Drax profit falls on higher fuel and carbon emissions costs

LONDON (Reuters) - Drax (DRX.L), which runs Britain's biggest coal-fired power station, made a net pre-tax profit of 206 million pounds in the first six months of 2008, down more than 28 percent from the first half of last year, the company said on Tuesday.

Drax, whose plant in northern England is the country's biggest single source of carbon dioxide, reaffirmed that it expects its full year EBITDA to be slightly more than 400 million but below the 506 million for 2007.

Drax said higher fuel and carbon emissions costs more than offset increased revenue from higher power prices and squeezed profit margins in the first six months of 2008.

"During the first half of 2008, we have continued to focus on delivering value for our shareholders by maintaining leading performances in trading and production whilst developing our biomass capability," Chief Executive Dorothy Thompson said.

"Both of our strategic carbon abatement projects, to deliver efficiency improvements by upgrading our turbines and to grow our co-firing capability have made good progress."

Drax said success in procuring cleaner-burning organic matter to burn with coal in its 4,000-megawatt plant in Yorkshire, meant it could generate 500 megawatts of power from biomass by 2010, up from its previous forecast of 400 MW.

Net sales rose by one terawatt hour compared to the first half of last year to 13 TWh in the first six months of 2008.

The large coal fired power station near Selby, which supplies about 7 percent of Britain's electricity, was able to produce power for 87 percent of the first half of the year.

Drax has proposed distributions of 14.7 pence per share, comprising an interim ordinary dividend of 5.0 pence and an interim special divided of 9.7 pence.

(Reporting by Daniel Fineren; Editing by Paul Bolding)