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British power generator Drax ups dividend as profits rise

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·2-min read
FILE PHOTO: Sunset over Drax power station in North Yorkshire
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By Susanna Twidale

LONDON (Reuters) - British power generator Drax announced on Thursday a 10% increase to its interim dividend as profits rose and the financial impact of COVID-19 on the business softened.

During the first half of 2020 much of Britain's economy was shut down to help limit the spread of coronavirus, leading to lower power demand. Looser restrictions in the first half of 2021 had less of an impact.

Drax reported operating profits from continuing operations of 84 million pounds ($117.15 million), up from a 57 pound million loss during the first half of 2020, and increased its interim dividend to 7.5 pence per share.

Drax's customer business, which sells energy and services to small and medium-sized companies, saw a 10-15 million pound impact from COVID in the first half of 2021, down from 44 million pounds in the first half of 2020.

The company said it did not expect any additional COVID-related impact in the second half and recommended a 10% increase for its full-year dividend.

Drax, which has converted four coal-power units to use sustainable biomass, said its remaining two coal units closed for commercial operations in March and its carbon emissions have fallen 90% since 2012.

The company is developing carbon capture and storage technology which it hopes to deploy by 2027 and which it said could make it the world's first carbon negative power plant.

Drax has partnered with engineering firm Bechtel to explore global opportunities for Bioenergy with Carbon Capture and Storage (BECCs).

"We are working actively in the U.S. to pick through the best locations for doing BECCs in the U.S. but also Europe and Asia," Drax CEO Will Gardiner told Reuters in an interview.

The company reported a total loss after tax from continuing operations of 6 million pounds, including a 48 million pound charge from revaluing deferred tax balances following confirmation of UK corporation tax rate increases from 2023.

($1 = 0.7171 pounds)

(Reporting by Susanna Twidale; Editing by Edmund Blair and Anil D'Silva)

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