SSE adjusted FY profits slump; warns of tough 2019
By Frank Prenesti
Date: Wednesday 22 May 2019
(Sharecast News) - Adjusted pre-tax profits at energy provider SEE slumped 38% to £725.7m as the company warned current year results would be challenged by competition and opposition Labour Party renationalisation plans.
The adjusted figure reflected a £284.9m adjusted operating loss previously forecast in energy portfolio management. Pre-tax profit for the year through March rose to £1.37bn, up from £864.4m on-year, as the company benefited from the proceeds of asset sales.
SSE Energy Services, the company's renamed domestic supply division, saw operating profit fall to £35.3m from £221.8m due to the government-imposed price cap and the decision not to pass on the full impact of higher wholesale prices to customers
The company also said it was forming a separate board for its electricity and gas supply business, which it has been trying to offload, "with a mandate to deliver a new future for the business outside of the SSE group and continue progress towards a listing or new, alternative ownership by the second half of 2020".
Adjusted earnings per share fell 32% to 67.1p. A final dividend of 68.2p a share was declared, making the total 97.5p a share.
"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," said chairman Richard Gillingwater.
SSE said current year group adjusted operating profit was "likely to be negatively impacted by expected phasing of profits in regulated electricity networks and by renewable output for 2019/20 being hedged at less than current market prices".
SSE, which is one of the so-called 'Big Six' providers, said earlier in May it was cutting 444 jobs in its struggling retail business, blaming tough competition and the price cap.
The company added that Brexit worries and Labour's proposed renationalisation policy if it was elected had caused "significant" uncertainty.
"The energy sector as a whole remains under significant scrutiny, including from the Labour Party, which advocates nationalisation of energy networks," the company said, adding that it was lobbying against the policy.
"In all of this, there is a huge degree of uncertainty, including: uncertainty about what the final form of Labour's policy will be in a general election; uncertainty about whether that general election will result in a Labour government with a sufficient majority and capacity to pass the necessary legislation in parliament; uncertainty about the final content of any legislation; and uncertainty about how and when any legislation would be implemented."
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