Power producer Drax's core earnings beat estimates

Reuters - UK Focus

(Corrects paragraph 1 to say the company produced less power,not more)

Feb 18 (Reuters) - British power producer Drax Group Plc (LSE: DRX.L - news) reported core earnings ahead of analysts' estimatesdespite generating slightly less electricity from its powerproduction fleet.

The company said earnings before interest, tax,depreciation, amortisation (EBITDA) and unrealised gains orlosses on derivative contracts were ahead of market estimates,but slumped 23 percent to 230 million pounds ($384.40 million)due to rising carbon costs.

Analysts on average were expecting EBITDA of 221.52 millionpounds for the 12 months ended Dec. 31, according to ThomsonReuters I/B/E/S.

Amid an acute shortage of coal and EU rules that limitcarbon emissions, burning coal has become increasinglyuneconomic. The British government too has levied a tax onemissions, forcing utility companies to search for cheaperalternatives.

Noting the trend, Drax, which owns one of Europe's largestcoal-fired power stations, made a partial switch to biomass lastyear in a bid to rein in costs at a time when rising coal priceswere squeezing its profits.

Drax, which runs coal and biomass-fired power plants tosupply electricity largely to retail clients, cut its full-yeardividend to 17.6 pence per share from 25.3 pence per share ayear earlier.

Shares in the company were up 1 percent at 815 pence at 0829GMT on the London Stock Exchange (Other OTC: LDNXF - news) . ($1 = 0.5983 British pounds) (Reporting by Esha Vaish in Bangalore; Editing by SupriyaKurane)

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