Drax Group plc (LON:DRX) has announced its full year results for the twelve months ended 31 December 2025
Record levels of renewable generation
| Twelve months ended 31 December | 2025 | 2024 |
| Key financial performance measures | ||
| Adjusted EBITDA(1/2/3) (£ million) | 947 | 1,064 |
| Net debt(4) (£ million) | 784 | 992 |
| Adjusted basic EPS(1) (pence) | 137.7 | 128.4 |
| Dividend per share (pence) | 29.0 | 26.0 |
| Total financial performance measures | ||
| Operating profit (£ million) | 241 | 850 |
| Profit before tax (£ million) | 190 | 753 |
Drax Group CEO, Will Gardiner, said: “In 2025, we produced more renewable power than ever before, delivering energy security for the UK. Our colleagues and supply chain partners work around the clock to help keep the lights on for millions of the UK’s households and businesses, no matter the weather.
“The signing of the new low carbon dispatchable CfD is an inflection point for the Group. It provides the foundation for us to keep supporting the UK with the flexible, renewable power it needs for security of supply this decade and beyond.
“The energy transition and growth in AI are creating opportunities for us to invest and grow our business further in line with the country’s energy needs. We are making good progress on this with our initial investments in Battery Energy Storage Systems (BESS), which we see as an attractive market. We will continue to explore options to invest in flexible and renewable energy, creating value for stakeholders and attractive returns for shareholders in line with our capital allocation policy.”
Highlights
· Strong operational and underlying financial performance across the Group
· Record levels of renewable generation – 6% of UK power, 11% of UK renewables
· Record levels of pellets produced – 5% increase vs. 2024
· Strong Adj. EBITDA with Adj. EPS growth benefiting from share buybacks and lower net finance costs
· Reduction in operating profit primarily reflects non-cash charge for impairments of £378 million
· Signing of low carbon dispatchable CfD for Drax Power Station
· Strong balance sheet
· £942 million of cash and committed facilities, 0.8x Net debt to Adj. EBITDA
· Sustainable and growing dividend
· 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 completed October 2025
· £450 million three-year buyback extension commenced, supported by c.£0.5 billion working capital inflow from end of Renewables Obligation scheme in 2027
· Strategy – c.£0.5 billion of commitments in 710MW of BESS developments and Flexitricity acquisition
Financial outlook
· Full year 2026 expectations for Adj. EBITDA in line with analyst consensus estimates(5)
Targeting post 2027 Adj. EBITDA of £600-700m pa – Pellet Production, Biomass Generation and FlexGen(6)
· Pellet Production – positioned to capture value in supply chain as a producer, user and seller of biomass
· US operations highly integrated with Drax Power Station
· More challenging outlook for Canadian operations, reviewing strategic options to maximise value
· Biomass Generation – low carbon dispatchable CfD supports UK energy security and provides increased visibility
· FlexGen – Pumped Storage, Hydro, Open Cycle Gas Turbines (OCGTs) and Energy Solutions
· Growing system need supports improved outlook
· Aligning structures, systems and performance culture to support the Group’s growth
· Structure cost base and resource to support low carbon dispatchable CfD, growth strategy and value creation
· Targeting annual structural savings of >£150 million pa from 2027 vs. 2024 base
Targeting c.£3 billion of free cash flow from existing business pre growth investment (2025-2031)(7)
· c.£0.5 billion of £3 billion target delivered in 2025
· c.£0.5 billion working capital inflow expected following end of Renewables Obligation (RO) scheme
· Over £1 billion to be returned to shareholders through dividends and share buybacks
· Up to c.£2 billion investment in growth – Drax Power Station site, FlexGen (incl. c.£0.5 billion of BESS commitments) and other flexible, renewable generation opportunities
Opportunities to invest in energy transition and AI growth
· Drax Power Station – largest power station in UK with 4GW of grid capacity
