National Grid reports 'good' first half progress, reiterates outlook

Electricity transmission network operator National Grid reported “good progress” against its key priorities in its interim report on Thursday, with adjusted operating profit excluding timing up 4% to £1.4bn.

The FTSE 100 company’s adjusted earnings per share in the six months to 30 September stood at 18.5p, including adverse timing of 1.9p.

On a statutory basis, operating profit was £1.3bn and earnings per share were 19.5p.

During the period, National Grid made capital investment of £2bn - an increase of 7% year-on-year, or 4% at constant currency.

The board declared an interim dividend of 15.49p per share, which represented an improvement of 2.1%, in line with the board’s stated dividend policy.

A total of £3.6bn from the company’s sale of its gas distribution division was also returned via a special dividend and ongoing share buybacks during the half-year.

The board claimed its “strong” balance sheet had been maintained, as well as its full-year outlook, with its financial performance weighted to the second half due to seasonality in the US market.

“We have delivered a solid financial performance in line with our expectations, made further progress to evolve our business and maintained a world class, safe and reliable service,” said National Grid chief executive John Pettigrew.

“Our focus on efficiency and innovation has reduced costs and generated increased savings for bill payers.”

Pettigrew noted that the company also invested a further £2bn in “critical infrastructure” during the period.

“Our improved performance in the US is encouraging, with this part of the business now representing an increasingly important part of our investment proposition.

“Having reshaped our portfolio in the UK, we continue to expect our electricity and gas transmission businesses to deliver high levels of performance.”

On the operational front, National Grid said “strong momentum” sontinued in the US, with the Niagara Mohawk rate case filing now at settlement stage, and filings on Massachusetts Gas and Rhode Island said to be “imminent”.

It also described continued “solid performance” in its UK regulated business, with a framework for the separation of its electricity system operator business agreed.

UK interconnector projects to Norway, Belgium and France were also progressing well, the board claimed.

“Our outlook for the year is unchanged, underpinned by our expectations for a stronger second half,” John Pettigrew added.

“We are focused on completing rate filings in the US, continuing proactive discussions with Ofgem ahead of the next regulatory settlement in 2021 and seeking new opportunities to grow the business and optimise our performance.

“We are confident that our strategy continues to create value for shareholders, delivering an attractive yield, and asset growth in the 5% to 7% range.”