National Grid issues profit warning as extreme weather causes £140m of damage

Hurricanes Harvey, Irma and Maria battered the US in the second half of 2017 and snow, ice and winds hit in February and March this year

National Grid has issued a profit warning after extreme weather in the US inflicted an extra £140m of costs.

The energy infrastructure provider said headline earnings for the full year would be lower than expected because of the cost of fixing storm damage.

Hurricanes Harvey, Irma and Maria (HIM) battered the US in the second half of 2017. Further severe storms hit again in February and March this year, leaving more than a million residences without power in the Northeast and Midwest.

National Grid said that underlying earnings, which strip out one-off costs, would be in line with its previous guidance.

Storm remediation costs “are expected to be recovered in future periods and will be reported as timing in our full-year results in May", the company said in a stock market announcement.

National Grid also said it would benefit from a reduced US corporation tax rate. Senate Republicans recently passed a radical programme of tax cuts, slashing the rate paid on company profits from 35 per cent to 21 per cent, and giving tax breaks to wealthy individuals.

The company said it would pay an overall rate of 24 per cent, down from 27 per cent a year before.

Reinsurance giant Swiss Re warned businesses this week to expect more damage from severe weather, which is likely to occur more often in future “with more frequent convergence of conditions favourable to hurricane formation”.

“With a warming climate, the frequency of events that combine heavy rains and winds will likely increase. So too will events with severe storm surge, in view of rising sea levels,” the company added.