SSE have evidently enjoyed the period of higher wholesale electricity prices as they increase EPS guidance by 25%
The power generator has increased EPS guidance from 120p to 150p as it reaps the rewards of operating in an industry buoyed by higher wholesale power prices.
In addition to higher wholesale prices, SSE Renewables unit generated more power from offshore and onshore wind, as well as hydro, in the nine months to 31st December. Output amounted to 6,860 GWH, materially higher than the 5,920 generated in the same period a year ago.
However, renewable output was only 90% of the planned 7,623 due to adverse weather conditions and delays to their Seagreen project.
SSE will make record investment this year as it pursues a fully-funded £12.5bn investment into a programme designed to achieve net-zero goals.
“SSE raised its full-year EPS guidance for 2022/23 by a lofty 25%. Higher gas prices and better gas storage optimisation were to thank for this, helping to offset lower than expected renewables output. Overall, the struggling markets appeared to like this update and the group’s valuation is now trading up around 9% over the past year,” said Aarin Chiekrie, Equity Analyst at Hargreaves Lansdown.
Chiekrie also alluded to the strength of the SSE dividend, even after the company choose to focus on investment into their infrastructure and the cost of higher dividends. The dividend will be rebased to 60p for 2023/24 and grow at 5% per annum thereafter.
“Despite the rebase of its dividend to fund investment plans, the group’s still paying a healthy dividend at a 3.9% forward yield. But remember, no dividends are guaranteed.