Dollar dive fails to drain National Grid

BRITAIN'S main power network operator National Grid Transco said trading was in line with forecasts and that annual profits would rise despite the impact of a weak US dollar.

'Both underlying profit before tax and underlying earnings [are] expected to be ahead of last year,' National Grid said in a statement.

The company said a weak dollar would reduce profits by £20m - it distributes electricity in the north-east of the US to approximately 3.3m customers and gas to around 560,000 customers in New York state.

In the UK, where the company supplies 21m homes, offices and factories, the group said it had benefited from last year's £1.1bn acquisition of mobile phone masts giant Crown Castle UK (CCUK). The company claimed at the time it would make annual savings of £18m from merging the business with its own Gridcom operation. Long-term, it is well placed to benefit from the expansion of digital television.

National Grid today said benefits from the deal helped offset and expected fall in profits in the UK distribution business due to planned higher level of UK gas main replacement expenditure, estimated at £470m for the year.

It also said there was a year-on-year reduction in gas transportation prices, forced by reduced volumes due to warmer than normal weather.

Last year, National Grid agreed to sell half its gas distribution assets for £5.8bn, raising money to return to shareholders and invest in growing US markets. The company said it would return £2bn to shareholders and also set a more generous dividend policy.

National Grid shares fell ½p to 487¼p in early trading. The stock has performed broadly in line with the FTSE 100 index over the past year.