Drax shares fall nearly 5% on FTSE 250 after dividend and profit drop

In the year ended 31 December profits at Drax fell from £443 million the previous year to just £158 million. EBITDA also fell significantly from £454 million to £355 million.

The group said it would be reducing the final dividend from 38.3 pence per share to 9.6 pence per share.

Despite the profit drop, which was attributed to lower prices, Drax said it was optimistic about the prospects for 2010 as it would benefit from new contracts and cost cutting measures.

The group has already made a start to cutting costs, having reduced its underlying cost base by £14 million in 2009.

Dorothy Thompson, Chief Executive of Drax, said, "We delivered an excellent performance across the business in 2009 in the face of historically weak commodity prices. This enabled us to deliver earnings for the year ahead of market expectations. Weak commodity prices for coal generators persist and we are therefore particularly pleased with our decision to accelerate our hedged position for 2010, with Drax now virtually fully hedged at higher average margins than for 2009. This underpins strong earnings and cash generation in the current year.”

By 10:30 shares in Drax were down 4.82 per cent to 396.70 pence per share.