(Reuters) - National Grid (L:NG) on Thursday reported a 15 percent rise in full-year profit, partly due to electricity price differences between Britain and continental Europe that boosted trading volumes on its cable network.
Chief executive John Pettigrew said the company was able to benefit from this arbitrage between British electricity prices and those of its neighbours.
"Looking at our expectations for what that arbitrage price looks like in the next 12 months we think it's going to go back to more normal levels," Pettigrew, took over as CEO on April 1, told Reuters.
Volumes on National Grid's interconnectors typically increase when traders see opportunity to trade price differentials between two countries.
The company said revenue from this business was expected to fall next year, mainly due to lower auction revenues in the French interconnector and lower numbers of meters in the domestic metering business.
The power network operator said it was pushing ahead with plans to build more connections, including a second interconnector to France and a new one to Denmark, with final investment decisions expected in late 2016 and 2018, respectively.
National Grid, which is in favour of Britain's membership of the European Union because it says it benefits energy consumers, said the interconnector business helped it to achieve a 15 percent rise in 2015/16 pretax profit to 3 billion pounds ($4.4 billion).
Overall, National Grid expects its core British business performance to remain flat this year.
Its overall return on equity rose to 12.3 percent in the last financial year, up from 11.8 percent a year earlier.
"NG's returns remain the envy of a sector beset by challenges," analysts at Jefferies, who rate the stock as a 'hold'.
Last November, National Grid put a majority stake in its 8.5 billion pound gas distribution business up for sale. [nL3N1352OL]
"We are pleased with the good level of interest we have received so far," Pettigrew said. He said a formal sales process would start at the end of June or early July. The deal is expected to conclude in early 2017.
National Grid's shares were down 2.3 percent by 0840 GMT, underperforming a 1.1 percent fall in the European utilities index (SX6P).
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