SSE squeezes higher profits from household energy customers
SSE squeezes higher profits from household energy customers
SSE said 4.76 million of its 6.76 million UK domestic customer accounts could be affected by a cap on standard variable tariffs
19 May, 2017, 05:24
The company said the full impact of a price cap could be seen only once all its features were known but that this was clearly a risk to SSE's business.
Dividends of SSE could be threatened by "challenges" facing the sector in the coming year.
It said the introduction of a price cap could affect 4.76 million of its 6.76 million customer accounts.
Pre-tax profits for the year to the end of March tripled to £1.8 billion, although a year ago the company made a number of writedowns on older power stations.
Adjusted profit before tax hit £1.5bn this year, while profit margin per dual fuel household customer was around 6.9 per cent against 6.2 per cent the previous year.
SSE rose as much as 1.2 percent to 1,468 pence, the highest in a month, before trading at 1,464 pence at 10:45 a.m.in London.
The firm said it is working to keep its dividend cover within an expected range of 1.2-1.4 times, though it is likely to be at the bottom of that range, which means adjusted earnings per share is likely to be lower than it was in 2016/17.
Breaking down the adjusted operating profit, the result from the Networks division was broadly flat year-on-year at GBP936.5 million from GBP926.6 million, Retail dipped to GBP422.3 million from GBP455.2 million and the Wholesale division experienced a lift to GBP514.6 million from GBP442.5 million.
Its wholesale business reported an operating profit of 498.2 million pounds after a loss of 481.3 million in 2015/16. It hiked its dividend for 2016-17 by 2.1% to 91.3p. This was above analyst expectations of 122-125 pence per share. Its total energy customer accounts in Britain and Ireland fell to 8 million compared to 8.21 million a year earlier. Revenue from electricity distribution will benefit from around GBP10.0 million of under-recovered revenue in the recently-ended financial year.
Regarding the proposed cap the SSE said: it "would caution against potential unintended consequences of any proposed intervention in what is a rapidly changing and increasingly competitive market".
"SSE will continue to focus on securing maximum value from our portfolio of Wholesale assets, achieving further efficiencies and customer service improvements in our Networks businesses, responding positively to evolution and change in our Retail markets and creating long-term value through investment of around GBP1.70 billion in new assets in 2017/18", he added.
It said in a statement: "As a major energy supplier we believe customers" best interests is served by competition, not caps.
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