Hydro powers up 19% after hard drive south: Improved performance achieved without cutting back on jobs

AN AGGRESSIVE sales drive into England and Wales helped to lift pre- tax profits at Hydro-Electric - one of two Scottish electricity companies - by 19.3 per cent to pounds 146m last year.

Sales outside Scotland - both to industrial customers and also to other electricity companies - increased by 16 per cent to pounds 135m and now account for one fifth of the company's turnover.

Roger Young, chief executive, said: 'The easiest way to grow is to go to England where the market is bigger and there is more room.' He said that unlike some electricity companies, Hydro-Electric had for the time being ruled out the risk of expansion into overseas markets.

The potential for more sales south of the border will increase later this year when the interconnect, which Hydro shares with Scottish Power, is due to be doubled in capacity.

In spite of warmer weather, the volume of electricity sold in Scotland also increased due to the relatively robust economy and improved performance in services including central heating.

Hydro-Electric received a further boost from the advent of low-cost gas from the Miller Field, which came on stream last year and supplies the company's Peterhead power station.

Turnover rose by 7.2 per cent to pounds 717.8m while the volume of electricity sold increased by 4.2 per cent. The dividend for the year is up by 12 per cent to 11.38, covered 2.4 times.

Bucking the general trend in the electricity industry, the company's workforce has remained static - at around 3,500 since before flotation in March 1991. Mr Young said that most of the slimming down had been done in preparation for privatisation, adding: 'We are focusing on profit improvement, not cost reduction.'

Hydro-Electric is now expanding into generation in England. Its main project is a 680 megawatt combined cycle gas turbine power station at Keadby near Scunthorpe. The plant is a joint venture with Norweb, one of the 12 regional supply companies, and the partners will share the electricity output when the Keadby station comes on stream in January 1995.

Hydro is also looking at combined heat and power schemes in conjunction with industrial partners. The first, in operation in Dover, supplies RJ Wiggins Appleton with steam and electricity, while Hydro sells the rest of the electricity to Dover Harbour Board.

The company has recently been awarded a licence to offer telecommunications services. The aim is to exploit Hydro's existing network linking 70 power stations by offering spare capacity to companies wishing to set up their own private telephone networks.

Mr Young added that problems last year with the regulator, Offer - when Hydro was attacked for failing to meet standards of service targets - had been largely resolved.