Scottishpower profits rise 27% in ‘pivotal year’ for firm
SCOTTISHPOWER has hailed the benefits of its decision to focus on renewables after posting a 27 per cent increase in annual profits.
The Glasgow-based energy giant recorded underlying profits of £1.543 billion in 2018 compared with £1.215bn in the preceding year.
Chief executive Keith Anderson said 2018 was a pivotal year for Scottishpower as the firm completed the “landmark” journey from coal and gas to 100% green power by selling its conventional generation business.
The renewables division increased profits by 33% last year to £457.8m from £343.3m. Mr Anderson said the increase reflected the benefits of the hefty investment the firm made in 2017 in onshore wind farms in Scotland.
He also claimed the decision to focus on renewables had helped Scottishpower make progress in the retail business, which sells gas and electricity to households, last year.
The Spanish-owned group’s liberalised businesses almost trebled underlying profits, to £271.8m in 2018 from £94.7m. The bulk of the profits were achieved by the company’s retail arm.
On Tuesday Scottishpower and Scottish Gas became the latest energy suppliers to announce they were increasing their standard variable tariffs after Ofgem upped the price cap.
Scottishpower said yesterday it had achieved a strong performance relative to competitors in the sector last year, with customer numbers remaining above 5 million.
“It’s clear our customers are backing our commitment to green energy and our investment in a cleaner healthier future as, unlike others, our overall customer numbers have remained stable in 2018,” said Mr Anderson.
However, Scottishpower’s numbers were boosted by the addition of 108,000 households and 21,000 businesses in November when the regulator appointed the firm to take on the customers of Extra Energy after it ceased trading.
A series of independent energy companies hit the buffers last year including Borders-based Spark Energy, which was left facing big financial commitments under the official renewables obligation support scheme.
The introduction of the price cap on standard variable tariffs by Ofgem from January put pressure on firms’ margins.
The price cap was labelled a con after Ofgem said recently it would increase the typical limit for UK default and standard variable gas and electricity tariffs by £117 to £1,254 a year from April 1.
The demise of independents could ease the pressure on giants. Many domestic customers have switched to smaller players in recent years.
Scottishpower said yesterday it achieved a profit margin of around 3% on retail sales in 2018 after facing challenges in the preceding year. Customers numbers fell by around 200,000 in 2017, to 5.1 million, while warmer weather led to a fall in the amount of gas and electricity remaining customers were using.
The liberalised business also included the power generation portfolio Scottishpower sold to Drax for £702m in October. This includes a giant reservoir-based power generator in Argyll, the Lanark and Galloway hydro- electric facilities on rivers in South West Scotland, and a biomass fuel plant near Glasgow, along with four gas-fired power stations in England.
Scottishpower increased profits from its networks business to £813.4m, from £776.5m.
Wind power production increased by 9% in 2018, to 4,568Gwh, following the completion of a £650m investment programme to build eight new onshore wind farms in Scotland. First power from the giant East Anglia ONE offshore project is expected in 2019.
The parent Iberdrola group grew underlying profits (before interest, tax, depreciation and amortisation) by 27.7% to €9.4bn (£8.2bn).