Drax forecasts £60m hit from Coronavirus pandemic
Power station owner Drax Energy Group says it anticipates £60m worth of potential impact from the virus outbreak.
It has included the figure today in its latest trading report, which outlines a robust trading and operational performance in the first three months of 2020.
The company points to a strong balance sheet as of 31 March 2020, with net debt of £818m and available cash and committed cash facilities of £663m.
But Drax also warns its 2020 full year Adjusted EBITDA includes a £60m estimated impact from Covid-19. It highlights lower power demand and increased bad debt risk in its customers business.
The firm says its strategic focus remains on biomass supply chain expansion and cost reduction.
Will Gardiner, Drax Group CEO, said: “With our strong balance sheet, robust trading and operational performance, and resilient sustainable biomass supply chain, Drax is in a strong position to support its employees, business customers and communities during the Covid-19 crisis, while continuing to generate returns for shareholders.
“As an important part of the UK’s critical national infrastructure, we recognise our responsibility to support the country’s response to Covid-19.
“We have strong business continuity plans in place and are in close contact with the UK Government.
“Our dedicated teams across England, Scotland and Wales, supported by our US biomass colleagues and business partners, are working around the clock to generate and supply the flexible, low-carbon and renewable electricity the UK needs, not least to the 250,000 businesses, including care homes, hospitals and schools we supply.
“The Group is also providing support for communities and others affected by Covid-19.
“Nevertheless, it is still early in this pandemic. As Covid-19 continues to develop, we remain vigilant in looking to protect all our stakeholders and will report further if there are significant changes to our outlook for 2020.”
Drax’s update adds it has increased its expectation of potential customer business failures. It states the Group will closely monitor the impact on the customers business and update the market accordingly.
The performance of Drax’s Generation business is dependent on the continuation of biomass deliveries to Drax Power Station.
The update notes: “Biomass generation is currently the most material area of activity for the Group and a protracted suspension of the supply chain could lead to lower levels of biomass generation, resulting in a reduction in the Group’s expectations for the full year.
“At present there has been no impact from Covid-19 and the Group has a good supply of biomass throughout the supply chain, which continues to be robust and functioning well.”
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