Utility Week

UTILITY Week 26th May 2017

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UTILITY WEEK | 26TH MAY - 1ST JUNE 2017 | 15 This week Profits surge by 14% at National Grid Chief executive credits record capex and focus on efficiency for substantial hike in profits National Grid Group has announced a substantial rise in profits in the year to the end of March. Adjusted operating profits grew 14 per cent to £4.6 billion, and adjusted pre-tax profits were up 13 per cent to £3.6 billion. Reported pre-tax profits fell 3 per cent to £2.9 billion. Chief executive John Pettigrew said: "We invested record capex of £4.5 billion delivering a safe and reliable service for customers. Our focus on efficiency has also generated £460 million of savings for customers in the first half of the eight-year RIIO framework." Adjusted operating profits from electricity transmis- sion in the UK jumped by 17 per cent year-on-year to £1,372 million, although there was a more modest rise of 6 per cent to £1,235 million when accounting for the timing of revenue receipts. The group's gas transmission business in the UK saw a 5 per cent rise in adjusted operating profits to £551 mil- lion, and an even greater increase of 7 per cent to £449 million when excluding timings. In March, National Grid completed sold a 61 per cent stake in National Grid Gas Distribution (NGGD) to a consortium of international investors. NGGD has been separated from the group and rebranded Cadent. National Grid received £3.8 billion in cash and a further £1.8 billion in debt financing. Adjusted operating profits from NGGD increased by 2 per cent in 2016/17 to £898 million. There was an 8 per cent rise to £920 million when excluding timings. TG ENERGY Profits edge up at SSE despite retail woes Improved performance in SSE's networks and wholesale divisions have driven a modest rise in profit in the company's preliminary results for the year to the end of March. The increase came despite a decline in earnings from the company's retail arm, which has shed about 210,000 households and business customers. Adjusted operating profit was up 2.7 per cent to £1,874 million, and adjusted pre-tax profit grew by 2.1 per cent to £1,545.9 mil- lion. Adjusted operating profit in the retail arm fell by 7.2 per cent to £422.3 million, which SSE pinned on "increases in non- energy costs, the household gas tariff reduction in March 2016 and falling customer numbers". "Reduced wholesale energy costs and slightly increased aver- age consumption" meant there was a "small overall increase" in earnings from the UK household supply segment of the retail arm. ENERGY Firm plans return of Green Deal The Green Deal Finance Com- pany (GDFC) has revealed plans to raise £5 million by launch- ing a retail bond through the peer-to-peer finance platform Abundance Investment. The money will be used to upgrade the company's operational infrastructure as it prepares to offer new loans. The GDFC and its existing loan book were bought for £40 million in January by a consor- tium of Aurium Capital Markets and Greenstone Finance. The firm is initially plan- ning to relaunch the Green Deal scheme with a small number of thoroughly vetted installers to ensure customers receive a high- quality service, before widening the pool. ENERGY RWE and Engie ponder alliance RWE and Engie are considering an alliance in which RWE would swap a stake in its renewables and grids spin-off Innogy for a minority interest in Engie, according to Reuters. The utilities have discussed possible deals with advisers and bankers, although there are no active talks between senior executives, according to four unnamed banking sources quoted by the news agency. The sources said a marriage between the European energy giants would not take place before the German elections in September. "There are indeed talks ongoing, but that does not mean they will succeed," said a French government source. Profits jumped in transmission businesses Stock watch 13.7 13.6 13.5 13.4 13.3 RWE SHARE PRICE, FIVE DAY ENGIE SHARE PRICE, FIVE DAY The stock price of the German energy group RWE rose last week from €16.10 to €17.38 aer reports it was considering an alliance with rival Engie. The news prompted analysts at Jefferies to allocate a "buy" rating to RWE shares, although they also warned they struggled "to see the long-term benefits of such a deal" for RWE shareholders. The value of Engie's shares fluctuated over the same period, starting at €13.42 and finishing at €13.49. 17.5 17.0 16.5 16.0 15.5 18 May 18 May 19 May 19 May 22 May 22 May 23 May 23 May Finance & Investment

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