Drax Group shares surge as energy technology agency scores larger income

Drax Group shares jumped on Friday morning after the company posted a huge increase in first-half profits.

They soared 11.9 per cent to 634p by midday, making them the FTSE 250 Index’s top riser and taking their gains since the year started to about 30 per cent.

The power generation business revealed its pre-tax profits climbed by 36.6 per cent to £463.2million in the opening six months of 2024.

Result: Power generation business Drax Group posted a huge increase in first-half profits

Earnings were bolstered by higher levels of renewable power generation, including from its biomass plants, which produced 7 Terrawatt hours (TWh), compared to 5.3 TWh over the same period last year.

It was further uplifted by pellet sales and production expanding to 2.5 million tonnes and 2 million tonnes, respectively.

Following the result, Drax has announced a £300million share buyback programme and a 13 per cent hike in its interim dividend to 10.4 pence per share.

The Yorkshire-based firm also expects its annual adjusted earnings before nasties will be ‘around the top end’ of analysts’ forecasts, which ranges from £881million to £996million.

‘Drax has delivered a strong operational performance, playing an important role supporting the UK energy system with dispatchable, renewable power,’ said Will Gardiner, chief executive of Drax Group.

He added: ‘We look forward to working with the new UK Government to help grow the economy and take steps urgently to deliver a net zero electricity system by 2030.’

The Labour Party claims its plans to decarbonise the UK’s electricity grid by 2030 will deliver a £1,400 reduction to annual household energy bills and cut energy costs for businesses by £53billion.

However, experts are divided on whether the deadline can be achieved, because it would require building significant amounts of new infrastructure that could face considerable local opposition and have to overcome stringent planning regulations.

By 2030, Drax hopes to expand output by 600 megawatts at Cruachan Power Station, a pumped-storage hydroelectric facility in Scotland.

It also wants to develop a bioenergy with carbon capture and storage unit in the UK capable of producing 4 million tonnes per year, with a second unit following soon afterwards.

Gardiner said: ‘We believe that Drax and our partners across the Humber and Scotland can accelerate growth, create thousands of new jobs and channel billions in private investment into carbon capture and green energy projects, subject to the right government policies to support regional development plans.’