Category: Top Story

Drax (LSE:DRX) reported record renewable electricity generation in 2025, strengthening shareholder returns and outlining long-term growth plans backed by a new low-carbon dispatchable Contract for Difference (CfD) agreement aimed at supporting UK energy security.

The company generated enough renewable power during the year to supply around 6% of the UK’s total electricity demand and 11% of its renewable output. Biomass pellet production also increased by 5%, reflecting continued operational expansion. Despite strong generation performance, adjusted EBITDA declined to £947m, while operating profit fell significantly following a £378m impairment charge.

Drax continued to reinforce its financial position during the year, increasing its dividend by 11.5% and completing a £300m share buyback programme. The group has also launched a further £450m repurchase initiative, supported by improved earnings visibility stemming from the newly agreed CfD framework.

Management said the agreement enhances long-term revenue certainty while reinforcing the company’s role in delivering reliable low-carbon power to the UK grid.

Looking ahead, Drax is targeting annual adjusted EBITDA of between £600m and £700m beyond 2027 and expects to generate roughly £3bn in free cash flow between 2025 and 2031. Of this, more than £1bn is planned for shareholder distributions, while up to £2bn will be invested in growth initiatives including flexible renewable generation capacity and battery storage assets.

The company is also advancing plans to develop data centre and battery projects at its 4GW power station site, positioning the location to benefit from rising electricity demand linked to digital infrastructure and artificial intelligence workloads. In parallel, Drax is pursuing cost efficiencies expected to exceed £150m annually from 2027.

These initiatives are intended to strengthen the group’s role in the energy transition while increasing exposure to growing system flexibility requirements across the UK power market.

Drax Group plc’s overall outlook is supported by robust cash generation, solid profitability metrics and favourable valuation indicators, alongside strategic initiatives such as buybacks and government-backed agreements. However, management acknowledged that slower revenue growth and evolving dynamics within the biomass pellet market present risks that will require careful oversight.

More about Drax Group plc

Drax Group plc is a UK-based renewable energy company focused on biomass generation, pumped storage, hydroelectric assets and other flexible power solutions. The group also operates a large North American biomass pellet production business and is expanding into battery energy storage systems and energy optimisation services designed to enhance grid stability and support the broader transition to low-carbon energy.

HSBC Holdings (LSE:HSBA) exceeded full-year profit forecasts on Wednesday and issued a 2026 net interest income (NII) outlook above market expectations, lifting its Hong Kong-listed shares by more than 2%.

The Asia-focused banking group reported pretax profit of $29.91 billion for 2025, surpassing the $28.86 billion analyst consensus compiled by Bloomberg, although lower than the $32.38 billion recorded in the previous year.

The year-on-year decline was largely attributable to $4.9 billion in notable items, including impairments related to its stake in Bank of Communications and restructuring expenses. On an adjusted basis excluding these items, pretax profit increased to $36.62 billion from $34.18 billion.

Group revenue rose 4% to $68.3 billion, supported by stronger wealth management fees and foreign exchange income. Return on tangible equity reached 13.3% for the full year, or 17.2% when excluding notable items.

HSBC projected banking net interest income of at least $45 billion for 2026, driven by deposit growth and contributions from its structural hedge. The guidance compares with an analyst consensus currently standing at $43.5 billion.

Management also indicated operating costs would rise by around 1% in 2026, implying a cost base of approximately $33.8 billion — about $500 million below consensus expectations.

“This gives management – along with visibility from the structural hedge – the conviction to produce banking NII guidance for ’26E of > $45bn, some $1.5bn higher than the street,” Jefferies analysts said.

The bank expects credit losses in 2026 to be roughly 40 basis points of loans and reaffirmed its goal of achieving a return on tangible equity of at least 17% through 2028, alongside revenue growth accelerating to around 5% by that time.

Adjusted pretax profit for the fourth quarter reached $8.59 billion, exceeding consensus forecasts by 9%. Banking net interest income totalled $11.7 billion, about 6% ahead of expectations, supported by higher HIBOR rates and a one-off contribution not expected to recur. Wealth management fees increased 20% year on year, while insurance income surged 49%.

Reported pretax profit for the fourth quarter rose sharply to $6.8 billion from $2.3 billion a year earlier, when results had been affected by losses linked to the disposal of the Argentina business.

HSBC’s CET1 capital ratio stood at 14.9%, 20 basis points above consensus estimates. Tangible net asset value per share increased 12% year on year to 964 cents. The board declared a fourth interim dividend of $0.45 per share, bringing total shareholder distributions for 2025 to $0.75 per share.

The bank also disclosed $500 million in base synergies linked to the Hang Seng transaction, with an additional $400 million in potential synergies targeted by 2028, associated with restructuring costs of $600 million.

Jefferies reiterated a “hold” rating on the London-listed shares with a price target of 1,120 pence. The stock last closed at 1,291 pence, equivalent to around 1.8 times spot tangible book value.

