Graanul - comment

Drax released its FY24 numbers but we await the Q&A to glean new information about its agreement with the UK government regarding subsidies for burning wood pellets in its furnaces. But a quick data point worth noting is that Drax targets post 2027 a recurring adj EBITDA of £250m for its 5Mt wood pellet operations in the US. This would equate to €160-170m p.a. for Graanul, adjusting for currency and Graanul’s smaller size (2.8Mt). Drax made €43.50/t (£36/t) on its 4Mt production in FY24 which compares to Graanul’s reported €53/t. There are the usual caveats of differing jurisdiction and industry pressures but projected EBITDA is higher than our expectations for Graanul.