Feb 26 (Reuters) - British power company Drax Group beat annual profit expectations on Thursday, helped by strong pellet production in North America, and said it generated more renewable power in 2025
Drax Shares Surge to 20-Year Peak as Profits Exceed Forecasts
Feb 26 (Reuters) - British power company Drax beat annual profit expectations and raised its dividend on Thursday, driven by strong pellet output in North America and record renewable generation, lifting shares to a near two-decade high.
Drax has benefited from elevated wholesale power prices in recent years, especially after the Russia–Ukraine war.
Financial Performance and Dividend Increase
The company raised its full-year dividend by 11.5% to 29 pence per share, and forecast 2026 core earnings in line with the market view.
Drax reported core earnings of 947 million pounds ($1.28 billion) for the 12 months ended December 31, 2025, down almost 11% from a year ago but still ahead of analysts' forecast of 914 million pounds on average, according to company-compiled consensus.
Its shares hit their highest level since August 2006, before paring some gains to trade up 3.5% at 913 pence.
Strategic Transition and Future Outlook
STRATEGIC TRANSITION
CEO Will Gardiner told Reuters he expects core profit between 600–700 million pounds in 2027 as Drax moves onto the UK’s updated low‑carbon support regime, with earnings expected to grow from there.
The company booked a 378 million pound non‑cash impairment charge in 2025, mostly related to its Canadian operations, for which it is reviewing strategic options.
Impact on Workforce and AI Opportunities
Drax has already said it may cut more than 350 roles. Gardiner said on Thursday that jobs created as a result of its planned data centre project will depend on the scale of investment by the developer and customer.
On the subject of artificial intelligence, Gardiner said: "As a supplier of power, we have a huge opportunity. AI is power. And so the opportunity for us to supply customers in that space is very interesting."
($1 = 0.7390 pounds)
(Reporting by Ankita Bora in Bengaluru; Editing by Subhranshu Sahu and Louise Heavens)
