SSE takes £80m hit from hot, still weather

Perth-based energy giant SSE said in a trading statement ahead of its AGM that a combination of “dry, still and warm weather” and persistently high gas prices “has negatively impacted on SSE’s adjusted operating profit in Q1-18/19 by around £80 million.”

SSE shares fell almost 3% to around £13.46 give the Perth firm a current stock market value of around £14 billion, acording to Bloomberg data.

“Poorer than average wind conditions in Q1-18/19 have resulted in output from onshore and offshore wind farms being around 15% lower than plan … ” said SSE.

“The temperature in the UK across the three months to 30 June 2018 was 1.5 degrees centigrade warmer than the thirty-year average.

“This led to average domestic gas demand being around 10% lower than plan.

“In addition to dry, still and warm weather, the financial year so far has also been characterised by persistently high gas prices.

“All of this has resulted in a higher cost of energy, lower than expected output of electricity from renewable sources and lower volumes of energy being consumed.

“This has negatively impacted on SSE’s adjusted operating profit in Q1-18/19 by around £80m, compared with plan, and this will potentially impact on its full year results – dependent on the range of factors that apply in its market-based businesses, in which energy portfolio management is a major influence.”

SSE’s total customer energy accounts fell to 7.45 million as of June 30, the company said.

That means SSE lost 320,000 customers in the quarter, compared with 230,000 customer losses in the year-ago period.

SSE said last November it agreed to demerge its household energy and services business in Great Britain with Innogy subsidiary Npower to form a new listed UK company.

The combination, if allowed, would create the UK’s second largest energy supplier.

The UK’s Competition and Markets Authority (CMA) has since referred the proposed merger for an in-depth investigation “after finding competition concerns.”

SSE chief executive Alistair Phillips-Davies said: “This new financial year has so far been characterised by lower than expected output of renewable energy and persistently high gas prices, but looking ahead, we are very focused on fulfilling our obligations to energy customers and delivering on our key priorities.

“Those priorities include successful delivery of our plans to invest around £1.7 billion in this financial year, and we are pleased with the progress of key projects, including the installation of the first two turbines  at the Beatrice offshore wind farm.

“Investment of this kind supports our strategic goal of creating value in a sustainable way, including remunerating shareholders for their investment, and we are strongly committed to delivering the five-year dividend plan we set out in May.”