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SSE is expected to post higher earnings for the first half of its financial year despite a predicted loss for its retail business, according to investment analysts RBC Capital.
In an investor note, RBC predicts SSE will show earning have increased by 13 per cent (to £464 million) for the first half of the financial year when compared to the same period last year.
This comes despite predictions that the company’s energy supply arm will post a loss for the first half of the financial year.
This loss is expected to be made up in the next six months, with SSE predicted to post a 3 per cent profit margin for its supply business, although this would be lower than the management expectations of a 4 per cent.
RBC also expects SSE to lose more customers to smaller suppliers, although this is likely to be “less pronounced than earlier in the year”.
RBC added that the first half of the year will make up an estimated 24 per cent of SSE’s full year profit.
However, SSE’s management is expected to reiterate the guidance from a trading statement in September, which said the company “remains on course to achieve its principal financial objective for 2014/15, which is to deliver an increase in the full-year dividend of at least RPI inflation.”
The half year results are also expected to show that gas and electricity distribution profits will be “broadly flat”, although income from electricity transmission will “jump significantly” as a result of higher returns from “continued high capex levels”.
Generation output is also likely to be down, with RBC saying this will be shown particularly with wind and coal.
Ahead of its results on Wednesday morning, SSE said it has contributed £17 billion to the UK economy over the last three years.
SSE cites report it commissioned from PwC, which says the company contributed £8.94 billion to the UK economy in 2013/14 and supported 111,900 jobs during that period.
SSE chief executive Alistair Phillips-Davies said the report “shows the scale of our commitment to UK plc and measures the economic benefit that our investment brings.”
He added: “As a responsible company, SSE seeks to maximise the economic benefits from its activities, not just in the countries it operates in, but in local communities too.
“This analysis from PwC helps us to identify areas where we can enhance our impact.”
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