Drax PLC (LSE:DRX) maintained its full-year 2026 earnings outlook after reporting first-half adjusted EBITDA of £279 million. The result was down 39% from the same period last year and came in slightly below analyst expectations of £289 million, primarily due to weaker-than-expected performance from its Biomass Generation business.
The Biomass Generation division reported adjusted EBITDA below market forecasts, while the company’s Pellet Production operations performed in line with expectations during the period.
Pellet Production Meets Expectations
Drax produced 1.9 million tonnes of wood pellets during the first half of 2026, with Pellet Production delivering earnings broadly in line with analyst forecasts.
The company said first-half performance leaves it on track to achieve full-year adjusted EBITDA consistent with current market expectations. Drax continues to expect 2026 adjusted EBITDA of around £665 million, within the analyst consensus range of £643 million to £681 million.
New 2029 Growth Targets Announced
Alongside its interim results, Drax introduced an upgraded medium-term earnings target, forecasting adjusted EBITDA of between £650 million and £800 million by 2029.
The new target excludes any potential contribution from the proposed BSIF acquisition and represents an increase from the company’s previous guidance of £600 million to £700 million. The revised outlook incorporates expected earnings from its expanding Batteries and Battery Energy Storage Systems (BESS) operations.
Management expects the Batteries/BESS business to contribute between £50 million and £100 million of EBITDA by 2029. Current analyst forecasts estimate approximately £627 million of EBITDA for 2029 on a like-for-like basis, including around £50 million from the BESS division.
Strong Balance Sheet Supports Growth Plans
Drax ended the first half with net debt equivalent to 1.3 times EBITDA, reflecting a relatively conservative leverage position. The company also reported available liquidity of £630 million through cash reserves and committed credit facilities, providing financial flexibility to support future investment and strategic growth initiatives.
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