British power station operator, Drax Group, expects underlying profits to be ahead of market forecasts and said that growth would be modest going forward.
In a trading update, the group said that its earnings had been boosted by its ability to improve its strategic position in the UK generation fleet throughout 2009.
As a result, it claims to have a strong forward contracted position for 2011 and after adjusting for movements in working capital, it further anticipates that total distributions for 2009 will be in line with the current market consensus of £50m.
Dorothy Thompson, chief executive of Drax, said: ‘This is a good performance in what remains a challenging market environment. I am also particularly pleased with our contracted position for 2010, which underpins strong earnings and cash generation for next year.
‘Beyond 2010, forward markets are currently weak, although our contracted position for 2011 provides us with a reasonable foundation for that year. Nevertheless, we will retain a strong focus on cost, cash and risk management to ensure we navigate successfully these potentially difficult conditions, whilst at the same time being in a position to maximise opportunities when markets recover.’
The company added that it had begun commissioning of the 400MW co-firing facility at Drax in line with the proposed construction schedule. The co-firing facility is scheduled to be fully operational by the end of 2010 and will increase Drax’s total co-firing capacity to 500MW.
The company said: ‘We are taking advantage of the plant’s flexibility and reliability to improve profitability in such market conditions. These features of the plant enable us to participate more actively in the real-time electricity trading market and also buy back power in the market to meet forward contracted positions.’