Drax tops expectations

23rd Feb 2010 07:03

Drax, operator of the UK’s largest coal-fired power station, delivered a set of full year results ahead of market expectations, despite poor market conditions.Earnings before interest, tax, depreciation and amortisation (EBITDA) in 2009 were £355m, down from £454m in 2008 but ahead of market expectations of £341m. The 2009 EBITDA figure was boosted by £31m arising on the close out of foreign exchange derivative contracts.‘Weak commodity prices for coal generators persist and we are therefore particularly pleased with our decision to accelerate our hedged position for 2010, with Drax now virtually fully hedged at higher average margins than for 2009. This underpins strong earnings and cash generation in the current year,’ said chief executive Dorothy Thompson.Total revenue was also ahead of expectations at £1,475.8m, down from £1,752.8m; investment analysts had pencilled in a figure of £1,356m for 2009.Profit before tax slumped to £157.8m from £442.5m in 2008. A final dividend of 9.6p has been proposed.The company’s drive to reduce carbon emissions continues apace, with the turbine upgrade and biomass co-firing projects both on schedule. The company added that it has also made good progress on its new dedicated biomass-fired generation plant developments, with key steps taken in the planning consent process.Drax is the single biggest generator of carbon emissions in Britain.‘For 2010 and beyond, we are continuing to see narrow dark green spreads driven principally by low forward gas prices compared to those of coal,’ Thompson said.‘Our view remains that, in time, the electricity market will provide increasing returns to available capacity as the retirement of some of the older power stations on the system reduces the generation capacity margin. Indeed, the poor market spreads may hasten some of the expected retirements, and this should put upward pressure on spreads,’ she added.