SSE (SSE) shareholders should feel some relief – management nudged up the half-year dividend, despite the fact that adjusted operating profits were almost wiped out at the wholesale business during the first half. Ongoing high gas prices forced the energy portfolio management (EPM) operations into an £86m adjusted pre-tax loss, but that was better than September’s guidance of around £100m thanks to more favourable outturn prices.
EPM will also establish more stringent measures for hedging against commodity price volatility by 2020, which will include introducing a measure of the downside risk to the profitability of SSE's portfolio of physical and financial assets. Renewable assets will be consolidated into a single business, with management hoping to expand investments internationally. Production was down 5 per cent during the period, due to calmer weather. The networks business continued to be a bright spot for the energy group, with adjusted operating profits rising 7 per cent to £380m. Electricity transmission profits were up almost a third thanks to greater ‘use of system’ revenue.
City analysts expect consensus adjusted earnings of 75.9p a share for the year to March 2019, down from 1,211p in the prior year.
| SSE (SSE) | ||||
| ORD PRICE: | 1,168.5p | MARKET VALUE: | £12bn | |
| TOUCH: | 1,168-1,169p | 12-MONTH HIGH: | 1,450p | LOW: 1,077p |
| DIVIDEND YIELD: | 8.2% | PE RATIO: | 42 | |
| NET ASSET VALUE: | 435p* | NET DEBT: | 211% | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 10.72 | 368 | 30.8 | 28.4 |
| 2018 | 3.33 | -183 | -22.6 | 29.3 |
| % change | -69 | - | - | +3 |
| Ex-div: | 17 Jan | |||
| Payment: | 15 Mar | |||
| *Includes £1.2bn of hybrid equity | ||||
