Free from the £893m in impairments booked in the 2016 financial year against coal and gas generation, storage and production, operating profits at SSE (SSE) more than doubled in the reported period to £1.94bn. The electricity and gas supplier's healthy dividend is also generously covered by adjusted EPS, sitting near the top of the 1.2 to 1.4 target range at 1.38 times. However, this has been overshadowed by the potential impact of a proposed energy price cap, the full details of which are expected to emerge imminently in the Conservative Party manifesto. The Labour Party has also promised an emergency cap on the average duel fuel energy bill at £1,000 a year.
This, combined with the £40m revenue reduction from electricity transmission and the lower-than-expected clearing price from the year-ahead capacity auction, make the short-term outlook far less appealing. The group expects earnings per share to drop for the 2018 financial year, with dividend cover expected to slip towards the bottom of the range, although analysts have warned this was a risk even before a price cap is accounted for.
Analysts at RBC Capital markets are forecasting adjusted pre tax profit of £1.7bn, giving adjusted EPS of 134p a share in the year to March 2018 (from £1.6bn and 123p in FY2017).
SSE (SSE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,464p | MARKET VALUE: | £14.8bn | |
| TOUCH: | 1463-1465p | 12-MONTH HIGH: | 1,644p | LOW: 1,369p |
| DIVIDEND YIELD: | 6.2% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 620p | NET DEBT: | 106% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 28.3 | 0.60 | 42.0 | 84.2 |
| 2014 | 30.6 | 0.58 | 33.5 | 86.7 |
| 2015 | 31.7 | 0.74 | 55.3 | 88.4 |
| 2016 | 28.8 | 0.59 | 46.1 | 89.4 |
| 2017 | 29.0 | 1.78 | 158.4 | 91.3 |
| % change | +1 | +200 | +244 | +2 |
Ex-div: 27 Jul Payment: 22 Sep | ||||
