Drax Group (DRX) Trading Update summary

Operational performance and financial outlook

• Strong performance in Flexible Generation, Pellet Production, and Biomass Generation, with 2024 Adj. EBITDA expected at the top end of analyst estimates (£993–1,039 million).

• Targeting post-2027 recurring EBITDA over £500 million from FlexGen and Pellet Production combined.

• Net debt to Adj. EBITDA expected to be around 1x at end of 2024, with over £1 billion of new, longer-dated debt and facilities secured in 2024.

• Over £3.2 billion of contracted forward power sales between 2024 and 2026, with 2024 and 2025 effectively fully hedged.

• £300 million two-year share buyback programme underway, with two £75 million tranches completed and c.11.9 million shares purchased.

Strategic initiatives and growth opportunities

• Progressing BECCS and pumped storage hydro projects, contingent on UK government policy clarity and investment frameworks.

• Launched Elimini, a US-based international carbon removals business, to develop 24/7 renewable power and carbon removal projects outside the UK.

• Exploring opportunities to supply power to data centres, leveraging large-scale dispatchable generation and carbon removals.

• £80 million investment in Cruachan Power Station refurbishment, with a 15-year Capacity Market agreement and plans for a 600MW expansion.

• Commissioning of three new OCGTs (c.900MW) delayed to Q1 2025 due to grid connection issues; options for sale under review.

ESG and sustainability actions

• Partnership with Smart Green Shipping to trial wind-assisted 'FastRig' sails, aiming to cut supply chain emissions by up to 30% per year.

• Ofgem closed its investigation into biomass profiling data, finding no evidence of unsustainable biomass or incorrect ROC issuance; Drax made a £25 million voluntary payment.

• Provided £7 million for historical overcharging of Opus Energy customers.

• Investment in BECCS and SAF (Sustainable Aviation Fuel) opportunities, with a pipeline of biomass sales in North America, Asia, and Europe.

• New sustainability-linked £450 million revolving credit facility and £50 million term loan secured, extending debt maturity profile.