Drax Group plc

Drax reported 2025 adjusted EBITDA of GBP 947 million, adjusted EPS of 137.7p, and record biomass power production of 15 terawatt hours. Pellet production EBITDA fell from GBP 143 million in 2024 to GBP 129 million in 2025, while pellet volumes rose to 4.2 million tonnes. Net debt was GBP 784 million, equal to 0.8x EBITDA, and the company ended the year with GBP 942 million of cash and committed facilities. The expected full-year dividend is 29p per share, up 11.5% year over year. Management said it still expects post-2027 adjusted EBITDA of GBP 600 million to GBP 700 million per year across pellet production, biomass generation and FlexGen, and reiterated expected free cash flow of about GBP 3 billion between 2025 and 2031, with over GBP 1 billion initially for shareholder returns and up to about GBP 2 billion for growth investment. For 2026, management said it is comfortable with consensus and expects growth CapEx to be over half on batteries, with maintenance CapEx rising due to a planned outage at one biomass unit.

Dwight Gardiner framed the quarter around Drax’s purpose of enabling a zero carbon, lower-cost energy future and said the company is preparing for the new CfD operating regime through its “Future Focus” program. He emphasized that Drax sees two main growth vectors: investing in U.K. energy transition assets, especially batteries, and exploring a data center opportunity at Drax Power Station. His tone was confident but disciplined, repeatedly stressing capital allocation, optionality, and that the company will stay focused on value creation rather than chasing growth for its own sake.

Mark Strafford highlighted the financial strength of the business, pointing to GBP 947 million of adjusted EBITDA, 137.7p adjusted EPS, and net debt of GBP 784 million at 0.8x EBITDA. He said total cash and committed facilities were GBP 942 million, and noted the company completed a GBP 300 million buyback in 2025 and started a further GBP 450 million program, with GBP 57 million repurchased by February 24. He also laid out the capital plan: growth CapEx in 2026 will be driven mainly by batteries, while maintenance CapEx should increase because of a major planned outage at Drax Power Station.

Analysts focused on three main areas: the Canadian pellet business, the sizing and timing of the battery investment program, and the economics and phasing of the data center opportunity. Management said the Canadian impairment was not a sign that conditions are getting worse, but rather a formalization of a long-running structural issue tied to fiber costs and contracts; they also said strategic options include optimization, possible disposal, and continuing to honor contracts through the 2030s. On batteries and capital allocation, management said about GBP 0.5 billion has already been allocated, could see up to about GBP 1 billion more potentially flow into that area, but wants to see results before committing too much more. On the data center, management explained the 100 MW first phase is driven by speed to market, the 500 MW second phase depends on government agreement under the CfD, and the 600 MW-plus third phase would come after 2031.