Drax pre-tax profits hit by rising carbon costs

18th Feb 2014 10:36

Full-year pre-tax profits at power-station owner Drax group fell to 32m pounds from 190.2m pounds on the back of rising carbon costs.Drax said earnings before interest, tax, depreciation and amortisation (EBITDA) fell to £230m in the year to December 31, 2013 from $298.4m. The dividend was also cut to 17.6p a share from 25.3p.The company said £120m had been added to its fuel costs as a result of the ending of the European Union's free carbon dioxide emissions allowance and introduction of the carbon price support mechanism by the UK government.Revenues rose to £2.062bn for the year against £1.78bn in 2012.Drax Chief Executive Dorothy Thompson said the company was investing "significant capital" to transform the company into one of the world's largest renewable generators, burning sustainable biomass with two US construction projects "on schedule and budget"."At the same time we have delivered strong operating performance across the business, including notably, good output, efficiency and reliability from our first converted unit," she said. "In 2016, we expect half of Drax to be fuelled by sustainable biomass, some 4% of the UK's electricity."Thompson said one of Drax's coal units will operate as an enhanced co-firing unit burning at least 85% biomass from May." "We will use this unit to conduct further research and development into the types of biomass that can be effectively burnt[...]and to build up biomass supplies for the second unit conversion in April 2015," she said."During the year we will make further investments in improving the performance of our biomass units. Through these investments we are confident that we will now be able to deliver capacity to the grid from a converted unit of 630MW burning standard biomass. This is only 15MW less than when fuelled with coal."Drax shares were down 11p at 795p at 10.37.FP