SSE pre-tax profits slump by more than a third

Adjusted pre-tax profits at SSE have slumped by 38 per cent to £725.7 million, according to the firm’s latest set of financial figures.

The energy company’s preliminary financial results for 2018/19, which have been posted today (22 May), also show adjusted earnings per share are down by 32 per cent to 67.1 pence.

According to SSE, the results reflect an £284.9 million adjusted operating loss in its energy portfolio management (EPM) business, which was first highlighted by the company last September and more than £1 billion in exceptional gains from sales of stakes in three onshore wind farms and its telecoms business.

Adjusted operating profits at SSE’s wholesale energy business fell by 71 per cent from £657.2 million last year to £191.9 million as a result of losses in the EPM division.

But SSE’s networks wires and pipes business was up 9 per cent from £763.1 million to £830.2 million, following heavy investment in the North of Scotland electricity system to allow more renewables to connect to the grid.

And its retail business was 2 per cent from £124.1m to £122 million.

It has also been announced that Katie Bickerstaffe is to be the new executive chair of SSE Energy Services, with mandate to deliver a new future outside the SSE group.

The results also show profits from SSE Energy Services fell from £278.7 million to £89.6 million due to a challenging price cap and lower customer numbers.

“While our financial results clearly fell well short of what we hoped to achieve at the start of the year, we’ve made significant progress towards our ambition to be a leading energy company in a low-carbon world,” said SSE chair, Richard Gillingwater.

“We have continued to develop our core businesses of regulated energy networks and renewables; demonstrated our ability to create and unlock value from developing and operating, as well as owning, assets; and adopted clear long-term goals as we set up the business for long-term success.”

James Smith, a fund manager at Premier Global Infrastructure Trust, commented: “Despite popular perception of excess profits, UK energy businesses continue to struggle. SSE’s March 2019 earnings reflect this with headline (normalised) earnings down 32 per cent.

“Following the abandonment of SSE’s proposed merger of its retail business with nPower, SSE will need to develop a new strategy for this business. In the meantime, trading remains tough with profits in their household retail business falling 68 per cent to £90 million from £279 million. Retail customer accounts fell 8 per cent to 6.25 million. SSE is concentrating on its more stable renewable energy and networks businesses, in which they invested over £1 billion in the year.”