residues.
"Drax Group has delivered strong profit and dividend growth in the first half of the year," said Chief Executive Will Gardiner.
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