Drax Group (LSE:DRX) reported a good first-half performance for the six months to 30 June, backed by a strong balance sheet and a raised interim dividend of 12.9p per share, up from 11.6p a year earlier.
The renewable and flexible power generator expects full-year dividend growth of 11% to 32.2p per share, extending a run of ten consecutive years of dividend increases averaging more than 11% annually.
"We are at a key moment in Drax's transition, investing to create a larger and broader portfolio with more MWs under management that can provide more power to the country when needed," said chief executive Will Gardiner.
The group generated around 6% of UK power and 10% of UK renewable output in the period, and commissioned its first open-cycle gas turbine (OCGT), adding around 0.3GW of capacity.
Net debt stood at 1.3 times adjusted EBITDA, supported by £630m of cash and committed facilities; the company returned £48m via share buybacks before pausing the programme ahead of its proposed £561m acquisition of Bluefield Solar Income Fund, expected effective on 31 July.
Full-year adjusted EBITDA is expected to be in line with analyst consensus, with the company targeting £650m to £800m by 2029, driven partly by 0.7GW of battery storage capacity due to commission from 2027.
Also, Drax noted that during the period, the Financial Conduct Authority closed its investigation into Drax's historical biomass sourcing statements, taking no action.
News Intelligence what this means for the company
Drax raised its interim dividend 11.2% to 12.9p and guided to full-year growth of 11% to 32.2p, extending a decade-long streak of double-digit annual increases. The company is pursuing an 85% capacity expansion by 2025—anchored by a £561m acquisition of Bluefield Solar Income Fund and 0.7GW of battery storage due from 2027—while targeting £650m–£800m adjusted EBITDA by 2029, supported by a net debt ratio of 1.3x EBITDA and £630m in cash.
The dividend growth and capacity roadmap signal confidence in cash generation, but the near-term investment intensity (£561m acquisition, battery capex) and reliance on Capacity Market revenue for three further 900MW OCGT plants under development will test whether the company can sustain its 11% annual dividend growth while funding this transition. The FCA's closure of its biomass sourcing investigation with no action removes a regulatory overhang.
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