Drax cuts leverage ratio after strong second half

Power station group Drax has scaled back its leverage expectations after a strong performance in the second half, and said it should meet analysts' profit forecasts with its full-year results.

The company said it now expected net debt-to-adjusted EBITDA – excluding the government's windfall tax on renewable and low-carbon generators, the Electricity Generator Levy (EGL) – to be "around 1x" at the end of 2023.

That compares to guidance in July of "significantly below 2x" and down from 1.3x at the half-year stage. The company's long-term target is 2.0x.

Drax said it continues to expect full-year adjusted EBITDA and the EGL to be in line with analysts' consensus estimates, "subject to continued good operational performance".

The current consensus forecast for adjusted EBITDA before EGL is £1,164m, up from £731m the year before, while the 2023 EGL is expected to be £198m.

Drax's chief executive Will Gardiner said: "We continue to deliver a strong system support and generation performance, providing dispatchable, renewable power for millions of homes and businesses.

"Drax Power Station is the UK's single largest provider of renewable energy by output during 2023 and a critical contributor to the country's security of supply."