LONDON BRIEFING: National Grid Profit And Payout Miss Expectations

(Alliance News) - National Grid said Thursday it expects a GBP400 million hit from Covid-19 in the financial year ahead, as it reported a dip in profit for its recently ended one.

Revenue in the year to March 31 edged down 2.6% to GBP14.54 billion from GBP14.93 billion, while pretax profit fell 5% to GBP1.75 billion from GBP1.84 billion.

Underlying pretax profit was GBP2.49 billion, missing market expectations of GBP2.55 billion, but up 0.8% from GBP2.47 billion the year before. Underlying operating profit was GBP3.45 billion, also missing expectations, of GBP3.62 billion, but also up 0.8% from GBP3.43 billion in financial 2019.

The power transmission and distribution company took a GBP117 million provision for bad debts in the period, and expects a "slightly bigger" impact in the financial year due ahead to the weaker economic backdrop.

National Grid expects Covid-19 to hit underlying operating profit by GBP400 million in the year ahead amid additional costs in the UK and higher bad debt charges in the US. For the recently ended financial year, underlying operating profit amounted to GBP3.45 billion, up 1% on the year before that.

"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% to 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," said Chief Executive John Pettigrew.

National Grid will payout a full-year dividend of 48.57 pence, up 2.6% on the year before. The company had been expected to payout 48.70p.

Shares were down 1.0% early Thursday.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: down 0.5% at 6,225.05

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Hang Seng: down 0.3% at 24,407.42

Nikkei 225: closed down 0.5% at 22,355.46

DJIA: closed down 170.37 points, 0.7%, at 26,119.61

S&P 500: closed down 0.4% at 3,113.49

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GBP: up at USD1.2550 (USD1.2525)

EUR: up at USD1.1256 (USD1.1221)

Gold: up at USD1,726.30 per ounce (USD1,724.21)

Oil (Brent): down at USD40.61 a barrel (USD40.90)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Thursday's Key Economic Events still to come

1200 BST UK Bank of England interest rate decision and MPC meeting minutes

1200 BST UK agents' summary of business conditions

0830 EDT US Philadelphia Fed business outlook survey

0830 EDT US initial jobless claims

1000 EDT US leading indicators

1030 EDT US EIA weekly natural gas storage report

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There is "clear early demand" for a return to flying, according to the boss of London City Airport, PA reports. Speaking ahead of the airport reopening for passenger flights on Sunday, chief executive Robert Sinclair said many people want to fly for leisure and business. The airport has been closed to commercial and private flights since March 25 due to the coronavirus pandemic. A survey of more than 4,700 of its customers indicated that 77% are very likely or quite likely to fly when they are told by the Government and airports or airlines that it is safe to do so. Some 42% plan to travel for leisure within the next three months, while 41% anticipate taking a flight for business over the same period.

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French Finance Minister Bruno Le Maire slammed as a "provocation" a call by the US for a break in negotiations on how to tax digital giants internationally. "I confirm that we have received, along with my counterparts in Italy, Spain and Britain, a letter from US Treasury Secretary Steven Mnuchin confirming that they don't want to pursue OECD talks on the digital tax," Le Maire told France Inter radio. "This letter is a provocation." Mnuchin sent a letter to his French, British, Spanish and Italian counterparts in which he informed them of this break, a source told AFP, confirming a report in the Financial Times. In January, 137 countries had agreed to reach a deal on the taxation of multinationals by the end of 2020 under the aegis of the OECD.

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BROKER RATING CHANGES

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BERENBERG CUTS CARNIVAL PLC TO 'SELL' ('HOLD') - TARGET 800 (1180) PENCE

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RBC RAISES ANGLO AMERICAN TO 'OUTPERFORM' ('SECTOR PERFORM') TARGET 2200(1475) PENCE

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JEFFERIES CUTS TAYLOR WIMPEY TO 'HOLD' ('BUY') - TARGET 146 (186) PENCE

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GOLDMAN CUTS SCHRODERS TO 'SELL' ('NEUTRAL') - TARGET 2330 (2310) PENCE

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COMPANIES - FTSE 100

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Tesco, the UK's largest grocer, said it has agreed to sell its business in Poland for GBP181 million. "We have seen significant progress in our business in Central Europe, but continue to see market challenges in Poland. Today's announcement allows us to focus in the region on our business in Czech Republic, Hungary and Slovakia, where we have stronger market positions with good growth prospects and achieve margins, cashflows and returns which are accretive to the group," said Chief Executive Dave Lewis. The sale includes the disposal of 301 stores, with the associated distribution centres and head office, to Salling Group. Net proceeds from the sale are expected to be GBP165 million, settled in cash, with completion expected in the current financial year. Further, the grocer said it has made "gross progress" in selling its remaining Polish property outside of the transaction. Over the past 18 months, it has either sold or agreed to sell 22 stores for net proceeds of GBP200 million. Tesco said it will seek to realise value from the remaining assets, which include 19 currently trading stores not covered in the Salling transaction.

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UK housebuilder Taylor Wimpey said it raised GBP522 million in a placing, subscription and retail offer. Taylor Wimpey placed 355.0 million shares at a price of 145p each, raising GBP515 million. Concurrently, directors subscribed for 324,823 shares in total at the same price, while employees and other retail investors subscribed for 4.9 million shares via the PrimaryBid platform. The placing price represented a 4% discount to Wednesday's closing price of 151.8p.

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COMPANIES - FTSE 250

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Stagecoach said it has agreed with its lenders a covenant waiver for the periods ending October 31, 2020 and May 1, 2021 with its lenders for facilities expiring March 2025. As an alternative to the covenants, the transport operator has agreed minimum liquidity thresholds. "Combined with the other actions outlined in our announcements on 23 March, 3 April and 28 May, the group has strong liquidity, with available cash and undrawn, committed bank facilities of over GBP800 million," Stagecoach said.

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Thursday's Shareholder Meetings

Ted Baker (re share placing)

IP Group

Horizon Discovery

Ten Entertainment

Shield Therapeutics

Tremor International

Jadestone Energy

Vietnam Enterprise

Intelligent Ultrasound Group

Block Energy

RBG Holdings

Impact Healthcare

Michelmersh Brick Holdings

Immupharma

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By Tom Waite; thomaslwaite@alliancenews.com

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