Power distributor National Grid’s pre-tax profits have climbed since its acquisition of two US energy businesses which it bought to counter regulator-capped earnings in the UK.
The subsidiaries NEES and EUA, which it bought for £2.9bn to form National Grid USA, turned in profits of 25% compared with the 6.5% maximum profit the company is allowed to make in the UK.
National Grid chairman James Ross said: `The acquisition of these businesses has substantially changed the shape of our balance sheet. Some 30% of the group’s operating profit now comes from the US.’ Group sales for the year to the end of March were up 4% to £1.58bn.
After posting its year-end results, the company announced a string of overseas telecommunications investments, including £55m for a 30% stake in Telefonica Manquehue in Chile and a 50% share of Southern Cone Communications, which is developing a network linking the principal cities in Argentina. It has also signed a joint venture with telecommunications firm Energis in Poland and acquired a 50% stake in Brazil’s Intelig.
Angelos Anastasiou, utilities analyst at Williams de Broae, said the refocusing of the group on overseas and telecommunications assets as well as non-core UK businesses was expected given the profit restrictions the company faced in the UK. `National Grid’s UK business does not have great growth prospects. They have got to do what they can to escape the clutches of the regulator,’ he said.
Copyright: Centaur Communications Ltd and licensors