Energy giant SSE on track despite drop in customers

● Big Six players sees customers fall by 70,000 in Q1 ● Green energy output comes in lower than forecast

Scottish energy giant SSE yesterday reassured investors that it is on track to meet its financial targets for the year despite a fall in customer numbers and lower than forecast renewable generation due to poor weather conditions.

Ahead of its AGM in Perth, the Big Six supplier said it had made “good progress” in the first three months of the new financial year and although it said it had been impacted by “short-term challenges”, reiterated its intention to pay a full-year dividend of 80p a share for 2019-20 to shareholders, many of whom invest in the company for a reliable income stream.

UK energy customer numbers fell by 70,000 to 5.71 million in the period to 30 June. Despite increasing the amount of renewable energy it has produced over the past year, SSE said it fell short of its forecasts for generation.

Poor weather over spring andthestartofsummermeant that it produced around 20 per cent less green energy than typically. Nevertheless, SSE’S green energy output rose by 15 per cent to 1,794 gigawatt hours for the quarter, driven by increased wind capacity.

Growth in renewables came as its gas and oil-fired generation output fell by 28.1 per cent.

Last month the FTSE 100 firm also confirmed plans to close its last coal-fired power station, in Cheshire.

SSE is currently in consultation with staff and trade unions over the proposals to shut the Fiddler’s Ferry site by March 2020.

SSE chief executive Alistair Phillips-davies said: “The early months of our financial year havebroughtsomeshort-term challenges and some encouraging longer-term developments, but the key months of our financial year lie ahead.

“I am confident we will make good progress in delivering against our strategic priorities, including the five-year dividend plan out to 2023.”

SSE also said that its annual net costs and investment expenditure are in line with its original forecasts.

Donald Brown, head of private clients at Brewin Dolphin Edinburgh, said: “The future of SSE Energy Services continues to be the major question mark, with customer numbers still falling. However, the appointments of new senior staff should provide an indication of its direction shortly, whether as a listed company or under new ownership.”

Although George Salmon at Hargreaves Lansdown said the need to keep the lights on should see SSE delivering steady revenues and profits, he highlighted external threats to the business.

“Nationalisation has reentered the debate for the first time in a generation, and could see the shares taken under government control for an as yet uncertain price. There’s also a trend towards higher interest rates, which could reduce the appeal of dividend paying stocks like SSE."