Drax powers up revenue and profits in strong and ‘transformational’ year
Drax Group has had a successful year in which it returned to profit while delivering surging revenues and EBITDA while it focused on sustainability and completed the £700m acquisition of Scottish Power Generation.
Reporting on the 12 months to December 31 2018, Drax Group this morning said pre-tax profits stood at £13.8m – a surge up from the £204m pre-losses tax reported in 2017. Its group adjusted EBITDA was up 9% to £250m (2017: £229m) and revenues reached £4.2bn, up from £3.6bn in the previous year.
The firm said its £700m acquisition of Scottish Power Generation had “accelerated strategy.” The group also completed the successful low-cost conversion of a fourth biomass unit and its third US biomass pellet plant was commissioned and is now fully operational.
Speaking to TheBusinessDesk.com this morning, CEO of Drax Power, Andy Koss, said: “We are in a really good place. We completed a major acquisition, going from a single asset to a portfolio is a transformational step and we are working hard to integrate.” He added that the group had overcome outages in Q1 2018 to perform strongly throughout the remainder of the year and that its retail business had performed well by growing customer number – despite headwinds.
Koss added that the firm was focused on engaging with government on climate change and that later in the year the group was expecting to hear the outcome of its planning application to re-power the station.
Talking of the coming year, Koss added: “We have got a lot of development work and there is potential for organic growth in the power generation portfolio. We will continue our engagement with government on how we will bring forward carbon capture and hopefully by the end of the year we will have a clear road-map of the carbon capture scheme to launch fully by the early 2020s.
“If we can become carbon negative, that’s very exciting. We are playing our part in addressing climate change. There are so many opportunities open to us but it’s about being disciplined with capital” he added.
Drax said it had made progress with its biomass cost reduction programme including sawmill co-location and rail spur development. During the year, listed Drax Group also completed a £50m share buy back programme.
Will Gardiner, Chief Executive of Drax Group, said: “Drax is now one of the leading generators of flexible, low carbon and renewable electricity in the UK. As the grid decarbonises, our ability to support intermittent renewables will become increasingly important as we strive to deliver our purpose of enabling a zero carbon, lower cost energy future.
“Drax performed well in 2018. Our commitment to operating safely and sustainably remains at our core. We commissioned our third pellet production plant, which contributed to our good results. After a difficult first quarter for our Power Generation business, we delivered strong availability and financial results. Whilst the year was challenging for our B2B Energy Supply business, we continued to grow our customer base and are investing in the significant opportunity created by smart meters.
“We are confident in our ability to continue growing our earnings and advancing our strategy through the year. We have attractive investment opportunities throughout our business, and while short-term uncertainty over the Capacity Market remains, we look forward to developing those opportunities in a disciplined fashion.”
In its Pellet Production division, adjusted EBITDA stood at £21m (2017: £6m) and saw a 64% increase in production to 1.351 million tonnes (2017: 0.822 million tonnes)
Its Power Generation division saw the optimisation of portfolio, system support services and development of de-carbonisation projects. It EBITDA stood at £232 million (2017: £238 million). The division was impacted by a rail unloading outage and generator outage in Q1 2018 but Koss said the group “recovered well.”
