Drax Group (DRX) H1 2025 earnings summary

Executive summary

• Delivered strong operational and financial performance in H1 2025, with record pellet production, high renewable generation, and support for UK energy security and renewables targets.

• Secured heads of terms for a low-carbon dispatchable CfD at Drax Power Station, with enabling legislation and CMA review completed; final contract negotiations ongoing.

• Announced an additional £450m share buyback over three years, underpinned by working capital inflow from the end of the Renewables Obligation scheme.

• Maintained disciplined capital allocation, focusing on balance sheet strength, investment in core assets, and sustainable dividend growth, with a 11.5% increase in interim dividend.

• Targeting post-2027 adjusted EBITDA of £600–700m per annum from FlexGen, Pellet Production, and Biomass Generation, supporting increased free cash flow visibility through 2031.

Financial highlights

• Adjusted EBITDA for H1 2025 was £460m, down from £515m in H1 2024, mainly due to lower achieved power prices.

• Adjusted basic EPS was 65.6p, unchanged year-over-year, aided by a 5% reduction in shares outstanding from buybacks.

• Cash generated from operations was £378m (H1 2024: £400m), with a £102m working capital outflow expected to reverse in H2.

• Net debt to adjusted EBITDA at 1.1x, well below the 2x target, with £726m in available cash and committed facilities.

• Interim dividend increased to 11.6p per share, with a full-year target of 29.0p per share, up 11.5% year-over-year.

Outlook and guidance

• Comfortable with full-year 2025 consensus expectations, subject to continued operational performance.

• Targeting post-2027 adjusted EBITDA of £600–700m per annum, excluding Options for Growth.

• Expecting strong free cash flow before dividends through 2031, supported by working capital inflow and disciplined investment.

• Ongoing focus on growth opportunities in FlexGen, batteries, energy solutions, and sustainable aviation fuels.

• Additional £450m buyback extension subject to AGM reapproval in 2026–2028.