1st Dec 2021 09:56
(Alliance News) - Drax Group PLC's shares rose on Wednesday after the power generation company tipped for earnings at the upper end of analyst consensus and put some production and sales targets up for 2030.
Drax shares were up 7.6% to 592.00 pence each in London on Wednesday morning in London.
Selby, Yorkshire-based Drax said it expects its 2021 adjusted earnings before interest, tax, depreciation and amortisation to be around top of range of analyst expectations.
Drax, which is targeting to become a carbon negative business by 2030, has the adjusted Ebitda analyst consensus at GBP380 million with a range of GBP374 million to GBP391 million.
Last year, adjusted Ebitda from continuing and discontinued operations came in at GBP412 million, up marginally from GBP410 million in 2019. Adjusted Ebitda from continuing operations alone was GBP366 million in 2020, down from GBP371 million in 2019.
Drax continues to expect its ratio of net debt to adjusted Ebitda to return to around two-times by the end of 2022.
On pellet production in North America, Drax said it has made good progress integrating Pinnacle Renewable Energy Inc since its acquisition in April and is currently in the final stages of commissioning over 360,000 tonnes of new production capacity at Demopolis in Alabama.
In a separate announcement, Drax laid out new targets for pellet production and biomass sales.
Drax is now targeting biomass pellet production of 8 million tonnes per annum by 2030. This is currently running at around 4 million tonnes.
On sales, Drax aims for biomass pellet sales to third parties of around 4 million tonnes per year by 2030, compared to the current 2 million tonnes a year.
Chief Executive Will Gardiner said: "We believe Drax can deliver growth and become a global leader in sustainable biomass and negative emissions and a UK leader in dispatchable, renewable generation. We aim to double our sustainable biomass production capacity by 2030 - creating opportunities to double our sales to Asia and Europe, where demand for biomass is increasing as countries transition away from coal."
Turning to power generation in the UK, Drax said it has not benefited much from the higher power prices but has been able to increase forward hedged prices in 2022 and 2023.
By Greg Roxburgh; [email protected]
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