Drax Group Plc (LON:DRX) has announced its half-year results for the six months ended 30 June 2025.
Leading dispatchable renewable power generator, delivering for the UK system and for shareholders
| Six months ended 30 June | H1-25 | H1-24 |
| Key financial performance measures | ||
| Adjusted EBITDA(1/2/3) (£ million) | 460 | 515 |
| Net debt(4) (£ million) | 1,062 | 1,159 |
| Adjusted basic EPS(1) (pence) | 65.6 | 65.6 |
| Dividend per share (pence) | 11.6 | 10.4 |
| Total financial performance measures | ||
| Operating profit (£ million) | 301 | 518 |
| Profit before tax (£ million) | 281 | 463 |
Drax Group CEO, Will Gardiner, said: “Drax is the leading dispatchable renewable power company in the UK, delivering 5% of the UK’s power and significantly more when the system needs it. Thousands of our colleagues at Drax and in our supply chain work tirelessly to ensure our assets continue to help keep the lights on for millions of this country’s households and countless businesses, no matter the weather.
“During the first half of the year, we made significant progress towards ensuring we continue to play an important role in UK energy security through this decade and beyond, reaching a heads of terms with the UK Government on a low-carbon dispatchable CfD. We expect to sign a final agreement later this year and look forward to continuing to play a critical role in the UK system into the future.
“Across the Group we are confident in our ability to generate significant free cash flow through 2031 and are focused on aligning the business to deliver.
“The energy transition is creating significant value opportunities aligned with the UK’s energy needs and we will continue to explore investing in those in a disciplined fashion consistent with our capital allocation policy.”
Highlights
· Strong operational and financial performance across the Group
· High levels of renewable generation and system support – 5% of UK power, 11% of UK renewables
· Record levels of pellet production – 5% increase vs. H1-24
· Strong balance sheet
· £726 million of cash and committed facilities, with debt maturities profiled towards 2030
· 1.1x Net debt to Adj. EBITDA(5)
· Sustainable and growing dividend – interim dividend of 11.6 pence per share (H1-24: 10.4 pence per share)
· Expected full year dividend up 11.5% to 29.0 pence per share (2024: 26.0 pence per share)
· Return of surplus capital beyond investment requirements, in line with capital allocation policy
· £300 million share buyback programme ongoing, c.£272 million complete
· Additional £450 million three-year buyback extension to follow current buyback, supported by cash flow from c.£0.5 billion working capital inflow from end of Renewables Obligation scheme in 2027
Progress on low-carbon dispatchable CfD Heads of Terms for Drax Power Station
· Legislation in place and CMA review of Gov. process for CfD compatibility with subsidy control framework complete
· Negotiation of final contract in progress
Full year 2025 expectations for Adj. EBITDA unchanged
· Analyst consensus for 2025 Adj. EBITDA is £899 million, with a range of £889-910 million(6)
Targeting post 2027 Adj. EBITDA of £600-700m pa – FlexGen, Pellet Production and Biomass Generation(7)
· FlexGen & Energy Solutions – pumped storage, hydro, Open Cycle Gas Turbines (OCGTs) and Energy Solutions
· Opportunity from continued rollout of intermittent renewables and growing system support need
· Pellet Production – current annual EBITDA supported via low-carbon CfD, opportunities for further improvement
· Opportunities for sales in existing and new markets, including Sustainable Aviation Fuel (SAF) and own-use
· Positioned to capture value in supply chain as a producer, user and seller of biomass in the global market
· Biomass Generation – targeting average Adj. EBITDA of £100-200 million pa (Apr-27 to Mar-31)
High quality assets and post 2027 EBITDA targets underpin increased visibility on free cash flow (2025-2031)(8)
· Includes c.£0.5 billion working capital inflow from Renewables Obligation scheme, supporting buyback extension
· Expect significant free cash flow post dividend and buybacks to support investment for growth, subject to returns
Disciplined capital allocation policy supports investment for growth and returns to shareholders
· Strong balance sheet
· Investment to maintain and grow asset base
· Investment in maintaining good operations from existing asset base
· FlexGen – OCGT commissioning from H2-25, opportunities for pumped storage and short duration storage
· Pellet Production – any further investment subject to greater visibility on post 2027 biomass demand, incl. SAF
· Biomass Generation – development of options for 4GW of grid access (incl. 1.3GW of current non-biomass capacity) and potential for >1GW data centre at Drax Power Station (participating in North Yorkshire AI growth zone application)
· Carbon removals – development of options for carbon removals from biomass and other technologies – agreement between Elimini and HOFOR to support development of BECCS in Denmark and associated marketing agreement for CDRs
· Sustainable and growing dividend