Diageo (LSE:DGE) reported first-half fiscal 2026 net sales of $10.5 billion, representing a 4% decline year on year, as organic net sales dropped 2.8% due to softer consumer demand in North America and continued weakness in Chinese white spirits. Growth across Europe, Latin America and Africa provided some offset, but operating profit still fell 1.2%, reflecting an unfavourable product mix and tariff pressures. Free cash flow decreased to $1.5 billion, prompting management to revise full-year expectations to a 2–3% fall in organic net sales and flat to low single-digit growth in organic operating profit.

The company is placing greater emphasis on balance sheet resilience and financial flexibility, introducing a rebased dividend policy targeting a 30–50% payout ratio alongside a minimum annual dividend floor of 50 cents per share. An interim dividend of 20 cents was declared. Diageo also anticipates roughly $2.3 billion in proceeds from the agreed disposal of its holdings in East African Breweries and its Kenyan spirits operations. Meanwhile, the Accelerate cost-efficiency programme continues under new CEO Sir Dave Lewis, who is steering strategy toward improved competitiveness, broader portfolio strength and more customer-focused execution.

Diageo’s outlook reflects supportive corporate developments and an attractive dividend yield, though pressures on profit margins, reduced cash flow stability and bearish technical indicators continue to weigh on overall sentiment.

More about Diageo

Diageo is a global beverage alcohol company known for its portfolio of premium spirits, beer and ready-to-drink brands. The group operates across key categories including whisky, vodka, rum and regional white spirits, supported by a diversified geographic presence spanning North America, Europe, Latin America, Africa and Asia-Pacific markets.

AFC Energy (LSE:AFC) released its FY25 results outlining a strategic shift toward commercial rollout of its fuel cell generators and ammonia cracking technology, supported by an oversubscribed £27.5 million fundraising. The company increased investment in research and development during the year, while reporting a wider post-tax loss of £22.2 million. AFC Energy closed the period with £25.3 million in cash and investments and has since obtained regulatory approval to begin early hydrogen sales from its Dunsfold pilot facility.

Operational progress included several deployments of 30kW generators through the Speedy Hydrogen Solutions joint venture and the introduction of the Hy-5 ammonia cracker. These initiatives are designed to deliver low-carbon hydrogen at a targeted cost of £10 per kilogram, positioning the company to compete among the UK’s lowest-cost suppliers. After the reporting period, AFC Energy launched its LC30 generator, signed new joint development agreements with both an S&P 500 partner and Komatsu, and entered a manufacturing partnership with Volex. Management indicated that 2026 is expected to mark the transition from pipeline development to firm commercial orders and more consistent revenue expansion.

The company is now focused on securing pre-orders for the LC30 and Hy-5 platforms, building out a Fuel-as-a-Service offering, and expanding distribution channels across North America, Europe and through its Saudi Arabian partner Tamgo. A simplified organisational structure, continued patent development and an emphasis on commercial execution are intended to reinforce AFC Energy’s position within the developing low-carbon hydrogen and off-grid energy markets.

AFC Energy’s investment outlook remains influenced by ongoing profitability and cash flow pressures. Technical indicators suggest improving market momentum, although valuation metrics — including a negative P/E ratio and absence of dividend yield — continue to weigh on overall sentiment.

More about AFC Energy

AFC Energy is a UK-listed developer of ammonia-based low-carbon hydrogen production and hydrogen-to-power technologies designed to replace diesel generation in off-grid environments. Its modular ammonia crackers and fuel cell systems aim to enable decentralised, scalable hydrogen supply for industrial and hard-to-abate sectors without dependence on government subsidies.

Hiscox (LSE:HSX) announced a third straight year of record financial performance in 2025, with insurance contract written premiums increasing 5.9% to $4.98 billion and profit before tax climbing to $732.7 million. The insurer achieved its strongest combined ratio in ten years at 87.8%, alongside record underwriting and investment income. Robust capital generation enabled a 20% rise in the final dividend and the launch of a new $300 million share repurchase programme, lifting total announced capital returns over the past three years to more than $1.1 billion.

Retail operations delivered solid momentum, with premiums rising 6.3% at constant currency as Hiscox broadened its reach into adjacent specialist markets. The company expanded into Italy through a bolt-on broker acquisition and accelerated product rollouts, particularly targeting emerging professional sectors and technology-related risks. Management highlighted that its ongoing multi-year transformation programme contributed a $29 million profit uplift in 2025 and remains on course to generate $200 million in annual benefits from 2028, supporting faster retail expansion and strengthening Hiscox’s position as a focused specialty insurer.

The company’s stock assessment reflects attractive valuation metrics and supportive corporate developments, notably the newly announced share buyback. While operating performance remains steady, cash flow pressures persist. Technical signals currently indicate a bearish trend, though valuation levels may imply potential upside if fundamentals continue to improve.

More about Hiscox

Hiscox Ltd is a Bermuda-based global specialty insurer listed on the London Stock Exchange. The group specialises in complex and niche risks, combining catastrophe-exposed underwriting with more stable local specialty insurance activities across its retail, London Market and reinsurance divisions. Hiscox serves both commercial and personal clients across the United States, the United Kingdom, Europe and other international markets.