Drax sees pre-tax profits drop 64% in “challenging year”

Energy firm Drax has reported a significant fall in profits in what has been described as a “challenging year.”

Drax has announced a 64% drop in pre-tax profits from £166m to £59m in the financial year ending December 2015.

The North Yorkshire-based company was affected by low energy prices and the government’s decision to get rid of the Climate Change Levy exemption for the business in last year’s budget.

This resulted in underlying earnings falling from £96m in 2014 to £46m last year, as dividends fell from 11.9 pence per share to 5.7 pence per share.

Last September, Drax also pulled out of a £1bn carbon capture project, due to the government’s decision to reduce subsidies for renewable energy. This had a direct impact on the profitability of the plant

Despite the poor results, Dorothy Thompson, chief executive of Drax, said the company has “delivered another strong operational performance” in part by maintaining its “vision to become a predominantly biomass fuelled generator.”

The power plant claimed that its transformation into a biomass generator is on schedule and on budget.

Dorothy added: “We are clear on the challenges ahead and how we will respond. The fastest, most affordable and safest way to reduce carbon emissions is to further deploy the world leading biomass technology Drax has pioneered to upgrade more of the UK’s existing coal fired power stations to sustainable biomass.

“With the right support framework, we stand ready to help the UK decarbonise further.”

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