· Nine consecutive years of growth since 2017 with average annual increase >11% pa
· Return of surplus capital beyond current investment requirements
· c.£472 million of share buybacks since 2017 – c.83 million shares purchased for an average price of £5.68/share
· c.£28 million outstanding on current £300 million share buyback
· Additional £450 million three-year buyback extension to follow current buyback, supported by cash flow from c.£0.5 billion working capital inflow from end of Renewables Obligation scheme in 2027
· The total number of voting rights in Drax Group, excluding treasury shares, as at 29 July 2025 was c.348.9 million
Sustainability – three major publications in H1-25
· Sustainability Framework – climate positive, nature positive, people positive roadmap by 2030
· Biomass Sourcing Policy – articulates commitment to sustainable sourcing
· Climate Transition Plan – lays out climate ambitions, targets and delivery plan
Operational and financial review
| £ million | H1-25 | H1-24 |
| Adj. EBITDA | 460 | 515 |
| Pumped Storage and Hydro | 64 | 76 |
| Energy Solutions – Industrial & Commercial (I&C) | 25 | 36 |
| Energy Solutions – Small and Medium-sized Enterprise (SME) | (7) | (14) |
| Flexible Generation & Energy Solutions | 81 | 98 |
| Pellet Production | 74 | 65 |
| Biomass Generation | 332 | 393 |
| Elimini | (16) | (20) |
| Innovation, Capital Projects and Other | (11) | (21) |
Flexible Generation & Energy Solutions (FlexGen) – flexible generation and system support services
· Pumped Storage and Hydro
· Strong system support performance, inclusive of major planned outages
· Planned outage programme – units 3 and 4 inlet valve upgrade and units 1 and 2 super grid transformer
· OCGTs – all three units delayed due to grid connections, first unit (Hirwaun) expected to commission in late 2025
· Energy Solutions
· I&C – maintaining margin in line with H1-24, some reduction in volume
· Continued development of system support services via demand-side response, and electric vehicle services
· Sale of majority of Opus Energy’s meter points completed September 2024, with remaining meter points sale completed May 2025 – reflects focus on core I&C business and exit from SME market
Pellet Production – North American supply chain supporting UK energy security and sales to third parties
· Continued improvement in operational and financial performance
· 5% increase in production vs H1-24 (2.1Mt, H1-24: 2.0Mt), including benefit of Aliceville expansion (commissioned in H1-24)
· 14% increase in Adj. EBITDA vs. H1-24 (£74 million, compared with H1-24: £65 million)
· Potential long-term offtake opportunity for biomass sales into new SAF market
· Heads of terms agreed with Pathway Energy for 1Mt pa multi-year biomass sales from 2029
Biomass Generation – UK energy security with dispatchable renewable generation and system support services
· Increased level of renewable generation and continuing system support role
· Lower achieved power prices vs. H1-24, partially offset by reduction in Electricity Generator Levy
· 7.1TWh (H1-24: 7.0TWh) – reflects demand for dispatchable generation at times of lower renewable output
· No major planned outages in 2025
· Strong contracted power
· As at 28 July 2025 c.£2.1 billion of forward power sales between 2025 and Q1 2027 on RO biomass, pumped storage and hydro generation assets – 22.5TWh at an average price of £94.2/MWh(9/10)
· RO generation – fully hedged in 2025 and 2026
· A further 5.1TWh of CfD generation contracted for 2025 and 2026
| Contracted power sales as at 28 July 2025 | 2025 | 2026 | 2027 |
| Net RO, hydro and gas (TWh)(9) | 10.5 | 10.2 | 1.8 |
| Average achieved £ per MWh(10) | 113.7 | 76.8 | 79.2 |
| CfD (TWh) | 4.3 | 0.8 | – |
Other financial information
Capital investment
· Capital investment of £59 million (H1-24: £141 million)
· Growth – £26 million – phasing of OCGT investment to align with delayed commissioning and operations, and Cruachan units 3 and 4 inlet valve upgrade and units 1 and 2 super grid transformers
· Maintenance and other – £33 million, no major planned biomass outage
· 2025 expected capital investment of c.£150-190 million
· Growth – c.£60 million, primarily OCGTs and Cruachan inlet valves and super grid transformers
· Maintenance and other – c.£110 million, pellet plant maintenance weighted towards H2-25
Cash and balance sheet
· Cash generated from operations of £378 million (H1-24: £400 million)
· Net working capital outflow of £102 million (H1-24: £93 million), including increase in renewable assets
· Net debt at 30 June 2025 of £1,062 million (31 December 2024: £992 million), including cash and cash equivalents of £276 million (31 December 2024: £356 million)
· £450 million Revolving Credit Facility extended to 2028 during H1-25 and c.£171 million term-loans extension completed July 2025
Notes:
(1) Financial performance measures prefixed with “Adjusted/Adj.” are stated after adjusting for exceptional items and certain remeasurements (including certain costs in relation to the disposal of the Opus Energy SME meters and change in fair value of financial instruments).
