Norweb fearful over growth prospects

NORWEB, the electricity supply company, has warned that regulatory difficulties in the second half of the decade may make it difficult to sustain current earnings growth.

The company increased pre-tax profits by 13.9 per cent last year to pounds 157.1m from pounds 137.9m a year earlier.

However, Malcolm Faulkner, marketing director, said: 'It is only 18 months until a new price control on the electricity distribution business takes effect. All regional supply companies are concerned that the regime will tighten.'

Norweb disappointed some City analysts with a 13 per cent increase in the dividend to 20p. Mr Faulkner said Norweb's long-term aim was to maintain dividend increases at 6 per cent or more in real terms and the present dividend cover of 3.2 times could be unwound to achieve it.

Turnover last year rose to pounds 1.4bn from pounds 1.32bn. The company is cutting prices by 1.6 per cent for domestic consumers from next month, reflecting cheaper coal supplied to power stations.

Norweb is also increasing its drive into unregulated businesses including retailing, power generation and gas supply. The retail business increased turnover by 31.5 per cent last year to about pounds 120m.