European Morning Credit: Today in European Credit

Research evidence excerpt

European Morning Credit: Today in European Credit

Corporates

National Grid (NGGLN): FY25/26 underlying operating

profit a small miss

Underlying operating profit increased 6% y/y to £5.7bn (small miss on consensus) and

underlying earnings rose 12% y/y to £3.9bn (in-line with consensus). The result is driven

by strong performance in the regulated businesses including new rates for Niagara

Mohawk (NIMO) business in upstate New York, recovery of prior year storms and

environmental costs, higher revenues supported by increased allowances in the UK and

delivery of strong cost efficiencies, which was partly offset by the impact of the

divestments of the Electricity System Operator, National Grid Renewables and Grain

LNG, and the impact of customer refunds related to the March 2026 FERC order on New

England transmission returns.

Cash generation in the period was strong - FFO came in at £5.8bn vs £5.6bn last year.

Capex increased to £11.6bn from £9.8bn last year. Net debt increased to £44bn from

£41bn as of Mar-25, mainly due to high capital investments and dividend payment,

partly offset by disposals (NG Renewables and Grain LNG). FFO/ND reduced slightly to

13% from 13.7% last year.

2026/27 Outlook: EPS growth of 13-15% (this is in line with previous statements).

Capital investment is expected to increase to c.£13bn. Net debt is expected to grow by

£6bn (from £44bn as of Mar-26) and regulatory gearing is expected to increase to 64%

by end of year.

Outlook 26/27 to 30/31: Maintain credit metrics above thresholds for current group

credit ratings (at least 2030/31), total investments of £70bn, asset growth CAGR of

c.10%, underlying EPS CAGR of 8-10%, DPS growth in line with UK CPIH, and regulatory

gearing increasing towards high 60% range by 2030/31 with balance sheet strength