Drax PLC reported full-year 2025 results that outperformed market expectations, with adjusted EBITDA reaching £947 million - roughly 4% above the consensus forecast. Earnings per share for the year were 137.7 pence, a result that exceeded analyst estimates by 11%.
The company attributed the outperformance primarily to unusually favourable biomass generation conditions in December, which combined with supportive pricing and robust pellet production output and volumes to lift results. Management also pointed to lower finance costs and the effect of completed share buybacks as contributors to the stronger-than-expected earnings per share.
Drax declared a dividend of 29 pence per share, matching analyst expectations. The company completed a £300 million share buyback programme in October 2025 and has initiated an additional three-year extension totalling £450 million that is currently underway.
On the balance sheet, net debt at the end of the full year 2025 stood at £784 million, equivalent to a leverage ratio of 0.8 times. For 2026, Drax issued EBITDA guidance of £662 million, which aligns with consensus analyst forecasts.
Looking further ahead, the group reaffirmed its post-2027 target EBITDA range of £600 million to £700 million. That range is stated on a basis that excludes development expenditure and also excludes expected accretion from recent acquisitions in battery energy storage systems and optimisation - acquisitions the company suggested could add approximately £100 million of EBITDA across 2027 and 2028.
Capital spending plans for 2026 were outlined at approximately £210 million to £250 million. The company indicated that around £130 million of this is maintenance capital expenditure, with approximately £100 million earmarked as growth capex. The growth allocation is described as primarily directed toward battery energy storage systems, the Cruachan inlet valves upgrade and a super grid transformer, and open cycle gas turbines.
The results package highlights a mix of operational and balance-sheet dynamics: operational gains from biomass and pellet volumes in a specific period, financial leverage reduction through buybacks, and a defined capex programme that prioritises both maintenance and strategic growth in storage and generation assets. Management's reaffirmation of its medium-term EBITDA target range and the precise 2026 guidance convey a degree of continuity in planning while noting potential upside from recent targeted acquisitions.
Editor note: This article presents the company's reported figures and guidance without additional commentary or forecasts beyond what was disclosed by management.