Thursday, November 12, 1998 Published at 09:34 GMT
Business: The Company File
Regional electricity sparks profits
Powergen warms to East Midlands
Reaping the benefits of its latest acquisition, British electricity producer PowerGen beat all predictions in its half-yearly profits.
The company, which bought UK regional electricity supplier East Midlands for £1.9bn in July, reported an 8% rise in its underlying profits from last year's £154m to £166m ending on September 27.
Boosted by the unexpected profits, PowerGen said it was considering buying another regional electricity company as early as next year.
"It's clearly a possibility, but it's a tall order," he said. "Buying East Midlands was advantageous but very difficult to get regulatory acceptance," said Chairman Ed Wallis.
Investors were treated to a 10p dividend, up from 9p last year.
The company said on Thursday that its growing leadership in the UK electricity and gas markets but an entry into the US still remained a part of its strategy.
East Midlands Electricity contributed £29m in profits in just over two months.
Shares in PowerGen increased by 52p this week in anticipation of the results, but fell by 1p on Thursday to 888.
Marching on US
As for its entry into the US, Mr Wallis said it was not PowerGen's number one priority.
Mr Wallis said changes planned to the current US legislation on foreign investment in the power sector would bring consolidation and "a very significant number of acquisition opportunities" there.
But it was the continued absorption of East Midlands which had become the focus for PowerGen.
"We're almost basically redesigning the company. When we've done that, I think we'll have another serious look at America," added Mr Wallis.
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