SSE has issued a profit warning, describing its performance so far as “disappointing” and “regrettable”.
The energy company blamed the upcoming price cap on the industry’s poor-value default tariffs, hot weather and higher gas prices for the poor trading update.
“Lower than expected output of renewable energy and higher than expected gas prices mean that SSE’s financial performance in the first five months has been disappointing and regrettable,” said Alistair Phillips-Davies, the group’s chief executive.
For the first five months of the year, the group took a £190 million hit on adjusted operating profit, sending shares down eight percent to £11.50.
Profits for the six months to 30 September will be around £293 million. This is half of the £586 million that was achieved last year.
“It is very rare to see a profit warning from a utility company as they are meant to have fairly predictable income streams. Yet SSE bucks the trend because of the wrong type of weather,” said Russ Mould, the investment director at stockbroker AJ Bell.
George Salmon, an equity analyst at Hargreaves Lansdown, said: “Hardly any rain or wind meant output from its hydro and wind assets wilted in the heat, and with nobody putting the heating on, customer meters just didn’t tick over. All the while, the price of gas in the wholesale market has kept on rising.”
”Investors should remember that SSE can’t control any of these factors and a business increasingly focused on renewable energy will have good years and bad. With that longer-term outlook in mind, the board says it intends to stick to pre-existing dividend plans.”
The energy company is currently in the process of merging with Npower.
“Reshaping and renewing the SSE group will support the delivery of our five-year dividend plan in the years ahead,” Phillips-Davies.
Shares in SSE (LON: SSE) are currently trading down 7.92 percent at 1.151,50 (1015GMT).
