Drax (DRX) made further strides last year towards shaking off its history as a fossil-fuel dinosaur and reinventing itself as a cleaner, greener biomass generator. It converted its first generating unit from coal to biomass, while work on the supply chain advanced with the ongoing construction of a wood-pellet plant and shipping facilities in the US. "Our journey is now well under way," says chief executive Dorothy Thompson.
The next major milestone is securing contract for difference (CfD) investment contracts from the government; these will provide Drax with a guaranteed strike price for the electricity it produces from biomass. There is a question mark over how these contracts will be affected by EU state-aid rules. But assuming they go ahead, Drax plans to convert its second unit into biomass in April 2015 and its third towards the end of 2015 at the earliest.
The reported figures last year were marred by £110m-worth of unrealised losses on derivative contracts. More importantly, Drax cautioned that the mild winter had depressed power prices and was likely to prompt a lowering of consensus earnings expectations. Broker Whitman Howard says the 2014 cash profit consensus forecast could slip to £240m-£250m from £280m prior to the results, giving adjusted EPS of 27p-29p (from 35.3p in 2013).
| DRAX (DRX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 802p | MARKET VALUE: | £3.2bn | |
| TOUCH: | 802p-803p | 12-MONTH HIGH: | 830p | LOW: 528p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 62 | |
| NET ASSET VALUE: | 350p | NET CASH: | £71m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 1.48 | 158 | 31 | 13.7 |
| 2010 | 1.65 | 255 | 52 | 32.0 |
| 2011 | 1.84 | 338 | 127 | 27.8 |
| 2012 | 1.78 | 190 | 44 | 25.3 |
| 2013 | 2.06 | 32 | 13 | 17.6 |
| % change | +16 | -83 | -70 | -30 |
Ex-div: 23 Apr Payment: 16 May | ||||
