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Highlights:
- Rising gas prices pushed National Grid's profits by 50% in the six months to September.
- Its CEO John Pettigrew also said that power cuts in the country during the winter are unlikely.
Gas prices in Britain have witnessed a steady increase since early this year. According to Office for National Statistics (ONS) data, gas prices have doubled within a week. According to ONS, the System Average Price (SAP) of gas jumped by 110% in the week to November 6 against the previous week. Against the pre-COVID time of February 2022, the prices have risen by a whopping 322%.
Because of such hikes, gas producers have been reaping solid profits. The latest to report such gains is British Gas owner National Grid (LON: NG.), which posted its half-yearly results on Thursday.
In the six months to September, the company saw a 50% jump in its operating profit, which hit £2.11 billion during the period. Pre-tax profits came at £1.45 billion, 47% higher than last year's period. Key growth factors included the new distribution network assets in the UK and higher property sales to Berkeley Group and others.
Image source: Marian Weyo, Shutterstock.com
The underlying EPS (earnings per share) also jumped from 22.8p to 32.4p. The interim dividend was 4% at 17.84 a share.
Allaying fears about the energy crisis during the winters, National Grid's chief executive John Pettigrew said that sufficient power generation is expected during the winter, so the UK may not see power cuts. He noted that 2-gigawatt power would be available from the French interconnector by peak winter. Notably, the Sellindge converter station in Kent was shut down last year due to a major fire.
Outlook
With the bumper profits, the company has upped its full-year guidance. It now expects its underlying earnings per share growth to be between 6% and 8%. In the next five years, National Grid intends to invest up to £40 billion in critical infrastructure, up from £30 billion to £35 billion, it had announced earlier. It will also focus on the decarbonisation of energy networks.
Share price performance
The latest results took the company's shares into the green. After closing at GBX 986.60 in the previous session and opening at GBX 980.20 on Thursday, the shares were trading at GBX 993.40, up 0.69% at 12:48 GMT. The FTSE 100 constituent has a market cap of £36,112.05 million, and its 12-month return currently stands at 5.35%. The National Grid's share price has dropped by 6.30% on a YTD basis. National Grid's turnover (on book) is currently £5,165,867.09, while the EPS stands at 0.65.
