FOR sparkling results Hydro-Electric's interim yesterday took some

beating. Pre-tax profits soared 66.4% to #40.6m, far ahead of the most

optimistic expectations, with the dividend given a 10.8% lift.

The shares responded with a 3p rise to 240p, close to the peak of

247p. With analysts sharing the company's optimism about trading

prospects, expectations for the full year are being raised to around

#145m.

''These are very satisfactory first-half results and we are well on

target for a strong full-year performance,'' said chairman Sir Michael

Joughin.

Industry regulators can have little complaint. Hydro's pricing tariff

is the second lowest in Britain and far below the cost in, for example,

rural Wales. Besides customer service is said to have ''improved

markedly'' in recent months.

The fact that sales across the Border increased 20.2% to #60.3m is

significant, with total power sales up 6.8% to #301m. ''Sheer hard work

and effort,'' was chief executive Roger Young's explanation, with eight

new contract customers won in England in spite of recession.

The company could be earning good profits there when the

interconnector upgrade is completed at the end of next year, adding 30%

to export capacity.

On production, Hydro showed an improved operating margin of 16.7%,

largely as a result of having two months' benefit from the Miller gas

flow to Peterhead power station. Higher summer rainfall also helped.

Distanced from the topical issues over coal use the company might even

benefit, if English generators are forced into price rises. Effectively

it is sold out of electricity at present.

Already the planned output from the new Keadby power station on

Humberside, a joint venture with Norweb, has been substantially sold

ahead. The project is not scheduled to complete until 1995. Supplies

have been purchased from France for two years now, and these could also

be stepped up.

Even appliance retailing has gone well, which will stun the English

distributors. Turnover rose 15% on the same sales area but benefiting

from refurbishment of the shops and a new warehouse opened in Perth.

Although it will rise slightly in the current half, with #48m drawn

down towards the Keadby project, at end-September gearing had been cut

to 20.6% from 41.6% at the same point in 1991. The interest charge was

down a third to #9.7m.

Added to which #116m of 11.5% Government debt is being redeemed next

week, taking #12.5m mainly from cash but saving #4m in a full year.

Earnings will eventually benefit and jumped from 5.11p to 7.93p in the

half-year. The interim dividend is 3.6p.

Hydro's initial 1,600,000 shareholders has reduced to 700,000, with

30% of the capital held by individuals.

There may be selling ahead of the final 70p-a-share call due in April,

but on these figures and a prospective yield of just over 6%, hydro

power is attractive.