Shares of Selby, North Yorkshire-based power company Drax Group fell more than 5% on Thursday after it said earnings before interest, tax, depreciation and amortisation (EBITDA) fell 17% to £140 million in 2016 and that it would pay a full-year dividend of 2.5p per share, down from 5.7p in 2015.
Revenue for 2016 was £2.95 billion, down £115 million on 2015.
Drax Group chairman Philip Cox said the results reflected “very challenging commodity markets and the removal of climate change levy exemptions.”
Drax said 65% of its generation in 2016 was from biomass, up from 43% in 2015.
“Against a background of low wholesale electricity prices, and a volatile and demanding environment for renewable energy providers, the group has again delivered strong operational performance,” said Cox.
“Following a comprehensive review, initiated in 2015, the group’s new strategy has been defined and is based on creating a more diversified earnings base that will produce higher-quality returns in the long term.
“Central to this strategy, Drax aims to play an increasing role in delivering a robust low-carbon energy system for the UK.”
Drax said the cut in dividend was in line with its policy of distributing 50% of underlying earnings, but Cox said Drax would now review its dividend policy involving discussions with shareholders in the first half of 2017.
Drax shares have risen more than 30% in the past year to give it a current stock market vaue of around £1.5 billion.
Drax Group CEO Dorothy Thompson said: “We are playing a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low carbon future.
“With the right conditions, we can do even more, converting further units to run on compressed wood pellets.
“This is the fastest and most reliable way to support the UK’s decarbonisation targets, whilst minimising the cost to households and businesses.
“In a challenging commodity environment Drax has delivered a good operational performance with 65% renewable power generation.
“The acquisition of Opus Energy and rapid response open cycle gas turbine projects are an important step in delivering our strategy, diversifying our earnings base and contributing to stronger, long-term financial performance across the markets in which we operate.”