Utility Week

UTILITY WEEK | 17TH - 23RD NOVEMBER 2017 | 13 This week Half-year profits slide at National Grid Reduced returns from UK gas and electricity transmission hit group earnings National Grid has reported a drop in first-half-year profit because of reduced earnings from its electricity and gas trans- mission businesses in the UK. Adjusted operating profit for the group for the six months to the end of September was down 13 per cent year on year at £1,259 million. Excluding the impact of timings due to over- and under-recovery of regulated revenues during individual years, adjusted operating profit rose by 4 per cent to £1,368 million. This was largely the result of increased earnings from the US business, which on this basis saw a 19 per cent rise in adjusted operating profit, to £526 million. Statutory operating and pre-tax profit dropped by 13 per cent and 12 per cent, respectively, to £1,274 million and £847 million. National Grid chief executive John Pettigrew said: "Having reshaped our portfolio in the UK, we continue to expect our electricity and gas transmission businesses to deliver high levels of performance." Adjusted operating profit from electricity trans- mission fell by 22 per cent to £542 million. Excluding timings, the fall was 11 per cent to £540 million. Adjusted operating profit from gas transmission fell by 21 per cent to £126 million, but grew by 25 per cent to £144 million when excluding timings. Net revenues rose by £22 million, in part due to allow- ances related to the cancelled £168.8 million Avonmouth project. National Grid has been ordered by Ofgem to return £85 million of associated allowances in 2018/19. TG ENERGY Networks fall sees SSE profits decline SSE's profit has fallen aer its networks division reported a sharp decline in earnings over the first half of the financial year. Adjusted group operating profit dropped to £627.2 million in the sixth months to the end of September – 6.5 per cent down on the same period last year. Strong results from SSE's energy services enterprise busi- nesses meant overall retail earn- ings grew by 16 per cent year on year, to £70.3 million. Adjusted operating profit from the wholesale division rose by roughly a third to £159.9 mil- lion, as a result of higher output from renewable and gas-fired generation. The networks division saw a 22 per cent decline in adjusted operating profit to £355.1 mil- lion, primarily due to the timing of investments in transmission. Earnings from electricity transmission were down almost 28 per cent, at £97.9 million. ENERGY Competition takes its toll on Npower Strong competition in the retail market has worsened losses at Npower during the third quarter of 2017. Adjusted earnings before interest and taxation (Ebit) fell by £24 million year on year to minus £89 million as "record high levels of UK customer churn" cut into margins. Revenue fell by more than 3 per cent in the three months to the end of September, to £4,264 million. Domestic cus- tomer accounts were down by 160,000 on a year ago, but up by 50,000 over the last quarter. ENERGY Profits plummet at Scottish Power Scottish Power's profit took a sharp downturn, largely due to the performance of its retail arm, which continued to lose custom- ers over the third quarter of 2017. Earnings before interest, depreciation and amortisation (Ebitda) fell by nearly 11 per cent year on year, to £825.3 million. The generation and supply division saw Ebitda for the three months to the end of September plunge by nearly three-quarters to £46.5 million – down from £187.1 million in the same period last year. Retail earnings fell by £92.9 million, as demand for electricity and gas dropped by 6.8 per cent and 6.6 per cent respectively. Customer numbers declined by approximately 80,000 over the quarter to 5.22 million – marking a fall of around 120,000 over the past year. Regulated returns fall Stock watch 13 12 11 10 9 8 EDF SHARE PRICE, FIVE DAY (€) Sep 2017 Oct 2017 Nov 2017 EDF SHARE PRICE, THREE MONTHS (€) EDF's share price plunged by more than 12 per cent on the morning of Monday 13 November, falling to €10.30, aer the group cut its profit forecast for 2018. It had previously been aiming for earnings before interest, taxation, depreciation and amortisation (Ebitda) of at least €15.2 billion, but lowered the target to between €14.6 billion and €15.3 billion, partly because of lower capacity payments in the UK. 12.5 12.0 11.5 11.0 10.5 10.0 9 Nov 10 Nov 13 Nov 14 Nov Finance & Investment 8 Nov

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