· Developing options for 1.2GW-scale data centre with first goal of 100MW from 2027 subject to necessary consents and a full assessment of capital cost and investment case, as well as establishment of the commercial and development structures
· Potential for additional system support services and generation
· FlexGen – targeting GW-scale pipeline of BESS opportunities and optimisation capabilities
· 710MW in development – physical assets (Apatura) and tolling agreements (Fidra, Zenobē, subject to FID)
· Acquisition of optimisation platform (Flexitricity, expected completion around March 2026)
· Total commitments c.£0.5 billion
· Assessing further opportunities for investment in flexible, renewable generation
Disciplined capital allocation policy supports investment for growth and returns to shareholders
· Optionality underpinned by strong balance sheet
· Investment to maintain and grow asset base, targeting returns significantly in excess of WACC
· Sustainable and growing dividend
· Nine consecutive years of growth with average annual increase >11% pa
· Return of surplus capital beyond current investment requirements, as at 24 February 2026:
· c.£558 million of share buybacks since 2017 – c.94 million shares purchased for an average price of c.£5.9/share
· c.£57 million of current £450 million share buyback complete
· Total number of voting rights, excluding treasury shares, was c.338 million
Sustainability remains a priority
· CDP A rating for forestry and climate – top 4% of 22,000+ companies making disclosures
· MSCI A rating
· Other developments
· Launched Sustainability Framework
· Climate Transition Plan published
· Full alignment to TCFD
· Enhanced alignment to TNFD
· SBTi targets to 2040 validated (2026)
· Launched Biomass Tracker tool (2026)
Operating and financial review
| £ million | 2025 | 2024 |
| Adj. EBITDA | 947 | 1,064 |
| Pellet Production | 129 | 143 |
| Biomass Generation | 725 | 814 |
| Pumped Storage and Hydro | 111 | 138 |
| Energy Solutions – Industrial & Commercial (I&C) | 54 | 81 |
| Energy Solutions – Small and Medium-sized Enterprise (SME) | (5) | (30) |
| Flexible Generation & Energy Solutions | 160 | 188 |
| Elimini | (37) | (47) |
| Innovation, Capital Projects and Other | (31) | (34) |
Pellet Production – North American supply chain supporting UK energy security and sales to third parties
· Record year for production – 4.2Mt (2024: 4.0Mt) – 5% increase
· Reduction in Pellet Production Adj. EBITDA
· Progress in cost reduction in US business resulting in lower Pellet Production revenues under established intercompany pricing methodology but lower biomass costs for UK Generation, a net benefit to the Group
· On a like-for-like sales price basis 2025 Pellet Production Adj. EBITDA increased vs. 2024
· Canadian operations – constrained Canadian fibre market, lower margins – commencing strategic review of options
Biomass Generation – UK energy security with dispatchable renewable generation and system support services
· Record levels of renewable generation 15.0TWh (2024: 14.6TWh) and continuing system support role
· Incremental generation in December 2025 responding to system need
· Lower achieved power prices vs. 2024, partially offset by lower Electricity Generator Levy and other savings
· No major planned outage in 2025 (single planned outage in 2026)
· Strong contracted power
· As at 24 February 2026 c.£1.0 billion of forward power sales between 2026 and 2028 on RO biomass, pumped storage and hydro generation assets – 13.3TWh at an average price of £78.0/MWh(8/9)
· RO generation – fully hedged in 2026 and substantially hedged to March 2027
| Contracted power sales as at 24 February 2026 | 2026 | 2027 | 2028 |
| Net RO, hydro and gas (TWh)(8) | 10.9 | 2.1 | 0.2 |
| Average achieved £ per MWh(9) | 77.8 | 79.5 | 71.3 |
| CfD (TWh) | 2.2 | – | – |
FlexGen (comprising the reportable segments Flexible Generation & Energy Solutions) – flexible generation and system support services
· Pumped Storage and Hydro – strong system support performance, inclusive of major planned outages
· Cruachan planned outage programme – inlet valves upgrade and super grid transformer
· Cruachan forced outage
