Drax Group shares rise as power generation company posts higher profits

Shares in Drax Group rose on Friday morning after the company posted a huge jump in first-half profits.

They were up 11.9 percent at 634 pence by midday, making them the biggest gainers on the FTSE 250 index and taking their gains since the start of the year to around 30 percent.

The power generation business revealed its pre-tax profits rose 36.6 per cent to £463.2m in the first six months of 2024.

Earnings were boosted by higher levels of renewable energy generation, including from its biomass plants, which produced 7 TWh, compared with 5.3 TWh in the same period last year.

The figures rose further as pellet sales and production increased to 2.5 million tonnes and 2 million tonnes respectively.

Following the result, Drax announced a £300m share buyback programme and a 13 per cent increase in its interim dividend to 10.4p per share.

The Yorkshire-based firm also expects its adjusted annual profit before the unpleasant events to be “close to the top end” of analysts’ forecasts, which range from £881m to £996m.

“Drax has delivered strong operational performance and has played an important role in supporting the UK energy system with renewable and dispatchable energy,” said Will Gardiner, CEO of Drax Group.

He added: “We look forward to working with the new UK Government to help grow the economy and take urgent action to achieve a net-zero electricity system by 2030.”

Labour says its plans to decarbonise the UK’s electricity grid by 2030 will cut household annual energy bills by £1,400 and reduce business energy costs by £53bn.

However, experts are divided over whether the deadline can be met because it would require building significant amounts of new infrastructure that could face considerable local opposition and overcome strict planning regulations.

By 2030, Drax hopes to expand production by 600 megawatts at Cruachan Power Station, a pumped storage hydroelectric facility in Scotland.

It also wants to develop a carbon capture and storage bioenergy unit in the UK capable of producing 4 million tonnes a year, with a second unit to be added shortly afterwards.

Gardiner said: “We believe Drax and our partners in the Humber and Scotland can accelerate growth, create thousands of new jobs and channel billions of dollars in private investment into carbon capture and green energy projects, subject to the right government policies to support regional development plans.”