National Grid restructures US operations

31st Jan 2011 14:37

National Grid is restructuring its US business and its management structure and believes that it can save $200m (£125m) a year in its US operations. Tom King will become responsible for the US business from April. This is part of a change from having management for each line of business to a regional model. National Grid believes that it will be able to take advantage of its scale and also improve efficiency. There will also be regional presidents for each of the US operations. Around 7% of the workforce - 1,200 people - will be made redundant. The targeted savings should be achieved in the 2011-12 financial year. The costs of the savings will total $100m. Nick Winser becomes head of the UK operations. Mark Fairburn, who currently heads up the gas distribution operations in the UK, is leaving the company. Meanwhile, National Grid says that its operating profit is "significantly ahead of last year" in its trading statement for the period between 1 October 2010 and 30 January 2011. The strong first half momentum has been repeated so far in the second half. This should enable earnings per share to be maintained this year even after the dilutive effect of the May 2010 rights issue. Profit growth is already coming from the US business even before the latest cost savings.The New York Public Service Commission (NYPSC) has agreed its final position on the Niagara Mohawk electric rate case and set new rates for the business for 2011. This will enable National Grid to generate $119m more in 2011. Capital expenditure of £3.6bn is forecast for this year. Management expects to recommend an 8% increase in full year dividend.