Northern lifts payout by 15%: Electricity customers to receive pounds 10 rebate as profits climb to pounds 111m

NORTHERN Electric made its contribution to the dividend bonanza from regional electricity companies with a 15.6 per cent increase in its payout for 1992/3, the biggest rise so far, on the back of a 13.4 per cent rise in pre-tax profits to pounds 111.4m.

Customers, whose prices were cut by an average 2.7 per cent on 1 January, will also share in the company's prosperity by way of a pounds 10 rebate on bills, planned for this autumn. Big customers will get a pounds 50 rebate.

Tony Hadfield, managing director, said the price cut and rebate reflected the passing through of lower coal prices, correction of past overcharging and increased efficiency.

Operating costs fell by 3 per cent in real terms last year and staff numbers were cut by 9 per cent. Since privatisation Northern has shed 14 per cent of its workforce and plans to remove another 10 per cent.

Northern's dividend increase beats the 15.1 per cent rise announced by Manweb. Analysts expect the biggest rise to come today from Seeboard, which took the prize last year with a 17 per cent increase.

Overall demand was flat as growth in electricity supplied to commercial, domestic and manufacturing customers was offset by a 3.9 per cent drop in industrial units. But profits benefited from the fact that growth occurred in Northern's higher margin supply categories.

Supply sales to higher voltage customers grew by 10 per cent thanks to new contracts with customers outside Northern's own region.

Non-regulated businesses went into reverse, showing a fall from pounds 3.3m to pounds 700,000 as appliance retailing experienced difficult trading conditions and incurred restructuring costs of pounds 900,000.

In common with other regional electricity companies, Northern enjoyed strong cash generation and net debt was cut from 16.2 per cent to 9.2 per cent of shareholders' funds.

With earnings up by 16 per cent, Northern retains one of the highest dividend covers in the eletricity sector. After a final of 15.15p the total payment of 21.45p is covered 3.2 times by earnings. Northern shares rose 7p to 515p.