(Alliance News) - Drax Group PLC on Thursday posted strong financials for the first half of 2023, as rising profit and revenue allowed it to declare a higher dividend return to its shareholders.

The Yorkshire, England-based power generator said first half pretax profit rose 69% to GBP338.1 million from GBP199.9 million a year earlier.

Revenue also grew 15% to GBP4.09 billion from GBP3.56 billion, outpacing cost of sales rising 9.2% to GBP3.21 billion from GBP2.94 billion.

As a result, Drax opted to increase its dividend payout to shareholders by 9.5% to 9.2 pence per share from 8.4p a year earlier. It also said a GBP150 million share buyback programme was ongoing and that it expected its full year dividend to rise 10% to 23.1p from 21.0p across 2022.

Shares in Drax were down 1.7% to 609.60p each in London on Thursday before midday.

"In the first half of 2023, we delivered a strong system support and generation performance, providing dispatchable, renewable power for millions of UK homes and businesses. Drax Power Station remained the UK's single largest provider of renewable energy by output during the period," said Chief Executive Officer Will Gardiner.

Looking ahead, Drax said its full-year expectations in terms of adjusted earnings before interest, tax, depreciation and amortisation were unchanged and in line with analysts' consensus estimates.

It also said it was progressing options for GBP7 billion of strategic growth opportunities from 2024 to 2030, primarily in bioenergy with carbon capture and storage. This includes aiming to develop over 20 megatonnes of carbon removals per year, specifically 14 megatonnes per year by 2030.

In the first half of 2023, Drax's capital investment multiplied to GBP210 million from GBP60 million a year earlier. It expects total 2023 capital investment of between GBP520 million to GBP580 million.

"We continue to focus on our role as the UK's leading generator of flexible renewable power and our ambition to be a world leader in carbon removals. To that end, in the US, we have made good progress screening options for BECCS projects which can deliver long-term, large-scale carbon removal and attractive opportunities for growth," Gardiner continued.

"We are excited about the opportunity for BECCS in the UK and are in formal discussions with the UK government to facilitate the transition to BECCS at Drax Power Station by 2030. Our plans could create thousands of new jobs in the Humber region, help the UK meet its carbon removals targets and support long-term energy security."

Net debt at June 30 ticked up to GBP1.27 billion on June 30 from GBP1.21 billion on December 31. Across the same period, cash and cash equivalents almost halved to GBP125 million from GBP238 million.

By Greg Rosenvinge, Alliance News reporter

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