· Units 3 and 4 currently unavailable due to a grid connection failure in late December 2025 caused by assets owed by Scottish network operator SPEN. Drax working with SPEN to restore the connection
· Currently awaiting timetable for repair programme to be provided by SPEN
· Progressing planned outage work on unit 3, minimising overall downtime
· OCGTs – all three units delayed, primarily due to grid connections
· First unit (Hirwaun) commenced commissioning October 2025, Drax expects to take commercial control March 2026
· Drax now expects to retain these grid balancing assets as part of FlexGen portfolio
· Energy Solutions
· I&C – similar margin to 2024, reduction in volume
· Route-to-market for c.2,000 embedded generators – over 800MW
· Continued development of system support services via demand-side response, and electric vehicle services
· Opus (SME) business wind down largely complete
Other financial information
Capital investment
· Capital investment of £202 million (2024: £321 million)
· Growth – £98 million – Apatura BESS assets, Cruachan inlet valves upgrade and super grid transformer, and OCGTs
· Maintenance and other – £104 million – no major planned biomass outage
· 2026 expected capital investment of c.£210-250 million
· Growth – c.£100 million – primarily BESS, Cruachan inlet valves upgrade and super grid transformer, and OCGTs
· Maintenance and other – c.£130 million – inclusive of Drax Power Station major planned outage on one unit
Cash and balance sheet
· Strong cash conversion with cash generated from operations of £1,000 million (2024: £1,135 million)
· Net working capital inflow of £86 million (2024: £122 million)
· Net debt of £784 million (31 December 2024: £992 million), including cash and cash equivalents of £302 million (31 December 2024: £356 million)
· £450 million Revolving Credit Facility extended to 2028, c.£171 million term-loans extension completed, new £190 million term-loan agreed (undrawn at 31 December 2025)
Impairments and charges
· Canadian pellet business and paused Longview pellet project (£337 million) – lower expected margins, constrained Canadian fibre market and future demand from Drax Power Station covered by US Pellet Production business
· UK BECCS (£48 million) – retain option for long-term development pending appropriate commercial and regulatory support for carbon removals in the UK
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, impairments of Longview, UK BECCS, and Canadian pellets, transformation and restructuring costs 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 2025 (2024: £161 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.
(5) As of 20 February 2026, analyst consensus for 2026 Adj. EBITDA was £662 million, with a range of £629 – £684 million. The details of this consensus are displayed on the Group’s website.
Consensus – Drax Global
(6) Excludes Options for Growth, including development expenditure in Elimini, Innovation, Capital Projects and Other cash flows from new investments.
(7) Includes targets for post 2027 Adj. EBITDA, c.£0.5 billion working capital inflow from end of RO scheme, committed and maintenance capex, interest, taxes and EGL.
(8) Presented net of cost of closing out gas positions at maturity and replacing with forward power sales.
(9) Includes de minimis structured power sales in 2026, 2027 and 2028 (forward gas sales as a proxy for forward power), transacted for the purpose of accessing additional liquidity for forward sales and highly correlated to forward power prices.
Webcast arrangements
Management will host a webcast presentation for analysts and investors at 9.00am (GMT), on Thursday 26 February 2026.
The presentation can be accessed remotely via a live webcast link, as detailed below. After the meeting, the webcast recording will be made available and access details of this recording are also set out below.
| Event Title: | Drax Group plc – Full Year Results 2025 |
| Event Date: | Thursday 26 February 2026 |
| Event Time: | 9:00am (GMT) |
| Webcast Live Event Link: | https://sparklive.lseg.com/DraxGroup/events/040c5009-459c-4213-9610-1794266ffe22/full-year-results-for-the-twelve-months-ended-31-december-2025 |
| Conference Call and Pre-register Link: | Full year results for the twelve months ended 31 December 2025 Registration Page! |
