National Grid shrugs off blackout as having 'zero effect on profits'

National Grid Transco, the electricity and gas transmission company, shrugged off this summer's blackouts in New York and London by saying it expected first-half profits to be "substantially ahead" of last year's.

Shares in the company rose 3 per cent, ending the day up 10.25p at 401.25p, on the back of the bullish statement which also forecast "significant" earnings growth for the full year.

Analysts are now pencilling in pre-tax profits before exceptional items and goodwill of about £380m for the six months to the end of September compared with an actual figure of £339m last year.

The company attributed the improved performance to cost savings coming through from the merger last year of National Grid and Lattice, the owner of the Transco gas pipeline network, and lower interest charges because of the fall in the dollar. A large amount of National Grid Transco's £14.2bn debt is in dollars. This has been partially offset by lower reported operating profits from the company's extensive US operations because of foreign exchange movements.

The company said that the August blackouts in New York, where National Grid Transco operates the transmission network, and then later in London would have "zero" effect on profits. Earlier this month, the company said that the London power failure, which cut supplies to 410,000 customers or a fifth of the capital, had been caused by the incorrect installation of a fuse.

The cost reduction programme will save National Grid Transco £135m in a full year from next March. Savings so far achieved together with the withdrawal from loss-making telecoms businesses have helped the company keep first-half operating profits flat when otherwise they would have fallen by about £100m because of a number of one-off gains the previous year.