ANNUAL profits dipped at coal fired power producer Drax, as it ramped up its transformation into a biomass-fuelled business.
Drax, which runs a coal-fired power station in Yorkshire, said yesterday that earnings before interest, tax, depreciation and amortisation over the full year fell to £298m from £334m in 2011, although this was in line with forecasts.
In October, the power station operator raised £190m through a share placing to support its growth into a biomass-fuelled electricity generator.
In a statement yesterday, Drax confirmed that its planned transformation was well underway during a “pivotal” year for the company.
“With government support and our financing secured, both in the second half of 2012, we are on track to convert our first generating unit fully to biomass in April of this year, with the second to follow in 2014,” chief executive Dorothy Thompson said. Capital spending will increase to between £250m and £300m this year, to cover costs of the biomass transformation, and earnings are likely to be “impacted adversely” over the period by the rising cost of carbon, Drax said.
Investors were upbeat on Drax's update though, and shares closed 6.12 per cent up yesterday at 641.5p.