Thursday May 15, 09:20 AM
National Grid looking at transmission assets in Germany; results inline UPDATE
(Adds analysts comments, further detail)
LONDON (Thomson Financial) - National Grid Plc (LSE: NG.L - news) . is considering buying
into the German power grid as E.ON AG plans to sell its transmission assets in the country, said chief executive Steve Holliday on a conference call.
E.ON plans to sell its grid as well as some 4,800 MW of power-generating capacity to end a pending European Commission anti-trust probe, and the German utility said yesterday that it has received interest from foreign transmission system operators.
While National Grid has in the past said that it plans to concentrate on its core markets in the United States and the United Kingdom, the changing situation in Germany could tempt the UK utility.
'The situation in Germany has changed quite rapidly from what we saw two years ago. If it [the transmission grid] were to open up, we would be interested,' said Holliday, reiterating that the price must be right.
'It needs to be something that creates value for us,' he said. 'We would be great stewards of the assets in Germany if we were able to acquire them at a price that makes sense.'
Analysts were not surprised by the news, seeing the potential move into Germany as a logical step. 'It does fit in with National Grid's remit and it is an opportunity to expand the business on the continent,' said Charles Stanley analyst Tina Cook. 'This is a fairly unique opportunity to break into a new country that they might not have been able to in the past,' she added.
Another analyst said: 'Germany is a reasonably robust environment. It is a little outside their core strategy at the moment and one would have to look at it on a case-by-case basis, depending on the price.'
National Grid, which acquired the North American energy company Keyspan (NYSE: KSE - news) in August for $11.7 billion, reported a 30 percent rise in capital investment for the year to 3.1 billion pounds, and while transmission assets in Germany are of interest, the 3.1 billion is likely to remain flat for the next four of five years, said Holliday.
In the United Kingdom and United States, the main focus of investment will be new sources of generation and replacement of ageing assets, Holliday said.
National Grid reported a rise in full-year adjusted pretax profit to 1.8 billion pounds from 1.5 billion pounds last year, in line with analysts' expectations.
The UK gas and electricity distributor reported a 25 percent rise in adjusted earnings per share to 48 pence, also in line with expectations.
The company said that it expects 2008/09 to be another strong year, shown by the already announced 15 percent dividend rise this year and further 8 percent rises each year to 2012.
The company is currently appealing a 41.6-million-pound fine from Ofgem for anti-competitive behaviour in the metering market and Holliday said he is confident of a positive outcome. 'We remain confident that we have done nothing wrong,' he said. 'There is no provision in the results for that fine whatsoever.'
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