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National Grid: on track for double-digit profit growth

National Grid’s core businesses drove underlying profit growth of 15% in the first half.
National Grid - sells majority NGG stake

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National Grid’s half-year revenue fell by 6% to £8.0bn, with the biggest fall being seen at the UK Electricity System Operator, which has since been disposed of to the UK Government for around £0.6bn.

Underlying operating profit increased by 15% to £2.0bn, ignoring currency impacts. National Grid Ventures was the only division where profit fell. This was offset by gains elsewhere with increased rates in New York and higher revenues in UK Electricity Transmission being amongst the largest drivers.

Free cash outflows increased from £0.3bn to £1.4bn reflecting a deterioration in cash generated from operations and increased capital investment.

Net debt fell by £5.1bn over the first six months to £38.5bn, benefitting from a £6.8bn equity fundraise.

National Grid expects operating profit growth of around 10% for the full year. In terms of earnings per share (EPS) growth, the additional share count from the Rights Issue is now anticipated to largely offset this improvement. Over the following four years, EPS is expected to grow at an average annual rate of 6-8%.

The interim dividend has been reduced from 19.40p to 15.84p.

The shares were broadly flat in early trading.

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HL view to follow.

National Grid key facts

All ratios are sourced from Refinitiv, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment.No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.Non - independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place(including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing.Please see our full non - independent research disclosure for more information.
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Written by
Aarin Chiekrie
Aarin Chiekrie
Equity Analyst

Aarin is a member of the Equity Research team. Alongside our other analysts, he provides regular research and analysis on individual companies and wider sectors. Having a keen interest in global economics, he knows how macro-events can impact individual companies.

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Article history
Published: 7th November 2024