In This Article:
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Adjusted EBITDA: Increased by 5% to GBP1,064 million.
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Net Debt to Adjusted EBITDA: Ended the year at 0.9 times.
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Cash Generated from Operations: Over GBP1.1 billion.
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Dividend per Share: Proposed final dividend of 15.6p, full year dividend of 26p, a year-on-year increase of over 12%.
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Share Buyback: Ongoing GBP300 million share buyback program.
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Pellet Production: Increased volumes to 4 million tons, adjusted EBITDA grew to GBP143 million.
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Biomass Generation: Adjusted EBITDA of GBP814 million, a 16% increase, with 14.6 terawatt hours of electricity generated.
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Capital Expenditure: GBP330 million, including GBP212 million on growth expenditure.
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Long-term EBITDA Target: Post-2027 target of GBP600 million to GBP700 million from FlexGen, Pellet production, and Drax Power Station.
Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Drax Group PLC (DRXGF) reported a 5% increase in adjusted EBITDA, driven by a 25% increase in power production and improved Pellet production.
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The company announced a 12.68% increase in dividends per share and continued with a GBP300 million share buyback, reflecting confidence in the business's value.
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Drax Group PLC (DRXGF) secured GBP700 million of new debt at attractive rates, extending maturity beyond 2027, which strengthens the balance sheet.
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The company is targeting GBP600 million to GBP700 million of recurring adjusted EBITDA post-2027 from its FlexGen, Pellet production, and biomass generation businesses.
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Drax Group PLC (DRXGF) is exploring long-term growth opportunities aligned with the energy transition, including investments in data centers and carbon removals through its new business, Elimini.
Negative Points
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The commissioning of the OCGTs has been significantly delayed due to grid connection issues, impacting the timeline for these assets.
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There is uncertainty surrounding the UK government's review of greenhouse gas removal technologies, which affects the company's BECCS projects.
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The potential move to zonal pricing under REMA creates uncertainty for new investments, particularly impacting the Cruachan expansion project.
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Drax Group PLC (DRXGF) faces a potential short-term oversupply of Pellets post-2027, which could impact pricing and margins.
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The company's long-term investments, such as in carbon removals and data centers, are subject to regulatory and market uncertainties, requiring careful capital allocation.
Q & A Highlights
Q: Can you provide more details on the biomass bridging mechanism and its impact on pellet production? A: Will Gardiner, CEO: The biomass bridging mechanism has a cap of 6 terawatt hours, which translates to about 3 million tons of biomass. We expect to use about 2 million tons of our own production. The remaining pellets are covered by existing contracts, primarily in Asia. The pricing for these pellets will be at arm's length to ensure transparency and compliance with tax regulations.