SSE sees network woes overshadow retail cheer
The firm said improved trading across its energy services division is helping drive wholesale and retail profits higher.
Energy supplier SSE has reiterated warnings over a hit to profits in spite of a better-than-expected performance in its retail gas and electricity arm.
Improved trading across its energy services division – offering boiler cover, broadband and telephone services – and business supply operation is helping drive profits higher across the wholesale and retail division.
The Big Six provider said it expects half-year results in November will show an increase in underlying earnings for that division.
This comes despite hefty falls in customer numbers in recent months.
But SSE – which hiked dual fuel prices by 6.9% in April – confirmed operating profits overall will be impacted by woes in its network business.
Annual earnings in the networks business will be around £150 million lower due to the phasing of its investment in energy network projects which will result in lower revenues, as well as a reduced share in SGN after it sold a stake last autumn.
SSE sought to assure investors it still expects to increase its full-year dividend payout at least in line with Retail Prices Index inflation.
Gregor Alexander, finance director of SSE, said: “We are encouraged with what has been achieved in the first half of the financial year, but energy provision is always complex, especially in the autumn and winter period.
“Our focus is on doing the right things and making the right decisions necessary to secure positive outcomes for customers and investors.”
SSE revealed in July that it had lost another 230,000 customer accounts in its first quarter to the end of June as households continued to switch to cheaper rivals.
Total customer accounts in the UK and Ireland dropped to 7.77 million from 8 million a year earlier.
George Salmon, equity analyst at Hargreaves Lansdown, said SSE’s “remarkable track record” on dividend payouts may not last.
“With customer numbers falling and political pressure for an energy market upheaval growing, we feel in order to keep this impressive dividend growth record going in the years to come, the group must start generating higher returns,” he added.