Scotland’s second largest quoted company SSE saw £500million added to its market value after a trading update which assured investors that the business is on track to meet its full-year targets.
The energy giant reported a strong first half-year thanks to a recovery in its renewable energy output and an improvement in the electricity supply business which has been losing ground to small competitors.
SSE said results for six-month periods were influenced by short-term issues, and it was likely to earn over a third of full-year profit in the first half rather than last year’s one-quarter. A year ago, first-half profits had been depressed in the wholesale business which includes renewable energy, while energy supply had made a loss, it said.
The year ended however with SSE's supply profits jumping by nearly 40 per cent, despite losing more than 500,000 customers, while its wholesale business saw a 25 per cent profit drop.
The company said: “In 2015-16 there has been high output of renewable energy, benefiting wholesale, and relatively good performance in energy supply. SSE continues to manage a wide range of issues across its wholesale and retail businesses and, therefore, relatively good performance in these segments in the first six months does not change its outlook for the financial year as a whole.”
It said it continued to target adjusted earnings per share of at least 115p , and was on course to achieve its main objective of a dividend increase at least matching inflation.
Figures from the Investment Association yesterday showed equity income funds still the most popular among retail investors, and SSE is a favourite holding with its current dividend yield of over six per cent. However star manager Neil Woodford last month said he had dumped his SSE holding as he was unsure it could grow its earnings.
Gregor Alexander, finance director, commented: “We are satisfied with the start we have made to the financial year, and are pleased to have made good progress in both the investment programme and the operational performance in each of the businesses. The priority now is to make sure that the business performs well throughout the autumn and winter, focusing on meeting the needs of networks, retail and enterprise customers in particular, while achieving our key financial goals.”
The shares rose 3.5 per cent to 1488p. On July 24 they fell five per cent to 1507p after the company said it was continuing to lose customers to new competitors and its supply business profits would be below last year's.
SSE said that since late July it had entered into an agreement with Total E&P UK to acquire a 20per cent interest in four gas fields and surrounding exploration acreage in the Greater Laggan area and a 20per cent interest in the new Shetland Gas Plant.
It had been named by Citizens Advice in its quarterly report as the best performing of the largest 18 energy suppliers in Great Britain, and had decided to “build on its position” by committing to respond to complaints in four weeks, half the industry standard of eight weeks.
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