National Grid profit slides as Covid costs increase
Energy firm National Grid posted a 12 per cent decline in profit for the first half as the coronavirus pandemic increased the network owner’s costs.
Underlying profit fell from £1.3bn to £1.15bn in the six month period, which the FTSE 100 company said was down to rising bad debt provisions and a shortfall in revenue.
It said that it remained on track to take a £400m hit to profit from the pandemic.
Shares in National Grid fell two per cent as markets opened this morning.
As a result of restrictions brought in to mitigate the pandemic, power usage shrunk nearly a fifth earlier this year.
The firm said that it expected demand to remain weaker than prior to the coronavirus, resulting in lower revenues, but said that this would be recovered in later years.
National Grid added that it remained in discussions over a multi-year settlement for its New York gas businesses.
Chief executive John Pettigrew said: “In the first half of this year we delivered strong operational performance whilst managing the impact of COVID- 19 costs on our financial results.
“We have continued to ensure safe, reliable networks and have delivered on our investment programme through the pandemic.
“Looking ahead, the group is well positioned to manage the ongoing Covid-19 uncertainty, and our full-year financial guidance is unchanged.”
Steve Clayton, fund manager at Hargreaves Lansdown, said that the firm had handled the pandemic well, but warned that today’s figures were a “sideshow” to the real challenges facing the firm.
“National Grid faces the challenges of reshaping its networks to meet the changing pattern of power generation in the UK.
“New wind, solar and nuclear generation all need to be hooked up to the grid, requiring billions of pounds of investment by National Grid.
“The most important thing going on at Grid right now is the discussion going on with the regulator about how much they will be allowed to charge to fund all of this investment in the years ahead. News on that is expected in December.”
Over the weekend the Sunday Telegraph reported that the firm was facing being broken up amid the UK’s push to a carbon neutral energy system.