SSE earnings slide after half a million customers depart

● Supplier pledges to sell or float energy services arm as results fall “well short”

Perth-based SSE has lost more than half a million customer accounts and seen profits slump as its pledged to offload its energy services arm.

The utility giant reported that domestic electricity customer accounts dropped to 3.46 million in the year to 31 March, down from 3.82 million the previous year, while gas accounts fell by more than 300,000 to 2.32 million.

It came as the group revealed full-year results that “fell well short” of expectations, with underlying pre-tax profits slipping to £725.7 million, a 38 per cent drop from almost £1.2 billion in 2017-18.

The Big Six supplier also announced it will offload its under-pressure energy services business, appointing a separate board led by executive chair Katie Bickerstaffe to do so.

The group, which called off a proposed merger with Npower late last year, saw underlying earnings in the division crash 68 per cent to £89.6m

Bickerstaffe is to oversee the separation of SSE Energy Services from the wider business, either “in the form of a listing or new, alternative ownership” by the second half of 2020.

SSE also set a deadline for the departure of chair Richard Gillingwater, who will depart no later than 31 March 2021.

The supplier posted a 59 per cent rise in rep or ted group pre-tax earnings for the year, which climbed to £1.37bn.

However, it forecast that tough market conditions and the government’s energy price cap will impact underlying profits into 2019-20.

Chief executive Alistair Phillips-davies said the group will continue to drive investment in its renewables arm where it “has a large pipeline of opportunities” and will also create a thermal energy business.

It proposed a final dividend of 68.2p, making a full-year dividend of 97.5p, which it said was “in line” with its five-year dividend plan.

Gilling water said :“While our financial results clearly fell well short of what we hoped to achieve at the start of the year, we’ve made significant progress towards our ambition to be a leading energy company in a low-carbon world.

“The fundamental strengths of our business and the strategic opportunities afforded by the transition to a low-carbon economy will support the deliver y of our five-year dividend plan and creation of value for society as a whole.”

AJ Bell investment director Russ Mould said: “Today’s mild profit warning – the utility’s third trading alert in the past year – hints at the pressure that was building on the [dividend] pay-out.

“All eyes are now on the company’ s plant ode merge its retail energy supply business.”

Peter Earl, head of energy at price comparison website comparethemarket.com, said the Big Six model is “failing to attract customer as it used to”, adding: “SSE saw an additional 550,000 vote with their feet this year and switch, cementing the 430,000 customers it lost to a wave of new entrants to the market 12 months ago.”