Drax profits fall as government delays CfD deal

Drax Group has reported a decline in earnings for the six months ending 30 June 2025, reflecting tightening margins and weaker profit growth amid ongoing energy market challenges.
Adjusted EBITDA fell to £460 million, down from £515 million in the same period last year, while profit before tax declined to £281 million from £463 million in H1 2024.
Operating profit also dropped significantly, to £301 million from £518 million a year earlier.
Despite the earnings contraction, Drax maintained its adjusted earnings per share at 65.6 pence and increased its interim dividend to 11.6 pence, up from 10.4 pence, signalling a continued commitment to shareholder returns even as headline performance faltered.
Will Gardiner, Chief Executive Officer, argued that Drax plays an important role for the UK's energy security, stating that the company currently supplies around five per cent of the UK’s power and has the ability to increase output rapidly when needed.
He acknowledged the operational support of staff and supply-chain partners, but the subdued financials point to broader market pressures.
A key development during the period was the agreement of heads of terms with the UK Government on a potential Contract for Difference (CfD) to support long-term investment in dispatchable, low-carbon energy.
A final agreement is expected later in the year. However, with no firm deal yet in place, market uncertainty continues to weigh on sentiment.
Revenue for the period totalled £2,647 million on a reported basis, with £2,601 million recorded on an adjusted basis.
These figures included contributions from Drax’s pellet production, biomass generation, flexible generation and energy solutions operations.
Gross profit reached £773 million, while adjusted operating profit came in at £322 million. Net debt declined modestly to £1,061 million, supported by cash reserves of £276 million and £450 million in undrawn credit facilities.
Although the net debt to adjusted EBITDA ratio improved to around 1.1, the headline results highlight the commercial headwinds facing Drax in the current market environment. Lower profitability, a stalled CfD agreement, and reliance on favourable regulatory outcomes underline the challenges ahead for the UK energy firm.