Gas and electricity provider National Grid reported underlying pre-tax profits up by a modest 2 per cent to £953m for the first six months to 30 September, but this still beat analysts estimates of £930m.
Trading was impacted by Hurricane Irene, which caused £69m of damage to the US network and affected power supplies to over a million National Grid customers. As a result, operating profit fell by £46m to £306m in the US business. However, if you adjust for timing differences - effectively over- and under-recoveries from customers paying their utility bills - and the one-off cost of Irene then underlying operating profits in the US would have risen by £38m. On the same basis, the UK transmissions business increased operating profit (excluding timing differences) by 2 per cent to £625m.
The regulatory environment in the UK and investment in the network will be a major determinant for future shareholders returns, with National Grid now expecting investment to be around £3.2bn to £3.3bn in the year to March 2012 - lower than some analyst estimates. A new performance metric of return on capital employed showed the UK posted a 8.5 per cent return, down from 9.6 per cent, but still higher than the US business at 7.1 per cent.
The interim dividend was boosted by 8 per cent in line with the board's policy.
NATIONAL GRID (NG.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 635.5p | MARKET VALUE: | £ 22.6bn | |
| TOUCH: | 635-635.5p | 12-MONTH HIGH: | 654p | LOW: 522p |
| DIVIDEND YIELD: | 6.1% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 234p | NET DEBT: | 239% | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 6.44 | 971 | 23.1 | 12.9 |
| 2011 | 6.31 | 941 | 22.3 | 13.9 |
| % change | -2 | -3 | -3 | +8 |
Ex-div:30 Nov Payment:18 Jan *Includes intangible assets of £5.4bn, or 151p per share †Adjusted for 2010's rights issue | ||||
