By Nina Chestney
LONDON (Reuters) -Drax Group reported an 11% drop in first-half adjusted core profit on Thursday due to lower UK wholesale power prices, but extended its share buyback programme and reported higher wood pellet production.
Drax, which has converted coal plants to run on biomass, provides about 5% of Britain’s electricity.
Adjusted profit, or EBITDA, fell to 460 million pounds ($611 million) in the first half, from 515 million pounds in the same period last year.
The group said it does not expect changes to its adjusted EBITDA of 899-910 million pounds for the full year.
Wholesale power prices in Britain have fallen over the past couple of years, after rising dramatically following Russia’s invasion of Ukraine.
Drax said it would extend its 300 million pound share buyback programme by an additional 450 million pounds over three years.
Shares rose 4.5% to 708.50 pence at 0903 GMT.
Drax also reported a 5% rise in output of wood pellets – used to generate renewable electricity – in the first half to 2.1 million tonnes, from 2 million tonnes a year earlier.
Adjusted EBITDA from pellet production was 74 million pounds compared to 65 million pounds in the first half of 2024.
Earlier this year, the government extended subsidies – called contracts-for-difference (CfD) – for biomass units that were due to expire in 2027 to 2031.
Drax said it expects to sign a final agreement with the UK government later this year for a subsidy for its four biomass units.
Under this scheme, Drax’s power plant in North Yorkshire would be able to raise generation when there isn’t enough electricity, helping to avoid the need to use more gas or import power from Europe. In times of excess supply on the UK grid, Drax would be able to reduce generation.
($1 = 0.7535 pounds)
(Editing by Bernadette Baum)
