National Grid eyes infrastructure boost from Trump election

National Grid could benefit from the election of Donald Trump if he presses ahead with plans to upgrade US infrastructure, its chief executive has suggested.

John Pettigrew welcomed “positive comments about infrastructure” from the president-elect, who has highlighted investing in “a modern and reliable electricity grid” as one of his key infrastructure priorities.

He said: “It’s early days but there was definitely some positive commentary from the Trump administration around infrastructure and the need for infrastructure in the US. So obviously that is welcomed, for us to see that.

“What we need to see is the detailed policy development now.”

He added: “Our major businesses in the US are gas distribution and electricity distribution, which are predominantly regulated at the state level. But we will look forward to working with the Trump administration.”

Mr Pettigrew was speaking as the FTSE 100 utility giant unveiled half-year results that were broadly flat on last year, excluding one-off charges related to the sale of a majority stake in its gas distribution arm.

National Grid’s operating profits rose 1pc to £1.85bn over the period.

While primarily known in the UK for its role managing the electricity and gas networks, it also has a substantial business in New York, Rhode Island and Massachusetts.

It invested more than £1bn in its US businesses in the six months to September – roughly half its overall group investment. Its operating profits from the US were £435m, compared with £1.3bn from its regulated UK business and £157m from non-regulated activities such as interconnectors.

On a pre-tax basis National Grid’s profits fell by 64pc to £485m, primarily due to a one-off charge of £718m as it restructured its debt ahead of the sale of a majority stake in its gas distribution arm. It is separating out the business, which could be valued at as much as £11bn, into a new company.

Mr Pettigrew said: “As part of the gas sales process we needed to raise the debt that’s part of the new company, so we raised the largest non-financial bond of £3bn. At the same time we needed to get the right gearing for our retained business so we bought back some existing debt. The cost of that is in the exceptional [items], but we will get the benefit of that through the lower interest rates and the sale of the gas distribution proceeds in the second half.”

National Grid said the sale was on track and was “expected to complete in early 2017”.

“Following completion, the board expects to return substantially all of the net proceeds to shareholders,” it said.

Mr Pettigrew added: “We have delivered good results and made significant progress on key priorities while continuing to deliver a safe and reliable service to our customers in the UK and the US.

“First-half earnings per share were in line with a strong prior year, with our regulated businesses delivering a solid performance.”

John Musk, analyst at RBC Capital Markets, said: “Over the medium term the National Grid share price is likely to be driven by events in the US. On the one hand greater fiscal stimulus and infrastructure investment under Donald Trump should be supportive, but if this leads to a steeper trajectory in rate hikes, this could be a negative. ”

[“source-smallbiztrends”]