SSE, the Perth-based power provider, has pledged to deliver on its dividend commitments despite trimming its interim shareholder payout after posting a double-digit hike in operating profit.
Reporting results for the six months to the end of September, the group also said it was “progressing well” with its switch to a low-carbon strategy.
Adjusted operating profit rose 14 per cent to £491.9 million on the back of “generally wet and windy weather”. It swung from a £284.6m pre-tax loss in the first six months of 2018 to a £128.9m profit on continuing operations this year, and invested more than £446m in its regulated electricity networks and renewable energy.
An interim dividend of 24p per share is 18 per cent down on the year before, reflecting a new dividend policy that was outlined in May of last year. The board intends to recommend a full-year dividend of 80p, with annual RPI inflation growth in the three subsequent years.
Shares were trading about 2 per cent higher in post-lunch trading.
The results are the first for chief executive Alistair Phillips-Davies since the company sealed the sale of its power supply arm to challenger brand Ovo. It leaves SSE primarily as a generator and transmitter of power.
Although the deal is not set to complete until early next year, pending approval from the Competition and Markets Authority, the figures from the retail division have been stripped from the latest set of results.
Chairman Richard Gillingwater said: “SSE is progressing well in the execution of its low-carbon strategy with the sale of SSE Energy Services leading to a group more focused on renewable energy and regulated electricity networks.
“SSE Renewables has an enviable development pipeline bolstered by recent success in securing valuable ‘contracts for difference’ and we have strong business plans for the upcoming transmission price control.
“Our growth is aligned to net zero emissions and looking ahead to [the UN climate change summit] in Glasgow next year, we will be encouraging even faster decarbonisation.
“Clearly some headwinds remain in the sector with political uncertainty and aspects of UK government policy being subject to judicial process, however, we have strong optionality to create value through the low carbon transition and deliver our dividend commitments.”
Callum D’Ath, senior investment manager at Brewin Dolphin, said: “The half-year update from SSE paints a positive picture of growth, with operating profit on continuing operations up 14 per cent – excluding both its energy services and gas production divisions which are earmarked for sale next year.
“Strong performance of its hydro and wind assets has been attributed to the wet and windy conditions we’ve seen since September – increasing output which has generated strong earnings on shares.”