Turbines wind up profits as SSE eyes further acquisitions

SCOTTISH Hydro owner SSE is on track for a further solid rise in profits as hundreds of additional wind turbines begin turning, while more acquisitions are on the horizon.

Analysts expect the Perth-based utility, whose other brands include Southern Electric and Swalec, to report a 2012-13 pre-tax profit of £1.44 billion.

That would mark a rise of about 7.5 per cent on the £1.34bn booked yesterday for the financial year just past. Shareholders are being rewarded with a full-year dividend of 80.1p, up 6.8 per cent. SSE has vowed to continue raising the payout by retail price inflation plus 2 per cent.

The profit haul was supported by higher renewable energy output, which helped offset a drop in customer numbers and lower energy demand. Overall output from wind and hydro facilities leapt by 73 per cent, including the highest hydro generation figures on record. The firm delivered 570 megawatts (MW) of additional renewables capacity. Credit Suisse analysts said a further 500MW of wind capacity should come online in 2013, as well as the impact of the additions this year.

“Given the ‘step-up’ in new assets this year, we expect a 5 per cent increase in adjusted pre-tax profit, the highest growth since 2008,” the analysts noted.

Operating profit at SSE’s retail arm, which supplies electricity and gas to households and businesses, fell 20 per cent due to a dip in customer numbers as well as lower average consumption.

It has been squeezed by rising wholesale costs, which make up around 50 per cent of a typical dual fuel bill, and a delay in increasing bills until September. SSE has also been investing heavily in its transmission infrastructure and “green” energy projects.

Chief executive Ian Marchant said overall investment would be about £1.6bn in the current year, down from £1.7bn.

“There will be a slight shift to transmission from renewables but investment is still at very high levels,” he added.

SSE unveiled a £19.1 million deal to acquire Northern Irish gas supplier Phoenix Supply, giving it 130,000 extra customers. It will also take on Phoenix’s operations in the Irish Republic.

Marchant said: “There are a couple of similar low-key acquisitions we are working on. There’s a bit more value out there than a year or two ago.”