UK's Drax shares soar on profit rise, share buybacks
Updates throughout with CEO comment, share price
By Susanna Twidale
July 26 (Reuters) -Shares in Drax DRX.L soared 15% on Friday morning after the British power generator posted a 37% rise in first-half profit and announced a 300 million pound ($386 million) share buyback programme.
Britain's largest renewable power generator by output has converted four coal-power units to use biomass and operates hydro power projects.
Its first-half pre-tax profit rose to 463 million pounds, buoyed by higher output from the biomass plants and stronger sales from its biomass pellet production sites.
A government subsidy for the biomass generation is set to end in 2027.
CEO Will Gardiner said in an interview he hopes there will be progress on an extension to support by the end of the year and that the company has already had positive engagement with the new Labour government which came into power earlier this month.
"We have a new government and we are increasingly recognised as critical for their ambitions to get to a net zero 2030 power system," he said.
In the future Drax plans to fit its biomass units with carbon capture and storage technology but last year it paused development on a planned 2 billion pound investment in the first BECCS (bioenergy with carbon capture and storage) unit saying it needed more clarity on government support.
"We are looking for the right public signals from them and are encouraged and hoping that happens by the end of the year," Gardiner said.
It also plans to build a BECCS plant in the United States and said it has identified the first possible site in the southeast of the country.
Drax said for 2024 it expects to post an adjusted core profit above analysts' consensus of 961 million pounds ($1.24 billion).
It also announced a 300 million pound, two-year share buyback programme to begin in the third quarter of 2024 and increased its interim dividend by 13% to 10.4 pence.
Drax shares were up 13.4% at 642.5 pence by 0738 GMT having traded up 15%.
($1 = 0.7774 pounds)
Reporting by Susanna Twidale in London and Radhika Anilkumar in Bengaluru; editing by Christina Fincher and Jason Neely
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