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Drax Group PLC on Thursday said trading remains strong as it outlined plans to develop a data centre at its Yorkshire site and a continued ambition to use free cash flow to return funds to shareholders. The Selby, North Yorkshire-based electricity generator said it expects full-year adjusted earnings before interest, tax, depreciation and amortisation to be at the top end of the consensus forecast range of £892 million to £909 million. This reflects a strong performance in FlexGen, Pellet Production and Biomass Generation, Drax said, but would be down from £1.06 billion reported in 2024. Drax continues to target adjusted Ebitda of between £600 million and £700 million per annum post-2027, and £3 billion of free cash flow from its existing business between 2025 and 2031. Free cash flow generation will support more than £1 billion returns to shareholders, inclusive of the company’s ongoing £450 million three-year share buyback programme, and up to £2 billion for options to invest in growth, Drax said. ‘Our year to date operational and financial performance has been strong,’ said Chief Executive Will Gardiner. Shares in Drax were up 1.2% to 770.00 pence each in London on Thursday morning. Gardiner said with UK power demand expected to double by 2050, Drax was ‘working to maximise the value of our existing portfolio, while driving growth over the short, medium and long term.’ Free cash flow between 2025 and 2031 can support investment in energy security, data centres and flexible, renewable energy, he said, ‘underpinning long-term value creation’. Reflecting growing UK power demand, Drax expects to grow its FlexGen business to comprise a greater proportion of total adjusted Ebitda over time. In addition, the company is looking at opportunities to maximise value from the Drax Power Station site, which covers 1,000 acres in North Yorkshire. Drax said it is preparing a planning application for a first phase data centre of 100 megawatts using existing infrastructure and transformers previously used to support coal generation. This could support the operation of a data centre at Drax Power Station as soon as 2027. In the long term Drax said it is assessing options for over 1 gigawatt of data centre capacity, which is expected to use existing generation capabilities at Drax Power Station. In Pellet Production, Drax said its US business is well underpinned by sales into the UK but the Canadian business, which primarily sells pellets into Asia, is expected to be more challenged, which has contributed to the decision to close the pellet plant in Williams Lake. ‘Against this backdrop the group does not currently expect to invest in additional capacity in the short to medium term, including the paused Longview project,’ Drax said. Drax will report its full-year results on February 26. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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