National Grid Profit Slips as Nationalization Casts Shadow




 

(Bloomberg) -- National Grid Plc unveiled adjusted operating profit that just beat analyst estimates as the U.K. network operator rebuffs proposals to nationalize energy assets.

The nationalization proposals "are only going to cause a huge amount of disruption," Chief Executive Officer John Pettigrew said in an interview. It's "the last thing you want when you've got the need for a huge amount of infrastructure investment."

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Even if Labour does get in to power, such a plan isn't seen to have wide political support, while state ownership could be complicated as more than half of the utility's revenue comes from U.S. assets.The company made "significant" progress on cross-border cables, or interconnectors. It has put the high-voltage lines at the heart of its growth strategy and is continuing with projects that are already underway, amounting to a 2 billion-pound ($2.6 billion) investment in cables to France, Norway and Denmark.The company said it expected energy regulator Ofgem to publish on May 23 its latest consultation on proposed gas and power grid price-control levels for 2021. The regulated rate over inflation is meant to save consumers 6.5 billion pounds but will hurt earnings for companies like National Grid.

Market reaction

National Grid was little changed at 844 pence at 8:24 a.m. in London.The stock has climbed more than 10% in 2019, on a par with the 29-member Stoxx 600 utilities index.

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Adjusted operating profit slipped 2% to 3.43 billion pounds, beating average estimates of 3.37 billion pounds.Capital expenditure for 2019/20 expected to increase to almost 5 billion pounds, up from 2018/19 level of 4.5 billion pounds."We remain on track to achieve asset growth at the top end of our 5-7% range in the medium term," Pettigrew said in a statement.Get more numbers hereStatement link(A previous version of this story was corrected to show profit fell instead of rose in the headline)

(Updates to add CEO comment in first bulletpoint; shares.)

To contact the reporter on this story: Jeremy Hodges in London at jhodges17@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Andrew Reierson, Rob Verdonck

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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