• Operating Profit: GBP2 billion, a 15% increase year-over-year.
• Underlying Earnings Per Share (EPS): 28.1p, an 8% increase from the prior year.
• Capital Investment: GBP4.6 billion, a 19% increase year-over-year.
• Interim Dividend: 15.84p per share.
• UK Electricity Distribution Capital Investment: GBP647 million, a 6% increase.
• UK Electricity Transmission CapEx: GBP1.3 billion, a 43% increase.
• New York CapEx: GBP1.6 billion, a 29% increase.
• New England CapEx: GBP814 million, a 7% increase.
• Net Debt: Decreased by GBP5.1 billion to GBP38.5 billion.
• Net Finance Costs: GBP670 million, a 4% decrease.
• Underlying Effective Tax Rate: 11.9%.

• Warning! GuruFocus has detected 11 Warning Signs with NGG.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• National Grid PLC (NYSE:NGG) has announced a significant capital investment plan of around GBP60 billion over the next five years, indicating strong growth potential.
• The company successfully completed a GBP7 billion Rights Issue, strengthening its balance sheet to support the upcoming growth phase.
• Operating profit from continuing operations increased by 15% to GBP2 billion, driven by strong performance across regulated businesses.
• National Grid PLC (NYSE:NGG) declared an interim dividend of 15.84p per share, in line with its policy, reflecting confidence in its financial stability.
• The company has made substantial progress in its strategic infrastructure projects, with construction underway on several key projects in both the UK and US.

Negative Points

• There are concerns about potential supply chain constraints, particularly regarding the procurement of transformers, which could impact project timelines.
• The regulatory environment remains challenging, with ongoing discussions about allowed returns and incentives, which could affect future profitability.
• National Grid PLC (NYSE:NGG) faces uncertainties related to the US elections and potential changes in energy policy, which could impact its investment plans.
• The company is dealing with increased costs due to inflation and higher financing costs, which could pressure margins.
• There is a risk of delays in planning and consenting processes for major projects, which could affect the timely delivery of infrastructure.

Q & A Highlights

Q: Can you remind us when you will be submitting your business plan for the RIIO-T3 period? And is there any early flavor you can give on what we should be expecting, especially when it comes to the mix of CapEx, how you're thinking about baseline versus uncertainty and how that ties into your five-year frame? A: We are due to submit the business plan in December this year. The plan is separated into two halves: a baseline with projects we have full confidence in moving forward, and a pipeline aligned with the Future Energy Scenarios. We don't anticipate significant changes to our 23 billion investment plan to 2029, despite some variations due to connection reforms.

Q: You mentioned you want the ROE to be at the upper end of the range. Do you have any expectations on how much operational incentive the package might deliver? A: We are in discussions with Ofgem about incentives that would benefit both consumers and shareholders, such as delivering projects early and constraint management. These incentives could create value for customers and align with our strategic goals.

Q: How much of your capital spend in the US is from imported goods, and what impact could there be if there was a material increase in import tariffs? A: The vast majority of our capital investment in the US is sourced domestically, with a relatively small proportion imported, such as steel. Therefore, changes to trade tariffs would not significantly impact us.

Q: Could you give us some perspective on the consenting and planning visibility you have for the key projects? A: We've made excellent progress on Phase One projects, with planning consents in place for most. We expect planning reform legislation next year, which should streamline processes and support our strategic infrastructure projects.

Q: How satisfied are you with the outcome of the Massachusetts Electric rate case, and how confident are you in achieving the allowed return? A: The Massachusetts rate case was a landmark, providing revenue adjustments for increasing capital investment and a performance-based mechanism for operational costs. This framework aligns more closely with New York's, increasing our confidence in achieving closer to the allowed return.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.