LONDON (ShareCast) - (Sharecast News) - SSE said first quarter operating profits would take an £80m hit due to Britain's hot summer and "persistently high gas prices" combining to cut renewable output, customers using less energy and increased costs.
The utility added that fully year results could also be hit but reaffirmed its commitment to pay a total dividend of 97.5p.

During the quarter SSE hit consumers with a price rise which it blamed on "higher wholesale and policy costs". It also responded to to the government's plans to cap standard variable tariffs, saying it that any implemented "must reflect accurately the costs that energy suppliers incur".



Renewable output was 15-20% lower than planned for the first quarter, with hydro output 20% lower and poor wind conditions meaning onshore and offshore wind output was 15% lower.

Domestic gas demand was 10% lower than expected as the temperature in the UK across the 3 months to 30 June 2018 was 1.5 degrees warmer than the 30 year average.

Both the Stonelairg onshore wind farm (228MW) and Beatrice offshore wind farm (588MW, 40% SSE) remain on track for completion in 2019, SSE said, with the SSE Energy Services transaction with Npower also on course for completion by the end of the current financial year, if the CMA's competition investigation goes to plan.

Analysts at RBC Capital Markets said the recent capital markets day was disappointing both in terms of near term earnings drivers and the new base for dividends in what will be left of SSE after the Energy Services deal of 80p/sh in 2020. "Even though we are supportive of the retail spin-off strategy and believe the RemainCo could become an attractive M&A target, we no longer see valuation upside."

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