Drax Group (DRX) H2 2025 earnings summary

Executive summary

• Delivered strong operational and underlying financial performance in 2025, with record renewable power and pellet production, supporting robust cash generation for growth and shareholder returns.

• Advanced strategic priorities, including preparing for the new low-carbon dispatchable CfD regime, investing in U.K. energy transition, expanding FlexGen and battery storage, and acquiring a 260MW BESS portfolio.

• Signed a low-carbon dispatchable CfD for Drax Power Station, marking a strategic inflection point for future earnings visibility.

• Over £1 billion returned to shareholders and up to £2 billion available for further investment in growth.

• Sustainability remains central, with top-tier third-party ratings, a public biomass supply chain tracker, validated climate targets to 2040, and new sustainability frameworks.

Financial highlights

• Adjusted EBITDA reached £947 million in 2025, driven by strong December market conditions and record 15 TWh biomass power production, though down from £1,064 million in 2024.

• Adjusted EPS rose to 137.7p, supported by share buybacks and lower net finance costs.

• Net debt reduced to £784 million (0.8x EBITDA), with cash and facilities at £942 million.

• Full-year dividend of 29.0p per share, up from 26.0p in 2024.

• £300 million share buyback completed and £450 million new program commenced.

Outlook and guidance

• Targeting post-2027 Adjusted EBITDA of £600–700 million per annum across pellet production, biomass generation, and FlexGen.

• Expecting £3 billion free cash flow between 2025 and 2031, with over £1 billion allocated to shareholder returns and up to £2 billion for growth investments.

• FlexGen expected to comprise a greater share of EBITDA mix over time.

• BESS (battery storage) investments not yet included in medium-term guidance; update expected later in the year.

• Forward power sales of £1.0 billion underpin earnings through Q1-27, with 13.3TWh contracted at an average price of £78/MWh.