National Grid Net Profit Falls But Dividend Rises

By Alex MacDonald

LONDON--National Grid PLC (NG.LN) said Thursday that net profit fell in its last financial year due in part to higher taxes and exceptional charges, but that strong cash flow generation prompted it to increase its dividend.

The U.K. and U.S. power and gas transmission company reported an 18% drop in net profit to 2.02 billion pounds ($3.12 billion) for the financial year ended March 31, compared with GBP2.48 billion a year earlier when the company booked a large exceptional pension credit and deferred tax credit. The higher tax charge and exceptional items helped offset a 2.6% rise in revenue to GBP15.2 billion and 5% rise in operating profit to GBP3.86 billion.

The FTSE 100 company said that all of its key businesses, with the exception of the U.K. natural gas distribution business, reported higher operating profit during the financial year.

The U.S. regulated business reported a return on equity of 8.4% during the last financial year compared with 9% the year before, due in part to extra operating costs incurred from gas main leakages and repair activities that were exacerbated by a severe U.S. winter.

Nevertheless, group return on equity rose to 11.8% in the last financial year from 11.4% the year before.

"We finished the year in a solid position, with a strong cash flow performance, good growth in our asset base and healthy gearing," said Chief Executive Steve Holliday. "We are on track with our program of rate filings, operational efficiencies and enhancements to customer service," he said, adding that the company continues to invest in its U.K. and U.S. businesses.

The strong cash flow generation prompted the company to recommended a 2.3% rise in the final dividend to 28.16 pence a share. This contributed to a 2% rise in the full-year dividend to 42.87p a share, in line with inflation and its dividend policy.

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