Higher revenues from new US rate cases and lower storm costs boosted National Grid’s (NG.) underlying operating profit by 1 per cent during the first half, a rise that may have been marginal but was still ahead of consensus expectations.
Capital expenditure increased by 17 per cent at constant currencies to £2.5bn, following significant investment in UK electricity transmission and regulated US infrastructure. The group is guiding to £5bn of capital investment (which includes contributions to joint ventures) for the full year. Growing the asset base meant net debt was up by £27.8bn and a further £1bn will be added in the second half.
As well as an Ofgem investigation into August’s power cut, there is an escalating dispute across the Atlantic. Amid gas supply constraints in downstate New York, its moratorium imposed on new customer connections has attracted the ire of the state's governor, Andrew Cuomo, who is threatening to revoke the group’s franchise licence. The businesses in question comprise 12 per cent of the overall asset base with a combined regulated rate base of $6.3bn (£4.6bn). National Grid says it is “confident” it can address the concerns raised.
RBC Capital Markets expects underlying pre-tax profit of £2.58bn and EPS of 59.9p for the full year, up from £2.47bn and 58.9p in 2019.
| NATIONAL GRID (NG.) | ||||
| ORD PRICE: | 899p | MARKET VALUE: | £ 31.3bn | |
| TOUCH: | 899-900p | 12-MONTH HIGH: | 927p | LOW: 745p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 546p* | NET DEBT: | 144%** | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 6.35 | 522 | 12.7 | 16.08 |
| 2019 | 6.29 | 404 | 11.3 | 16.57 |
| % change | -1 | -23 | -11 | +3 |
| Ex-div: | 28 Nov | |||
| Payment: | 15 Jan | |||
| *Includes intangible assets of £7.5bn or 215p a share, **Excludes £474m in lease liabilities | ||||
