By Jaime Llinares Taboada
National Grid PLC is scheduled to report results for the year ended March 31 on Thursday. Here’s what you need to know:
UNDERLYING EBIT: The U.K. energy infrastructure group is expected to report underlying earnings before interest and taxes of 3.85 billion pounds ($4.81 billion), according to a market consensus provided by the company and averaged from 11 brokers. This would be up from GBP3.28 billion a year earlier.
UNDERLYING EPS: National Grid is expected to post underlying earnings per share of 62.4 pence, according to the same consensus. This would represent a 15% increase from 54.2 pence in fiscal 2021, when performance was hurt by the coronavirus pandemic. The company has guided for average annual EPS growth of 5%-7% through to fiscal 2026.
WHAT TO WATCH:
–SHAREHOLDER DISTRIBUTIONS: National Grid’s dividend policy is to raise payments in line with the U.K. CPIH price index. Under the current economic environment, the safety of inflation-linked dividends is increasingly attractive for investors. National Grid is expected to pay a full-year dividend of 51.15 pence a share, according to the company-compiled market consensus based on 11 analysts’ estimates, which would be up from 49.16 pence a year earlier.
–OUTLOOK: As the U.K. and the U.S. upgrade and expand their infrastructure for the energy transition, National Grid has a key role to play. Back in September, the company reiterated that it will invest between GBP30 billion and GBP35 billion across the five years to fiscal 2026, resulting in a compound annual asset growth rate of 6%-8% and underlying earnings per share growth of 5%-7% in that period.
–M&A PROGRESS: As National Grid pivots its portfolio toward electricity, the company has embarked on intense mergers and acquisitions activity. This included the GBP7.8 billion acquisition of WPD–the U.K.’s largest power distribution company–the sale of a 60% stake in its U.K. gas-transmission network for GBP4.2 billion, and the sale of its 50% interest in the St William Homes property joint venture for GBP412.5 million. The group is now focused on completing the disposal of its Rhode Island business for an equity value of GBP2.7 billion, as one of the regulatory approvals was appealed by the state’s attorney general.
Write to Jaime Llinares Taboada at email@example.com; @JaimeLlinaresT