Full-year profits at National Grid fell by nearly a third as the company that owns and operates vital energy infrastructure was hit by one-off factors, including having to write off funds spent to connect two planned new nuclear power stations in the UK that were subsequently cancelled.
Pre-tax profit for the year to March dropped 31 per cent to £1.8bn. Earnings were also hit by a seven-month labour dispute in the US state of Massachusetts, which was resolved in January, as well as restructuring programmes at its US and UK businesses.
On an underlying basis, which strips out exceptional costs and other factors such as the costs of dealing with major storms, pre-tax profit for the 12 months that ended March 31 was down 3 per cent to £2.5bn, which was slightly ahead of analysts’ expectations.
Underlying earnings per share rose 5 per cent to 58.9p, which the company said reflected a lower share count.
National Grid has recommended a full-year dividend of 47.34p, an increase of about 3 per cent.
The company, which operates the high voltage electricity transmission system in the UK and ensures demand is balanced with supply, said it was forced to write off £137m of development costs in relation to connecting planned new nuclear plants in Cumbria and Wales, which were both scrapped last year.
National Grid and other owners of gas and electricity networks in the UK are facing a crackdown from the UK energy regulator Ofgem in their allowed returns to investors. Ofgem has proposed cutting returns to about 4-5 per cent from 2021 from 7-8 per cent currently.
In its results, National Grid argued that a “fair” return would be 5.5 per cent.
Network companies such as National Grid have previous been criticised by consumer groups in the UK for making “eye-watering” profits at the expense of consumers, who pay for the costs of maintaining cables and pipes that deliver energy to homes and businesses through their bills.