Drax Group plc recorded its highest-ever renewable power output for the 12 months to December 31, 2025, supplying 6% of UK power and 11% of UK renewable generation. The company said biomass generation reached a business record of 15.0 terawatt-hours and pellet production climbed to 4.2 million tonnes, an increase of 5% on 2024.
Financially, Drax reported adjusted EBITDA of 947 million, down from 1,064 million a year earlier. Operating profit declined to 241 million, compared with 850 million in 2024. The reduction reflected lower achieved power prices and non-cash impairment charges totaling 78 million.
Management highlighted improvements in leverage and liquidity. Net debt fell to 784 million from 992 million at December 31, 2024. That produced a net debt to adjusted EBITDA ratio of 0.8 times, comfortably below the company's stated long-term target of around 2 times.
The board approved shareholder returns while preserving flexibility. Drax completed a 300 million share buyback program in October 2025 and launched a 450 million three-year extension. The company said the extension is supported by an expected working capital inflow of approximately 500 million tied to the scheduled end of the Renewables Obligation scheme in 2027.
On the revenue certainty front, Drax entered a low carbon dispatchable Contract for Difference with the UK Government in November 2025. The CfD covers all four biomass units at Drax Power Station from April 2027 to March 2031 and underpins around 6 terawatt-hours of biomass generation per year at a strike price of 109.90 per megawatt-hour.
Strategic investment activity was prominent. The company committed approximately 500 million to develop 710 megawatts of battery energy storage systems, and agreed to acquire Flexitricity, an asset optimisation platform, for approximately 36 million.
Operationally, the pellet production business hit a record 4.2 million tonnes. However, Drax said Canadian operations encountered constrained fibre markets and weaker margins, prompting management to initiate a strategic review. The group recognised impairment charges of 337 million related to the Canadian pellet business and the paused Longview pellet project, and a further 48 million for UK bioenergy with carbon capture and storage development costs.
There were no major planned outages in 2025, the company said, which supported record biomass generation. Management also outlined options to develop a data centre at Drax Power Station. An initial phase of about 100 megawatts could be operational from 2027, subject to the necessary consents and commercial agreements.
Looking ahead, Drax expects adjusted EBITDA for 2026 to be in line with analyst consensus of 662 million. The company targets post-2027 adjusted EBITDA of 600-700 million per year from its combined pellet production, biomass generation and flexible generation operations.
Capital expenditure was reduced in 2025 to 202 million from 321 million in 2024. The company expects to invest approximately 210-250 million in 2026.
The board has proposed a full year dividend of 29.0 pence per share, an increase of 11.5% from 26.0 pence in 2024, reflecting a mix of strengthened liquidity and continued operational focus on renewables and flexible generation.
Note - The company provided these figures and forward-looking targets as part of its 2025 financial results announcement.