SSE repeats profit warning in latest trading update

Scottish energy supplier SSE has repeated warnings over a hit to profits in spite of a better-than-expected performance in its retail gas and electricity arm.

SSE is headed by CEO  Alistair Phillips-Davies
SSE is headed by CEO  Alistair Phillips-Davies
SSE is headed by CEO Alistair Phillips-Davies

The group said in a pre-close trading update yesterday ahead of interim results in November: “For 2017/18 as a whole, SSE continues to expect that its total adjusted operating profit will be impacted by a reduction in Networks adjusted operating profit of around £150 million, compared with the previous financial year.”

It said improved trading in its energy services division and business supply operation is helping drive profits higher across the wholesale and retail division.

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The utility revealed in July that it had lost 230,000 customer accounts in its first quarter to the end of June as households continued to switch to cheaper rivals. But it said yesterday that it still expects to increase its full-year divi at least in line with inflation.

George Salmon, analyst at Hargreaves Lansdown, said: “There aren’t many sectors with dividend records to rival the utilities. SSE in particular has a remarkable track record, having increased the divi every year since 1992.

“However, with customer numbers falling and political pressure for an energy market upheaval growing, we feel to keep this impressive dividend growth record going, the group must start generating higher returns. Despite having spent around £10 billion in the last seven years, mainly on renewable energy projects, net operating cash flows hasn’t moved a great deal.”