SSE chief lowers full-year expectations despite 50% increase in first-half profits

CANNY MAN: Alistair Phillips-Davies
CANNY MAN: Alistair Phillips-Davies

Profits at Perth-based energy supplier and electricity generator SSE rose by almost 50% to £548.8 million in the first half of its financial year.

This result was largely sparked by a return to profit for its Retail Division, which supplies energy to householders. It reported an operating profit of £101.5 million over the six months to September 30 after a loss at the same stage last year.

Within that division, its energy supply arm delivered an operating profit of £73.8 million following a £16.9 million loss last year.

However SSE said it made less than £5 profit per duel fuel customer and overall it expects to make less profit in Energy Supply at the end of the financial year than it did in 2014-15.

Its Wholesale business saw profits restored to £159.6 million, similar to the level in 2013, following an exceptionally low performance during the same period last year. High rainfall and wind saw over one third of SSE’s generation output coming from renewables in the last six months.

In SSE’s Networks business, operating profits declined by 1.5% to £451.6 million, which was expected following the new price control and reduced profits from its share in Scotia Gas Networks.

Its Transmission business is the fastest growing in Europe with record investment, including completion of the Beauly-Denny transmission line and the commencement of the Caithness to Moray subsea transmission link.

Alistair Phillips-Davies, SSE Chief Executive, said: “We’ve had a solid start to the financial year but half year profits are only half the story.

“There are many variables in energy and so they should be treated with caution – that’s why we focus on full year results.

 “The last six months have seen us invest substantially in the UK’s energy infrastructure – committing one and a half times what we’ve made in profit in the first half of the year. We’ve upgraded our fleet of gas fired power stations, opened our new multi-fuel power plant and completed the Beauly to Denny transmission link and started work on the vital subsea link between Caithness and Moray.

“We’ve seen a return to a more typical level of profit in our Wholesale and Retail businesses. However market conditions continue to be challenging in domestic energy supply and we expect these profits to be lower at the end of the year.”

Meanwhile, more than 400,000 customers switched their electricity supplier last month – the highest such figure in the past two years.

Three million customers have already switched in 2015. The latest electricity switching data also shows that around 310,000 people switch on average each month in 2015, well above the 250,000 average last year.

Lawrence Slade, chief executive of Energy UK, said: “With many fixed energy deals coming to an end in October it is encouraging to see so many customers shopping around to find the best deal for them. The two year high proves people are more engaged with their energy providers and the work industry and Government are doing to encourage customers to switch has really helped to push numbers up.”

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