(Correcting Drax's annual expectations.)
(Alliance News) - FTSE 250-listed electrical power-generation company Drax Group PLC on Tuesday kept its earnings forecasts for 2019, whilst also announcing a biomass cost-reduction plan.
Drax said it remains focused on opportunities to reduce its cost of the biomass it uses to fuel its power station in North Yorkshire to a level which is economic without subsidy in 2027. These savings will be delivered through further optimisation of existing biomass operations and greater utilisation of low-cost wood residues, the company explained.
Drax said it is targeting 5 million tonnes of self-supply capacity by 2027 compared to 1.5 million as of Tuesday.
"We believe sustainable biomass has a long-term critical role to play. That's why we plan to supply 80 percent of our biomass from our own sources - a significant increase on the 20 percent we currently self-supply," said Chief Executive Will Gardiner.
"Supplying more of our own biomass will cut costs and reduce supply chain risks, ensuring our biomass power generation remains viable in the long term," explained Gardiner.
Looking ahead, Drax said it expects its annual earnings before interest, taxes, depreciation, and amortization in line with guidance, with consensus standing at GBP409 million. Drax's adjusted Ebitda in 2018 was GBP250 million.
In addition, Drax reiterated its adjusted Ebitda guidance for Iberdrola assets - which were acquired in December 2018 - of GBP90 million to GBP110 million in 2019. The company noted that performance of these assets has been "strong", with the pumped storage business trading particularly well.
The stock was down 2.9% to 287.60 pence on Tuesday morning in London.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
Copyright 2019 Alliance News Limited. All Rights Reserved.
Drax (DRX)