(2) Earnings before interest, tax, depreciation, amortisation, other gains and losses and impairment of non-current assets, excluding the impact of exceptional items and certain remeasurements, earnings from associates and earnings attributable to non-controlling interests.
(3) In January 2023 the UK Government introduced the Electricity Generator Levy (EGL) which runs to 31 March 2028. The EGL applies to the three biomass units operating under the RO scheme and run-of-river hydro operations. It does not apply to the Contract for Difference (CfD) biomass or pumped storage hydro units. EGL is included in Adj. EBITDA and was £nil in H1-25 (H1-24: £114 million).
(4) Net debt is calculated by taking the Group’s borrowings, adjusting for the impact of associated hedging instruments, lease liabilities and subtracting cash and cash equivalents. Net debt excludes the share of borrowings, lease liabilities and cash and cash equivalents attributable to non-controlling interests. Borrowings includes external financial debt, such as loan notes, term-loans and amounts drawn in cash under revolving credit facilities. Net debt does not include financial liabilities such as pension obligations, trade and other payables, working capital facilities linked directly to specific payables that provide short extension of payment terms of less than 12 months and balances related to supply chain finance. Net debt includes the impact of any cash collateral receipts from counterparties or cash collateral posted to counterparties. Net debt excluding lease liabilities was £959 million (31 December 2024: £876 million).
(5) 1.1x Net debt to Adj. EBITDA, on last twelve months (LTM) basis.
(6) As of 28 July 2025, analyst consensus for 2025 Adj. EBITDA was £899 million, with a range of £889-910 million. The details of this consensus are displayed on the Group’s website.
Consensus – Drax Global
(7) Excludes Options for Growth, including development expenditure in Elimini, Innovation, Capital Projects and Other.
(8) Includes targets for post Adj. EBITDA, c.£0.5 billion working capital inflow from end of RO scheme, committed and maintenance capex, interest, taxes and EGL.
(9) Presented net of cost of closing out gas positions at maturity and replacing with forward power sales.
(10) Includes de minimis structured power sales in 2025, 2026 and 2027 (forward gas sales as a proxy for forward power), transacted for the purpose of accessing additional liquidity for forward sales from RO units and highly correlated to forward power prices.
Forward Looking Statements
This announcement may contain certain statements, expectations, statistics, projections and other information that are, or may be, forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans, beliefs, and objectives for the management of future operations of Drax Group plc (“Drax”) and its subsidiaries (“the Group”), are not warranted or guaranteed. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although Drax believes that the statements, expectations, statistics and projections and other information reflected in such statements are reasonable, they reflect Drax’s current view and no assurance can be given that they will prove to be correct. Such events and statements involve risks and uncertainties. Actual results and outcomes may differ materially from those expressed or implied by those forward-looking statements.
There are a number of factors, many of which are beyond the control of the Group, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These include, but are not limited to, factors such as: future revenues being lower than expected; increasing competitive pressures in the industry; uncertainty as to future investment and support achieved in enabling the realisation of strategic aims and objectives; and/or general economic conditions or conditions affecting the relevant industry, both domestically and internationally, being less favourable than expected, including the impact of prevailing economic and political uncertainty; the impact of conflicts around the world; the impact of cyber-attacks on IT and systems infrastructure (whether operated directly by Drax or through third parties); the impact of strikes; the impact of adverse weather conditions or events such as wildfires; and changes to the regulatory and compliance environment within which the Group operates. We do not intend to publicly update or revise these projections or other forward-looking statements to reflect events or circumstances after the date hereof, and we do not assume any responsibility for doing so.
Results presentation webcast arrangements
Management will host a webcast presentation for analysts and investors at 9:00am (UK time) on Thursday 31 July 2025.
| Event Title: | Drax Group plc – Half Year Results 2025 |
| Event Date: | Thursday 31 July 2025 |
| 9:00am (UK time) | |
| Webcast Live Event Link: | https://secure.emincote.com/client/drax/drax033 |
| Conference call and pre-register Link: | https://secure.emincote.com/client/drax/drax033/vip_connect |
| Start Date: | Thursday 31 July 2025 |
| Delete Date: | Saturday 1 August 2026 |
| Archive Link: | https://secure.emincote.com/client/drax/drax033 |
