Results set to be below forecast for Drax

DRAX today said it expects its full year results to be below current forecasts as power prices fall further.

In an interim management statement for the period from January 1 2014 to date, the Selby-based power station operator said that since publishing its preliminary results in February, power prices have fallen further, with mild weather across Europe resulting in weaker gas markets.  The group said it also anticipates some further weakness in ROC prices this year, exacerbated by abnormally high wind generation.  As a result, the group anticipates that, unless markets improve in the coming months, full year EBITDA and underlying earnings per share for 2014 will be below current market forecasts.

The group said it has continued to make “very good” progress with its on-going transformation to a predominantly biomass-fuelled electricity generator and said that overall, capital investment remains on schedule and budget.

Last month, Drax announced it had launched a legal challenge against the Government after it changed its mind over funding for the conversion of one of Drax’s generating units from coal to sustainable biomass.

This morning, Drax said: “We do, however, remain fully committed to our strategy of transforming Drax into a predominantly biomass-fuelled generator, initially through the conversion of three of our six generating units, with a fourth unit conversion under evaluation.”

The North Yorkshire group also said this morning that it has agreed a new private placement for £100m with various funds managed by M&G Investments, which will be used for general business purposes.