Energy giant hit
Hot spell and lower gas demand wipe £80m from SSE profits
Lower gas demand is hitting profits
Warm weather combined with lower demand for gas and higher wholesale prices will wipe £80 million from energy giant SSE’s first quarter profits.
The Perth-based company said the temperature across the UK for the months to 30 June was 1.5 degrees centigrade warmer than the thirty-year average. This led to average domestic gas demand being around 10% lower than plan.
The company has also had to weather persistently high gas prices and “poorer than average wind conditions” reducing output from wind farms by 15% lower than plan.
“All of this has resulted in a higher cost of energy, lower than expected output of electricity from renewable sources and lower volumes of energy being consumed,” it said in a trading statement ahead of today’s annual general meeting.
“This has negatively impacted on SSE’s adjusted operating profit in Q1-18/19 by around £80m, compared with plan, and this will potentially impact on its full year results – dependent on the range of factors that apply in its market-based businesses, in which energy portfolio management is a major influence.”
SSE said the proposed merger with Npower to form a new energy business is on course for completion by the end of the current financial year. A general meeting to consider the proposal will follow today’s AGM.
SSE has confirmed its intention to recommend a full-year dividend of 97.5 pence per share for 2018/19, as part of the five-year dividend plan.
Chief executive Alistair Phillips-Davies said: “This new financial year has so far been characterised by lower than expected output of renewable energy and persistently high gas prices, but looking ahead, we are very focused on fulfilling our obligations to energy customers and delivering on our key priorities.
“Those priorities include successful delivery of our plans to invest around £1.7bn in this financial year, and we are pleased with the progress of key projects, including the installation of the first two turbines at the Beatrice offshore wind farm.
“Investment of this kind supports our strategic goal of creating value in a sustainable way, including remunerating shareholders for their investment, and we are strongly committed to delivering the five-year dividend plan we set out in May.”