The Courier & Advertiser (Angus and Dundee)
Utility giant SSE warns over impact of price cap as full-year profits rise
ENERGY: Big Six power supplier sees customer accounts fall to eight million
Shares in SSE edged ahead after the Perth based utility revealed higher profits in 2017 despite a further fall in its domestic power customers.
Preliminary results show the ‘big six’ power provider generated revenues of £29 billion in the year to March 31, a marginal improvement on the £28.78bn of a year earlier.
However, pre-tax profits were significantly higher at £1.77bn compared with the £593.3 million return of a year previous after exceptional costs of £947m relating to asset writedowns and charges weighed on the bottom line in 2016.
SSE took the opportunity to warn the introduction of a price cap – as pledged by the Conservatives if they are returned to power in next month’s general election – would “clearly add to the risk for SSE and other energy suppliers and add to the volume of regulatory changes that need to be addressed and implemented and the significant consequences for finance.”
The group is Scotland’s largest by market value and operates across three main divisions – wholesale, networks and retail, the domestic supply arm of the business.
The results show the retail division lost 210,000 accounts in the past year, taking its total energy customer base to eight million.
Reported operating profit for the division was £313.2m – £85.7m lower than in 2016 – while on an adjusted basis the figure was £9.4m lower at £389.5m.
The wholesale division – which takes in the group’s energy portfolio management activities, electricity generation and gas production and storage – swung back into the black with a £736.1m return in the past year, up from a reported loss of £174.8m in 2016.
The networks unit oversees gas distribution and electricity transmission and distribution.
The transmission business produced an operating profit of £263.7m in the year past – down from £287.2m in 2016 – while distribution operating profits were £62.7m higher at £433.4m.
Overall, the group – which bought back £131m of its own shares in the year to March and which escalated that activity last month – is recommending a 2.1% rise in the full-year dividend to 91.3p.
Chief executive Alistair PhillipsDavies said the year ahead was likely to be challenging for the business.
“We have been clear for some time that 2017/18 presents challenges, and the need to engage constructively with a new UK government as it takes forward energy policy will be a key priority for the year ahead and beyond,” he said.
“SSE will continue to focus on securing maximum value from our portfolio of wholesale assets, achieving further efficiencies and customer service improvements in our networks businesses, responding positively to evolution and change in our retail markets and creating long-term value through investment of around £1.7bn in new assets in 2017/18.
“Across the SSE group, we will continue to take the decisions necessary to secure the right outcomes for customers and investors.
“With a strong and growing asset base, and significant index-linked revenues, we remain committed to delivering annual dividend growth that at least keeps pace with inflation, and to working towards ensuring that dividend cover remains within the expected range.”
Shares closed up 17p at 1,468p.