Drax sees tough year after 2014 profit rise
By Karolin Schaps
LONDON (Reuters) - British power producer Drax reported a rise in 2014 pretax profit on Tuesday as it made more money from selling electricity, but warned of a challenging year ahead due to an expected fall in profits from burning biomass in power plants.
The company, which owns one of Britain's largest power stations, is in the process of converting some of its coal-fired units to burning state-subsidised biomass instead.
Drax has started to see benefits from the conversion of its first two units as 2014 pretax profit rose to 166 million pounds ($256 million) from 32 million pounds, helped by a 38 percent rise in revenue to 2.45 billion pounds.
It expects to convert its third unit by early 2016 and to deliver the conversion programme within the previously set 650-700 million pound budget.
However, Chief Executive Dorothy Thompson said she expected headwinds for the company in 2015 on the back of sliding commodity prices.
"In these conditions we are placing particular focus on business efficiencies and cost control measures," she said.
Shares in Drax were trading 2 percent lower at 394 pence at 0819 GMT.
"We think that the 2014 results were better than expected (but) that the 2015 outlook may well be weaker than expected," said analysts at Whitman Howard.
The company's shareholders are also in line for a lower dividend payment, set at 11.9 pence per share for 2014, down from 17.6 pence.
($1 = 0.6478 pounds)
(Editing by Jason Neely and Mark Potter)
