SSE reveals profits dip as it pushes forward with investment plan
Energy network firm SSE has revealed a dip in profits as it pushes forward with a multibillion-pound investment plan.
It came as the group reported financial results “at the upper end” of forecasts for the past year.
The power company reported a “strong operational performance” and told shareholders its mix of operations meant it has seen no immediate impact from wider global volatility.
It revealed that pre-tax profits dipped by 1 per cent to £1.84 billion for the year to March, compared with a year earlier, while adjusted pre-tax profits were 6 per cent lower.
It reported earnings per share of 153.5p, at the top end of its guidance.
SSE also reported that its capital investment jumped by 23 per cent to £3.6 billion for the year, driven by its transmission division.
The company said it plans to increase capital investment to more than £5 billion for the current financial year.
Martin Pibworth, chief executive of the group, said: “This year has demonstrated the strength and resilience of SSE’s integrated model.
“By operating our business efficiently and optimally, while accelerating electrification and building energy infrastructure to unlock homegrown renewables, we are strengthening energy security and lowering system costs over time.
“With record levels of capital investment in line with our plan and strong momentum across the group, we are well placed to deliver sustainable growth and value creation for our shareholders while helping to build a more affordable and secure energy system for the UK.”
Duncan Ferris, investment writer at Freetrade, said: “SSE’s transmission business saw profits and investment both sharply higher, underlining how much now rests on its UK grid upgrade.
“For the moment, SSE’s energy transition plans and operations are on track, and the business appears to be bearing the weight of investment well.
“That’s just as well, as buildout projects like SSE’s are an important part of the UK energy infrastructure puzzle.”
Russ Mould, investment director at AJ Bell, said: “If the UK is to reduce its reliance on increasingly volatile global energy markets then SSE may play a role given its big investment in renewables and the electricity network.
“The good news for shareholders and the rest of us is that the company’s major spending programme is progressing to plan.
“While the pressure on earnings from variable weather conditions is a reminder of one of the main drawbacks of renewables – namely their short-term unpredictability – management’s decision to deliver a meaningful hike in the dividend is a show of confidence in the outlook as it sticks with medium-term guidance.
“SSE was among the names to see some selling yesterday on news of the new energy price cap which created fears about pressure on margins and risks around higher bad debts. However, because it exited its retail energy operations several years ago it suffered less than some of its peers.”