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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Scottish and Southern Energy    SSE   GB0007908733

SCOTTISH AND SOUTHERN ENERGY (SSE)
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Higher gas prices and hot summer take wind out of SSE's sails

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09/12/2018 | 11:06am CET
An SSE vehicle is parked outside the Pitlochry Dam hydro electric power station in Pitlochry

(Reuters) - British power company SSE Plc warned this year's hot and calm weather and higher gas prices had already knocked 190 million pounds off profits from its earlier plans, sending its shares nine percent lower.

Britain's second largest energy supplier said it expected profit to halve in the six months to the end of September compared to the same period a year ago.

"Lower than expected output of renewable energy and higher than expected gas prices mean that SSE's financial performance in the first five months has been disappointing and regrettable," Chief Executive Alistair Phillips-Davies said.

Shares dropped as much as 9.2 percent to 1,135.5 pence, dragging shares in fellow UK utilities Centrica and National Grid down 2 percent.

It said an 80-million-pound hit to first-quarter earnings that it flagged in July had risen to 190 million pounds in the first five months of the year. As well as hitting renewable output, the heatwave also depressed demand.

It said its wholesale business would show an adjusted operating loss for the six months to the end of September, driven largely by problems with the cost of power supplies and generation.

Its Energy Portfolio Management sub-segment, responsible for ensuring the company has the energy supplies it requires to meet the needs of customers, was expected to show a 100 million pound loss.

Germany's biggest energy group by market value, E.ON SE affirmed its guidance after profit warning by SSE.


Graphic: British Energy Providers Feel The Heat -

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Perth, Scotland-based SSE has been losing customers as smaller entrants challenge traditional players with aggressive pricing and is set to combine its retail power unit with Npower, owned by Germany's Innogy, to create Britain's second-largest retail power provider.

On Wednesday it said adjusted operating profit at the retail business, which supplies power to 3.7 million homes, offices and companies, should be "around break-even" in the first half.

SSE also said the price cap on default energy bills proposed by Britain's energy regulator last week would result in significantly lower full-year profit at its energy services division than expected at the start of the year.

Ofgem last week proposed a price cap that it said would save households about a billion pounds a year. It aims to implement it in time for winter following a government promise to tackle "rip-off" power prices.

SSE said it continues to expect to recommend a full-year dividend of 97.5 pence per share for 2018/19 and stick to a five-year dividend plan announced in May.

"Pledging to make good its promise on the dividend will sugar the pill of another profit warning, but with earnings falling and investment requirements stretching well into the billions, SSE can ill-afford more slip ups," said George Salmon, equity analyst at Hargreaves Lansdown.

(Reporting by Justin George Varghese in Bengaluru; Editing by Keith Weir)

By Justin George Varghese

Stocks mentioned in the article
ChangeLast1st jan.
CENTRICA 0.83% 145.25 Delayed Quote.5.79%
E.ON 1.52% 9.131 Delayed Quote.0.77%
INNOGY SE 0.30% 39.96 Delayed Quote.22.30%
NATIONAL GRID PLC -2.04% 823 Delayed Quote.-5.95%
SCOTTISH AND SOUTHERN ENERGY -0.97% 1118 Delayed Quote.-15.30%
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Financials (GBP)
Sales 2019 34 076 M
EBIT 2019 1 266 M
Net income 2019 963 M
Debt 2019 9 372 M
Yield 2019 8,73%
P/E ratio 2019 11,95
P/E ratio 2020 11,11
EV / Sales 2019 0,61x
EV / Sales 2020 0,58x
Capitalization 11 477 M
Chart SCOTTISH AND SOUTHERN ENERGY
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Technical analysis trends SCOTTISH AND SOUTHERN ENER
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Mean consensus OUTPERFORM
Number of Analysts 14
Average target price 13,4  GBP
Spread / Average Target 20%
EPS Revisions
Managers
NameTitle
Alistair Phillips-Davies Chief Executive Officer & Executive Director
Richard D. Gillingwater Chairman
Anthony Edward Keeling Chief Operating Officer
Gregor Alexander Finance Director & Executive Director
Martin Pibworth Director & Managing Director-Wholesale Division
Sector and Competitors
1st jan.Capitalization (M$)
SCOTTISH AND SOUTHERN ENERGY-15.30%14 723
DUKE ENERGY CORP3.06%61 792
IBERDROLA3.47%48 825
SOUTHERN COMPANY-1.89%48 245
DOMINION ENERGY-9.39%48 221
EXELON CORPORATION16.42%44 366