National Grid falls over nationalisation talks

Bloomberg

National Grid Plc shares dropped the most in more than a month after it unveiled a decline in adjusted operating profit as the UK network operator rebuffed proposals to
nationalise energy assets.
The nationalisation proposals “are only going to cause a huge amount of disruption,” Chief Executive Officer John Pettigrew said in an interview. It’s “the last thing you want when you’ve got the need for a huge amount of infrastructure investment.”
Even if Labour does get in to power, such a plan isn’t seen to have wide political support, while state ownership could be complicated as more than half of the utility’s revenue comes from US assets.
The company made “significant” progress on cross-border cables, or interconnectors. It has put the high-voltage lines at the heart of its growth strategy and is continuing with projects that are already underway, amounting to a 2 billion-pound ($2.6 billion) investment in cables to France, Norway and Denmark.
National Grid said it expected energy regulator Ofgem to publish on May 23 its latest consultation on proposed gas and power grid price-control levels for 2021.
The regulated rate over inflation is meant to save consumers 6.5 billion pounds but will hurt earnings for companies like National Grid.
The financial results were “largely neutral,” John Musk, an analyst at RBC Europe Ltd., said in a note.
“We recognise the overhang caused by Labour’s nationalisation plans, but do not
see this risk as ultimately materialising.” Shares slipped 2.8% in London to 819 pence at noon.
Adjusted operating profit slipped 2% to 3.43 billion pounds, beating average estimates of 3.37 billion pou-
nds. Capital expenditure for 2019/20 expected to increase to almost 5 billion pounds,
up from 2018/19 level of 4.5 billion pounds.
“We remain on track to achieve asset growth at the top end of our 5-7% range in the medium term,” Pettigrew said in a statement.