Drax Reports Sharp Drop in Profits Amid Job-Cutting Cost Saving Efforts
Power giant Drax has reported a steep decline in operating profits, just days after revealing job losses at its Yorkshire base. New full-year results for the FTSE250 firm show operating profit plummeted from £850 million to £241 million in 2025, while pre-tax profit slumped from £753 million to £190 million.
Factors Behind the Profit Decline
Drax attributed the numbers to non-cash impairments totaling £378 million. This includes £337 million related to pausing pellet production setup at Longview in the United States, lower expected margins, a constrained Canadian fibre market, and future demand from the Selby power station.
Additionally, there was a £48 million impairment attached to bioenergy with carbon capture and storage plans at the site, which have not materialized. Drax stated it could develop these plans in the long term, following a pause in March 2023.
Record Renewable Power Generation
Despite the profit fall, the firm emphasized it generated record levels of renewable power, contributing about 6% of the UK's power requirement and 11% of UK renewables overall. The Selby plant remains the largest power station in the UK, with Drax exploring options for a 1.2GW-scale data centre there.
Cost Savings and Job Cuts
The results come as Drax targets cost savings of more than £150 million per year from 2027, compared to its 2024 costs. Last month, the company announced a restructuring that will result in 350 job cuts across its UK and US operations.
CEO Comments on Future Prospects
Drax Group CEO, Will Gardiner, commented: “In 2025, we produced more renewable power than ever before, delivering energy security for the UK. Our colleagues and supply chain partners work around the clock to help keep the lights on for millions of the UK’s households and businesses, no matter the weather.”
He added: “The signing of the new low carbon dispatchable contract for difference is an inflection point for the group. It provides the foundation for us to keep supporting the UK with the flexible, renewable power it needs for security of supply this decade and beyond. The energy transition and growth in AI are creating opportunities for us to invest and grow our business further in line with the country’s energy needs.”
Gardiner continued: “We are making good progress on this with our initial investments in battery energy storage systems, which we see as an attractive market. We will continue to explore options to invest in flexible and renewable energy, creating value for stakeholders and attractive returns for shareholders in line with our capital allocation policy.”
