Perth utility SSE facing up to market challenges

Big Six firm sees domestic gas and electricity custom fall as competition increases

Perth headquartered utility SSE is facing up to a series of “complex” market challenges.

However, the power firm, which held its annual general meeting at Perth Concert Hall yesterday, told investors that change in the market was not just a negative but could also offer new opportunities.

“As expected, 2017/18 is presenting a number of complex challenges to manage, but SSE is a focused, resilient and adaptable business with efficient operations and disciplined investment at its core,” chief executive Alistair PhillipsDavies said.

“There continues to be significant change across the energy sector, but also opportunities for responsibly- minded businesses to contribute positively to its direction in the interests of customers and investors alike.

“Our priorities remain to support positive outcomes for customers, provide reliable and sustainable energy and deliver annual dividend growth for investors that at least keeps pace with inflation.”

In an update prior to the AGM, the company – the UK’s second largest power firm – revealed it had lost 230,000 UK and Ireland retail customer accounts in the first quarter, reducing its total to 7.77 million at June 30.

In the wholesale business, gas and oil fire generation grew strongly in the first quarter of 2017 and there was also an uplift in wind generation, although hydro output fell compared with the prior year.

SSE also updated on its share buyback programme, stating it had completed the purchase and cancellation of £323m of shares since last November.

It anticipates reaching its target of £500m of buybacks by the end of 2017.

On its wider financial outlook, the company said it was on track to deliver an annual dividend at least equivalent to RPI inflation.

However, it stuck with previous guidance that this year’s dividend is likely to be towards the bottom of the 1.2 to 1.4 times range.

That means that adjusted earnings per share for 2017/18 is likely to be lower than in the previous year.

All resolutions, including those relating to executive pay, were duly passed at the group’s AGM.

Shares in SSE closed the trading session down 0.60 to 1470.4 last night.