Underlying pre-tax profits surged 38 per cent to £397m at energy utility SSE (SSE), but these well flagged results still beat analysts' expectations by around 5 per cent. The board also stuck to its dividend policy and confirmed a rise of retail prices index inflation plus 2 per cent to take the payout to around 84p for the full year, adding that future increases will also be above inflation. The reported pre-tax loss in our table reflects a £331m adjustment in the valuation of derivative contracts to hedge commodity prices and borrowing costs as well as £89m for the purchase of emission allowances at the Medway power station.
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.
SSE (SSE) | ||||
|---|---|---|---|---|
| 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) |
|---|---|---|---|---|
| 2011 | 11.8 | -81.3 | -0.70 | 24.0 |
| 2012 | 11.4 | -26.8 | 2.90 | 25.2 |
| % change | -3 | - | - | +5 |
Ex-div: 23 Jan Payment: 22 Mar *Includes intangible assets of £1.1bn, or 117p a share | ||||
