Utility company Scottish and Southern Energy (SSE) had a tough first six months of its financial year as high wholesale gas prices could not be passed on to customers until the second half. However the 25 per cent fall in underlying pre-tax profit to £287m was in line with analysts estimates, who expect the majority of earnings will be generated in the second half following September's price increases. Investors can take heart at an inflation busting 7 per cent interim-dividend increase.
The higher wholesale gas prices reduced electricity generating margins by 60 per cent year-on-year. This was exacerbated by the loss of 30,000 customers since March. Meanwhile demand shrank from its remaining 10m customers as average household usage of electricity and gas dropped by 4 per cent and 16 per cent respectively.
Investment in the Clyde and Griffin onshore wind farms resulted in a 27 per cent rise in renewable energy spending to £479m. Total capital investment in the first half was £797m. SSE said it remains on target to spend around £1.7bn on capital and investment projects this year and currently has £1.3bn in projects under construction.
Liberum Capital expects full-year adjusted pre-tax profit of £1.4bn and EPS of 119p (from £1.3bn and 112p in 2011).
SCOTTISH & SOUTHERN ENERGY (SSE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,323p | MARKET VALUE: | £12.4bn | |
| TOUCH: | 1,323-1,324p | 12-MONTH HIGH: | 1,430p | LOW: 1,106p |
| DIVIDEND YIELD: | 5.8% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 490p* | NET DEBT: | 123% | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 10.7 | 645 | 53.7 | 22.4 |
| 2011 | 11.8 | -81.3 | -0.7 | 24.0 |
| % change | +11 | - | - | +7 |
Ex-div: 25 Jan Payment: 23 Mar *Includes intangible assets of £1.1bn, or 120p a share | ||||
