National Grid's profits still powering ahead

Published on Thursday 19 November 2009 21:18

NATIONAL Grid is on track for another year of "strong performance" after reporting a 16 per cent hike in interim profits.

The utility group, which operates electricity and gas networks, posted underlying pre-tax profits of 649 million in the six months to 30 September.

Chief executive Steve Holliday described it as "a very strong financial performance in the first half".

The firm's ability to earn regulated returns – set according to inflation levels – and the fact its revenues are no longer based on volumes helped it weather a drop in demand for energy during the recession.

National Grid's UK transmission operating profit rose 8 per cent to 637m, thanks in part to regulated revenues rising 6.7 per cent for electricity and 3.8 per cent for gas – benefiting from last year's high retail prices index (RPI) inflation. This year's negative RPI is expected to hit revenues in the next financial year.

But National Grid said this would be partly offset by helping bring finance costs down, as some of its 22 billion debts are linked to inflation.

The group's US business was more impacted by the recession, as many of its operations still have revenues linked to energy volumes. US transmission earnings fell 15 per cent to 88m.