National Grid says gas helps lift profits 4 percent

Source: Reuters

Date :20/11/2008 14:20:09

National Grid announced a 4 percent increase in half year profits, driven by a strong performance in its gas distribution business, and forecast full year results in line with its expectations.

National Grid, which runs energy networks in the UK and United States, said on Thursday that operating profit on continuing operations in the six months to September 30 rose to 1.079 billion pounds from 1.039 billion a year ago.

The group said its gas distribution business, which almost doubled in size after the acquisition of U.S. operation Keyspan in August last year, increased its operating profit by 65 percent to 274 million pounds.

New regulatory agreements in the UK and United States, which in Britain allowed for an above-inflation increase in allowed revenue for the year, helped the divisional result.

National Grid said its medium-term plans to invest about 3 billion pounds a year across its businesses remained on track, but warned that it would "only be made when we have regulatory certainty that it will deliver appropriate returns."

Pretax profit on continuing operations fell 26 percent to 558 million pounds and the company increased the interim dividend by 8 percent to 12.64 pence per share.

Chief Executive Steve Holliday said first-half earnings reflected the seasonality of the former Keyspan businesses, where gas revenues were significantly weighted to the second half.

The company was on track to achieve its target of $100 million (67 million pounds) of savings from Keyspan by March 2009, having delivered savings at a run rate of $56 million by the end of September, it said.

National Grid said it had raised more than 3 billion pounds in bonds and bank debt since the beginning of the year.

Finance director Steve Lucas described securing funds as hard work due to tough markets, but said it was business as usual.

"We're absolutely confident we will continue to build a funded investment programme going forward," he told journalists on a conference call.

Holliday said the outlook for 2008/9 was positive and the company was well-placed to achieve low-risk, organic growth.

"We remain on track to deliver in line with our expectations for the full year," he said in a statement.

The results were below Citigroup's forecast of 1.106 billion pounds, but above Credit Suisse's prediction of 1.070 billion.

Broker UBS, which had forecast pretax profit of 542 million pounds, said the out performance on that measure represented more of a timing issue between the first and second halves, rather than a strong upgrade to full-year numbers.

"Overall results are expected to bode well for the share price," UBS said in a research note.

At 9:30 a.m., shares in National Grid had recovered from early falls to stand 0.65 percent, or 4.5 pence per share, ahead at 694.5 p.

(Reporting by Philip Waller; Editing by Rupert Winchester)

LONDON (Reuters)