Drax Group (DRX) H1 2024 earnings summary

Executive summary

• Achieved strong operational and financial performance in H1 2024, with adjusted EBITDA up 24% to £515m, driven by renewables, pellet production, and Energy Solutions.

• Increased dividend per share by 12.6% to 10.4p, with a full-year expectation of 26.0p/share.

• Announced a £300 million two-year share buyback program commencing Q3 2024.

• Strengthened balance sheet with over £680 million in new facilities, repaid £949 million of shorter-dated maturities, and reduced net debt to £1,035m.

• Reduced safety incidents by 49% year-over-year (TRIR 0.24 vs. 0.47).

Financial highlights

• Adjusted EBITDA rose to £515m (H1 2023: £417m), with adjusted basic EPS at 65.6p (H1 2023: 46.0p).

• Cash generated from operations was £400m, broadly in line with the prior period.

• Net debt to Adjusted EBITDA: 0.9x, well below the long-term target of 2x.

• Interim dividend of 10.4p/share, with a full-year expectation of 26.0p/share.

• Capital expenditure in H1 2024 totaled £147m, focused on OCGT projects, pellet plant expansion, and enhancement projects.

Outlook and guidance

• Full-year 2024 Adjusted EBITDA expected at the top end of analyst consensus (£961m, range £881–996m), subject to continued good operational performance.

• Targeting >£500m recurring adjusted EBITDA post-2027 from FlexGen & Energy Solutions and Pellet Production.

• Biomass generation expected to deliver >£1 billion operational cash flow between 2024-2027.

• Ongoing discussions with UK Government on BECCS and bridging mechanism; clarity expected in H2 2024.