Drax launches £150m buyback, sees FY in line

Power generator Drax on Wednesday launched a £150m share buyback and said it was suspending carbon capture projects pending further talks with the government on subsidies.

It also emerged that the company was also under investigation by industry regulator Ofgem to see if it complies with sustainability rules, after a media stated its own scientific advisers had suggested it should stop calling its output from wooden pellets carbon neutral.

In a trading statement, Drax said it expected full year adjusted core earnings to be in line with analysts' consensus estimates.

It added that it would defer plans to invest about £50m in carbon capture technology at its power plant’s biomass burning units this year while waited for the government to include the project in its funding scheme.

Ofgem's investigation will look at whether the company’s activities are aligned with biomass sustainability rules. It will be undertaken by the US consulting group Black & Veatch, after a report in the Financial Times citing documents released under a freedom of information request.

Reporting by Frank Prenesti for Sharecast.com