Why UK's National Grid Shares Are Diving Today

Zinger Key Points
  • National Grid's FY revenue fell 8% Y/Y to £19.850 million, but adjusted EPS rose 32% Y/Y to £0.84.
  • National Grid plans to invest an estimated $75 billion across its service territory in the UK and US over the next 5 years.

National Grid plc NGG shares are trading lower after the company reported an equity raise of £7 billion and a year-over-year decrease in full-year revenue results

In its 2023/24 full-year, adjusted EPS increased 32% year over year to £0.84, and gross revenue declined 8% year over year to £19.850 billion.

Underlying operating profit rose 4% Y/Y to £4.8 billion (+6% Y/Y at constant currency), aided by growth in revenues in UK Electricity Transmission through the RIIO-T2 price control, non-recurrence of Western Link liquidated damages, and higher rates in New York and New England.

Dividend: The company disclosed a final dividend of 39.12 pence, bringing the full-year dividend to 58.52 pence, up 5.55% and in line with policy.

Outlook: For 2024/25, the company expects underlying EPS to be broadly in line with 2023/24 EPS once this has been adjusted by the number of bonus shares issued as part of the rights issue.

Investment: The company plans to invest £60 billion (around $75 billion) in the U.S. and U.K. over the next five years.

In New York, National Grid is investing around $21 billion between now and 2029, per the company’s statement.

The investment is expected to deliver annual group asset growth of around 10%, and 6%-8% underlying EPS CAGR from a 2024/25 baseline to 2028/29, assuming an exchange rate of £1:$1.25.  

This is projected to be led by a comprehensive financing plan that includes a £7 billion equity raise.

John Pettigrew, Chief Executive, said, “Alongside our new five-year financial framework, we are also today further evolving our strategy to focus on networks and will therefore be streamlining our business as we announce our intention to sell Grain LNG, our UK LNG asset, and National Grid Renewables, our US onshore renewables business.”

Investors can gain exposure to the stock via Invesco International Dividend Achievers ETF PID and Trust For Professional Managers ActivePassive International Equity ETF APIE.

Price Action: NGG shares are down 14.11% at $61.83 at the last check Thursday.

Photo via Midjourney

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