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--National Grid operating profit down on timing issues, US storms, but full year in line with views

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--US storm costs will be recovered over the next two to three years, says company

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--Company remains attractive in current market, says analyst

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(Recasts, adds CEO, analyst quote, details, updates share price)

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By Selina Williams

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Of DOW JONES NEWSWIRES

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LONDON -(Dow Jones)- National Grid PLC (NG.LN) Thursday posted a 6% decrease in first-half operating profit, driven by revenue timing issues and costs related to storms in the U.S, but said it was on track to meet its targets for this year.

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The results were slightly below expectations, but analysts said the results were solid considering weather-related effects.

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The costs were incurred in fixing downed power lines following an August 2011 U.S. hurricane and storms in October. However most of those costs will be recovered over the next two to three years, with some already in the process of being recovered, said Tom King, president of National Grid's U.S. operations.

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"Notwithstanding the exceptional U.S. weather, we remain well positioned to deliver another good year, although comparative progress will be impacted by the timing differences that benefited 2010/11," National Grid Chief Executive Steve Holliday said.

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The U.K.-based utility, which owns and operates electricity and natural gas networks in the U.K. and the U.S., said operating profit before exceptional items, remeasurements and stranded cost recoveries, in the half year ending Sept. 30, totaled GBP1.42 billion compared with GBP1.51 billion in the same period a year ago, slightly below analyst expectations.

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However, excluding storm costs and the already flagged timing issues related to higher revenue collection last year, underlying profit before tax was up 19%.

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The company took a GBP69 million charge related to Hurricane Irene and a GBP50 million charge from storms in October. It also said the 2011 operating profit comparison was negatively affected by timing issues related to the return of revenues owed to customers from previous years and some under recovery in the same period last year.

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Fraser McLaren at Bank of America Merrill Lynch said the results were ahead of their expectations and the company remained attractive in current markets.

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"With over 90% of its activities regulated, [National] Grid has relatively low risk, a 6.2% yield, and steady rehabilitation of U.S. returns gives more options to unlock value in the medium term," McLaren said.

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Net profit for the half year was up 4.6% at GBP795 million from GBP760 million a year ago.

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At 1118 GMT National Grid shares were up 1% at 633 pence.

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-By Selina Williams, Dow Jones Newswires +44 207 842 9262; selina.williams@ dowjones.com

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Order free Annual Report for National Grid PLC

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Visit http://telecomadvisors.biz/djnweurope.ar.wilink.com/?ticker=GB00B08SNH34 or call +44 (0)208 391 6028

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    (END) Dow Jones Newswires   11-17-110636ET   Copyright (c) 2011 Dow Jones & Company, Inc. 

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