National Grid profit takes a hit from coronavirus but maintains dividend
National Grid has increased its payout for the year despite reporting a hit to profits from increased bad debts from the pandemic in its US business.
The figures
National Grid delivered a pretax profit of £1.75bn for the year ended 31 March, down five per cent from £1.84bn for the same period last year. Earnings per share dropped 17 per cent to 36.8p.
Operating profit increased one per cent to £3.45bn, but missed analysts’ average estimate of £3.58bn, according to Refinitiv data.
Despite a disappointing set of results, the infrastructure firm declared a final dividend of 32p per share.
Why it’s interesting
National Grid’s performance has been dragged down by the performance of its US business. In March, the company set aside an additional £117m for bad debts in its US business, in response to the pandemic.
Today, it said that in total the pandemic will cost it £400m in the current year, due to late payments and bad debts, additional direct costs and the deferral of rate increases.
However, boss John Pettigrew said most of the shortfall will be recovered.
The coronavirus impact has in part been because of increased costs in areas such as IT, cleaning, PPE and health screening.
The final dividend brings the full-year payout to 48.57 per cent, up 2.6 per cent.
Helal Miah, investment research analyst at the Share Centre, said: ” Investors’ focus with regards to a company like National Grid is always going to be on the dividend and here investors will take some encouragement as the dividends for the full year were raised by just over a penny to 48.57 pence, keeping it in line with RPI growth targets.”
Shares are down 0.4 per cent.
What National Grid said
Chief executive John Pettigrew said:
Looking ahead, whilst Covid-19 will impact our financial performance in FY21, we expect this to be largely recoverable over future years and therefore anticipate no material economic impact on the Group in the long-term.
We continue to target asset growth of 5-7% in the near term and with an efficient balance sheet that underpins asset and dividend growth, the group is well positioned to create value for shareholders.
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