SSE posts 32 per cent profit hike as renewables output soars

SSE reported a dramatic increase in operating profit for the first half of this financial year as its supply business recovered from the losses seen in 2014, and the weather boosted renewable energy output.

In its H1 results on Wednesday SSE exceeded investor expectations, reporting an operating profit of £701.9 million from £529.8 million with the bulk of the gains coming from its supply and wholesale energy business areas.

SSE’s wholesale business saw operating profit increase from £11.8 million to £141.8 million, as a result of a 38 per cent increase in renewable output.

Higher rainfall and windier conditions over the six months may have helped SSE’s wind and hydro power activities, but market conditions remain challenging for thermal generation, the company said.

Also contributing to the overall profit increase is SSE’s retail business which last year reported an H1 loss of £16.9 million but now shows an operating profit of £73.8 million.

SSE attributes the significant gains to a better performance in the I&C sector, lower than average temperatures, and lower operating costs.

But for domestic supply SSE expects to report a decline in profit in its full year results due to lower customer numbers.

In July this year SSE said its customer base had shrunk to 8.49 million compared with 8.58 million on 31 March this year, a decrease of 90,000 in the first quarter of its financial year.

SSE also said that although “challenging” regulatory pressures from both Government and the Competition and Markets Authority created uncertainty over the first half of the year the outlook is now more stable.

“The road ahead is becoming clearer,” said SSE chairman Richard Gillingwater, adding that “there are grounds for cautious optimism that a stable long-term framework can be achieved.”