Drax Group (DRX) H2 2024 earnings summary

Executive summary

• Achieved strong operational and financial performance in 2024, with a 5% increase in adjusted EBITDA to £1.064 billion, driven by higher renewable generation and improved pellet production.

• Enhanced shareholder returns with a 12.6% increase in dividends per share, a £300 million share buyback program (c.£150 million complete), and a strengthened balance sheet.

• Secured heads-of-terms CFD agreement for Drax Power Station, supporting UK energy security and post-2027 operations.

• Upgraded recurring adjusted EBITDA target for FlexGen, pellet production, and biomass generation to £600–700 million post-2027.

• Targeting >25% increase in generation, with continued focus on renewables and pellet production.

Financial highlights

• Adjusted EBITDA grew 5% year-over-year to £1.064 billion; cash generated from operations reached £1.135 billion.

• Net debt reduced to £992 million, with net debt to adjusted EBITDA at 0.9x; total cash and committed facilities at £806 million.

• Full-year dividend for 2024 increased by over 12% to £0.26 per share.

• £700 million of new debt raised (maturities 2027–2029), £900 million of shorter maturities repaid.

• Adjusted basic EPS increased to 128.4p (2023: 119.6p).

Outlook and guidance

• Recurring post-2027 adjusted EBITDA targeted at £600–700 million, with FlexGen, Pellet Production, and Biomass Generation each targeting >£250 million, £250 million, and £100–200 million per annum, respectively.

• Over £1 billion estimated post-tax operating cash flows expected 2025–2027, underpinned by forward power sales and renewables.

• CapEx for 2025 expected in the range of £180–220 million.

• Ongoing investment in growth projects, including OCGTs, Cruachan expansion, and data centre development.

• Strong forward power hedges with 20 TWh locked in at an average price over £93 through Q1 2027.