SSE to ramp up green capex as interims rise 30%
By Frank Prenesti
Date: Wednesday 17 Nov 2021
(Sharecast News) - Interim profits at renewable energy company SSE on Wednesday rose by a third as the company pledged to invest £12.5bn in green capital expenditure in an apparent rebuff to calls from activist investor Elliott to split the group.
Adjusted pre-tax profits increased 30% to £174.2m as its gas storage operation helped to offset a fall in renewables earnings. SSE said it had made a strong start to the second half of the year, with renewables volumes above plan in October, and thermal and hydro plant in particular achieving strong prices in the market.
Subject to normal weather, plant availability and similar levels of commodity prices over the coming winter months, SSE said it expected to report full year adjusted earnings per share at a level which is at least in line with consensus of analysts' forecasts of 83p.
The 65% step-up in capital expenditure is the equivalent of an extra £1bn a year, the company said on Wednesday. It also declared a 25.5p a share dividend, but said it would be rebasing annual payouts to 60p in fiscal 2023/24.
SSE has been under pressure to split off its renewables energy business. Elliott has been building a stake in the business and is reported to be pushing for a break-up of the firm, which sold its household energy supply and services firm at the beginning of 2020.
AJ Bell investment director Russ Mould said SSE's pivot towards renewables meant it wasn't directly exposed to the current energy crisis, "where even the larger operators will be running many loss-making accounts as the wholesale cost of gas and electricity soars above fixed tariffs".
"This is unlikely to be sufficient to get activist investor Elliott off its back, which having joined the shareholder register earlier this year has been reportedly pushing for SSE to take more radical action and separate the renewables assets from the grid business."
"The rationale for such a move is that it could see SSE lifted to the more elevated market valuations enjoyed by other firms which concentrate purely on renewables. However, today's first-half results perhaps offered an indication why SSE is resisting such a move, at least for the time being."
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