Pre-Tax Profit Falls 7% At National Grid plc


Shares in National Grid (LSE: NG) (NYSE: NGG.US) dropped marginally in early trade this morning, following the release of its unaudited half-year report for the six months ending 30 September.

The headline figure was pre-tax profit declining by 7%, from £1.05bn in H1 2012 to £979m. According to management, this reflected “the temporary additional cost of pre-financing asset growth at attractive interest rates”. Operating profit fell 1%, or 3% at constant currency, due to “the expected end of Niagara Mohawk deferral income recoveries and higher US system implementation costs”.

The tone of this morning’s statement remained positive despite these falls, however, with management pointing towards decent performance in the UK under Ofgem’s new price-controlling framework, while National Grid has invested in enhanced capabilities to drive further improvements in the US as new rates have been put in place.

Chief executive Steve Holliday commented: 

“I am pleased with the solid start we have made to the year, in line with our expectations overall both operationally and financially. We continue to invest efficiently in essential regulated assets on both sides of the Atlantic, providing our customers with reliable networks while generating value and driving growth. The new eight-year price controls, covering our principal UK regulated activities, and the recent rate case settlements in the US provide us with the long-term framework and clarity to continue to invest for the future.”

National Grid’s interim dividend was confirmed as 14.49p per share and, at around 5.3%, remains one of the highest yields in the FTSE 100.

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> Sam does not own shares in National Grid.