Underlying pre-tax profits surged 38 per cent to £397m at energy utility
One of the main profit drivers was a recovery in the retail business as a cold snap saw gas consumption up 27.9 per cent and electricity up 2.8 per cent, which helped reverse last year's £101m operating loss into a £76m profit. Running the electricity networks is also going well and operating profits there were up 19 per cent to £399m, contributing the majority of group profit. However, these gains were offset by a lower contribution from the wholesale business, where profits declined 44.5 per cent to £123m. That mainly reflected lower spreads for gas-fired generation and reduced output from renewables sources due to calmer and drier weather compared with last year.
Analysts at Deutsche Bank expect full-year adjusted EPS to rise from 96p to 101p.
|ORD PRICE:||1,388p||MARKET VALUE:||£13bn|
|TOUCH:||1,388-1,390p||12-MONTH HIGH:||1,467p||LOW: 1,200p|
|DIVIDEND YIELD:||5.9%||PE RATIO:||56|
|NET ASSET VALUE:||316p*||NET DEBT:||135%|
|Half-year to 30 Sep||Turnover (£bn)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 23 Jan
Payment: 22 Mar
*Includes intangible assets of £1.1bn, or 117p a share
SSE provides an inflation-beating dividend with good visibility and is backed by infrastructure assets. However, with energy legislation pending, the shares are likely to mark time until there is further clarity. Hold.
Last IC view: Hold, 1,318p, 16 May 2012