Energy price cap boosted by surge in profit at SSE
19 May, 2017, 04:53 | Author: Glen Fletcher
"The operating environment has presented a number of complex challenges to manage, but SSE is a resilient business", Gillingwater said.
The board recommended a final dividend of 63.9 pence a share, making a total payout for the year of 91.3 pence a share, up from 89.4 pence a share.
It said some 70 per cent of its 6.76m United Kingdom domestic customer accounts could be affected by the cap. Shares rose 1% to 1465p.
On a reported basis - including the impact of write downs to wholesale generation, gas storage and production assets in the previous year - profit before tax jumped to £1.78bn from £593.3mln and operating profit surged to £1.95bn from £784.3mln.
Preliminary results show the Big Six power provider generated revenues of £29 billion in the year to March 31, a marginal improvement on the £28.78bn of a year earlier.
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 was working to keep its dividend cover within an expected range of 1.2-1.4 times, although it was likely to be at the bottom of that range, which meant adjusted earnings per share was likely to be lower than 2016/17.
Its wholesale business reported an operating profit of 498.2 million pounds after a loss of 481.3 million in 2015/16.
Adjusted operating profits in its retail business dipped to £389.5m from £398.9m, with lower wholesale costs offsetting customer losses.
SSE has continued to lose customers in the past year.
SSE raised its electricity prices in April by 14.9 per cent for 2.8 million customers.
However, that is because adjusted earnings per share will fall in the new financial year to the end of March 2018. The Conservatives have pledged to introduce a price cap that is expected to squeeze the Big Six energy company's margins from standard variable tariffs used by around 17 million United Kingdom households while the opposing Labour party has said it would like to introduce state-owned energy firms in every region.
It said: 'SSE would however continue to caution against the unintended consequences of intervention in what is a competitive, dynamic and fast changing market.
The Perth, Scotland-based company hasn't seen anything yet in the government's price-cap plan that requires it to change its policy of boosting dividends each year, but there are risks, Alistair Phillips-Davies, chief executive officer, said Wednesday on a conference call with investors.
It said in a statement: "As a major energy supplier we believe customers" best interests is served by competition, not caps.