SSE blames weather and competition for flat profits

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SSE, the Big Six energy provider, warned yesterday that warm weather and increasing competition would keep its profits flat this year.

The group’s shares tumbled 2.8 per cent to 1,536p after it said it had lost 210,000 customers in its first half as the exodus to smaller, independent suppliers continued. This brings the total number of account losses in the past year to more than half a million.

Overall, SSE reported a 4.6 per cent increase in group profits to £370m in the six months to 30 September; a strong performance in its networks business – the wires and pipes that carry electricity – outweighed weaker results in other divisions. SSE’s “wholesale” unit saw profits tumble by 83.4 per cent per cent to £26.7m as the unseasonably warm weather reduced demand.

The group said the weather had been 1.3°C warmer than the historical average in its financial first half and that hotter temperatures have continued into October and November.

The division also suffered from low winds, which reduced output from turbine-powered generators. Meanwhile, the group’s retail business made a £16.9m loss as customers left and those who remained used less energy.

Alistair Phillips-Davies, SSE’s chief executive, said: “In tough market conditions we have delivered solid business results.” But the company conceded that it was being affected by rising competition. “The business environment remains challenging and, in particular, the mild weather that has contributed to low production and consumption of energy has persisted into early November,” a spokesman said.

“As a result, SSE now believes its adjusted earnings per share in 2014-15 will be towards the lower end of the range set out in March 2014, and therefore be around the level achieved in 2013-14,” he added.

SSE said its chairman, Lord Smith of Kelvin, will step down on 1 January, to be replaced by Richard Gillingwater, the senior independent director. SSE also announced it had sold a venture that is working on seven street-lighting projects, in a £326.4m deal.