Drax sees 2016 profit at top end of forecasts on National Grid deal
(Reuters) - Drax Group Plc said it expects core profit for 2016 to be towards the top end of market forecasts, after it signed a contract with National Grid Plc to provide services that would help ensure British electricity transmission systems work reliably.
Shares of the power producer rose as much as 3.7 percent on Friday, outperforming a 1.6 percent fall in the European utilities sector <.SX6P>.
Drax said it would provide ancillary services to the British gas and electricity network operator for a year under the contract, beginning in April.
The services include black start, BM start-up, and fast reserve, a spokesman for Drax said.
Black start is a procedure for recovery from a transmission shutdown, BM start-up gives the grid access to additional power, and fast reserve controls sudden changes in frequency.
The market's current forecast for earnings before interest, tax, depreciation and amortisation for the year is between 132 million pounds and 161 million pounds, Drax said.
Shares in the company pared earlier gains to trade up 1.3 percent at 275.7 pence at 1146 BST on the London Stock Exchange. National Grid shares were down 1.6 percent at 971.6 pence, in line with the sector.
(Reporting by Mamidipudi Soumithri in Bengaluru and Nina Chestney in London,; Editing by Sunil Nair and Anupama Dwivedi)
