National Grid reassures shareholders over US earnings with bullish update
National Grid has told shareholders to expect further contributions to its earnings in the second half of the year, in an effort to reassure investors over its US operations.
The FTSE 100 company said: “For our US regulated businesses, we expect contributions to be more heavily weighted towards the second half.
“Our New York business is expected to deliver 10-15 per cent of its full-year operating profit in the first half, given a higher non-cash environmental provision charge.”
National Grid will unveil its results on Thursday 9 November for the six months of trading up to the end of September.
The company is on course to meet its financial guidance, and expects its overall performance to be in line with expectations with a greater contribution of earnings for the full year in the second half to next March.
This would be particularly pronounced in the US, where the group oversees electricity and gas operations for more than 20m people in the US through the states of New York and Massachusetts.
It expected that its New York business would deliver between 10 per cent and 15 per cent of its full-year operating profit over the past half-year after being hampered by a non-cash impairment.
This would contrast with its domestic UK operations, where earnings would be “broadly even” across the year.
Earlier this year, the company unveiled bumper profits for the year to March, with a 15 per cent rise in underlying operating profit to £4.6bn.
This was powered by rapid growth across the electricity distribution business it bought two years ago.
National Grid has spun off and sold much of its gas business in the UK, reaching a deal in July with a consortium led by Australian investor Macquarie to increase its ownership of National Gas to 80 per cent.
It is now focusing on electrification — with the government targeting the full decarbonisation of the electricity grid by 2035.
The power networks operator has pledged £40bn investment in critical infrastructure over the next four years, raising its commitments from £30-£35bn,
This includes £29bn targeted towards decarbonising energy networks across the country — with National Grid aiming to electrify more of the UK’s energy next work over the next seven years than it has managed since privatisation in 1990.
Chief executive John Pettigrew told Morning Wire last year that transparency was crucial for the decarbonisation of the grid, including clarity over supply chains, planning and its role in meeting both net zero pledges and the Government’s energy security targets.
He said: “We need transparency in terms of what work needs to be done. It is a huge ambitious target and a lot of investment is going to be needed over the next decade.”
Prime Minister Rishi Sunak has recently pledged to speed up the planning process for the UK’s electricity grid infrastructure — with the current queueing system a lightning rod for industry criticism.
Shares in the company are up 1.02 per cent on the FTSE 100 in this afternoon’s trading.