Supply side sparks Eastern Electricity

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The Independent Online
EASTERN Electricity has overcome a decline in distribution profits and pounds 3.7m losses in contracting and retailing to record a 70 per cent jump in interim pre- tax profits. Sharply reduced seasonal losses in wholesale supply and lower interest charges helped the result rise to pounds 26.1m in the six months to 30 September.

Reflecting the lower than average yield available when Eastern went public two years ago, its dividend was 13.4 per cent higher at 5.5p, the largest rise so far in the electricity reporting season.

In its last financial year, Eastern's wholesale supply business swung from a pounds 14.6m profit to a loss of pounds 9.7m because of under- charging. First-half supply losses, always high in the summer, fell from pounds 51.7m to pounds 32.5m on the back of better management of input prices and lower option contract fees.

Sales in Eastern's core distribution business fell by 2 per cent, partly due to the weather, with lower use among domestic and industrial customers offsetting higher demand from shops and offices. Costs in distribution rose 2.9 per cent, less than inflation, but the sales drop forced operating profits down by 11 per cent to pounds 67.7m.

A pounds 90m net inflow of cash cut interest charges from pounds 16.9m to pounds 12.4m and reduced gearing from 30.7 per cent at the end of March to 18.6 per cent.