Power outages blamed for sharp drop in earnings at Drax
By Hull Daily Mail | Posted: 24 Jul 2018
Two power outages at one of the country’s biggest power stations have been blamed for a sharp drop in earnings in the first half of 2018.
Drax Power Station said a generator outage in February and a problem with train unloading in January had caused EBITDA (earnings before interest, taxes, depreciation and amortisation) to plummet from £121m in the first of half of 2017, to £102m in the same period this year.
Despite this, Drax said its full year financial expectations remained unchanged, as the company’s pellet production rose by 80 per cent in a year.
Will Gardiner, chief executive of Drax Group Plc, said: “Full year EBITDA expectations remain unchanged. However, first half EBITDA was lower, principally due to two specific generation outages.
“We made excellent progress with our pellet production business, driving down costs while producing at record levels and our B2B Energy Supply business continues to increase customer numbers.
“We also remain on track with our investment projects: the conversion of a fourth unit to biomass, and the development of our OCGT and coal-to-gas repowering options.
“We remain focused on safe and efficient operations and returns to shareholders and expect to declare a full year dividend of £56 million for 2018.”
Electricity output at Drax for the first half of the year was down 18 per cent – from 10.7TWh in the first six months of 2017 to 8.9TWh so far in 2018.
Good news for Drax comes in the form of a continued growth in the power station’s biomass sector.
The company said conversion of the fourth biomass generating unit was on schedule and within budget, and will be commissioned in late summer.
EBITDA in the biomass sector rose to £14m from £10m, despite the rail outage earlier this year, as Drax also revealed a 12 per cent drop in cost per tonne of pellets.
“Drax continues to be at the heart of decarbonising UK energy, securing government support to convert a fourth unit to biomass and piloting a Bioenergy Carbon Capture and Storage project, supporting the UK Government’s carbon capture and storage ambitions,” Mr Gardiner said.
Net debt at Drax fell from £372m to £366m in the 12 month period, but underlying earnings took a hit to fall from £9m to £7m.
Despite the outages cited by the power station, Drax is adamant its full year expectation remains on course to see a dividend of £56m.
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