Drax's results plunge after challenging year

Despite severe market deterioration and difficult regulatory challenges, Drax said on Tuesday its EBITDA for the year to 31 December 2015 is in line with guidance.

The FTSE 250 power company reported it had dropped from £229m in 2014 to £169m after being hit with the removal of its Levy Exemption Certificates and the deterioration in commodity prices.

However, the company said it was mitigated by strong cash flow hedges, flexible operations and increasing biomass generation.

Underlying earnings also nearly halved from £96m to £46m, while profit before tax plunged from £166m to just £59m.

That has led the company to slash its final dividend from 7.2p per share in 2014 to just 0.2p per share.

The power company also signalled the outlook for 2016 is challenging, with a continued deterioration in commodity markets and the loss of Levy Exemption Certificates.

However, Drax said it is mitigating those risks by keeping operations flexible as well as focusing on tight cost controls and capital discipline.

"In a challenging year we have delivered another strong operational performance and realised our vision to become a predominantly biomass fuelled generator,” said Drax chief executive Dorothy Thompson.

"We are clear on the challenges ahead and how we will respond.

“The fastest, most affordable and safest way to reduce carbon emissions is to further deploy the world leading biomass technology Drax has pioneered to upgrade more of the UK's existing coal fired power stations to sustainable biomass.”

Shares in the company were down 4.5p (1.74%) to 253.8p at 0933 GMT.