SSE posts 4% drop in profit in full year results

Electricity provider SSE (LON:SSE) reported an adjusted operating profit of £2.4bn in its full year results, down 4% on the previous year.

SSE said its drop in profit largely stemmed from the performance of its thermal and gas storage business, reflecting lower volatility and energy prices.

However, SSE said this was partially offset by higher renewables volumes as more capacity came online, including its Seagreen offshore wind farm which is now fully operational.

In electricity networks, SSE said its transmission unit benefited from an increase in allowed revenues.

Meanwhile, the company’s distribution business was impacted by the timing of the recovery of inflationary cost increases, SSE said.

SSE chief executive Alistair Phillips-Davies said the results reflected a “strong performance”.

“We have delivered essential energy infrastructure, benefited from the resilience of our business model, and made disciplined investment in our excellent growth opportunities,” he said.

© Andrew Dykes/DCT Media

“Renewables, flexible power and electricity networks are the building blocks of a cleaner and more secure energy system.

“With world-class assets and capabilities, and enhanced visibility of growth in transmission, SSE is ideally placed to benefit from this structural trend, creating value for shareholders and society.”

Mr Phillips-Davies said the company’s immediate focus is on delivering its financial and operational growth targets out to 2026/2027.

“And we are on track to do this, converting our premium organic project pipeline into high-quality sustainable earnings,” he said.

SSE expects to invest £40bn ‘this decade’

More broadly, Mr Phillips-Davies said the company sees a path to investing around £40bn this decade if there is a “supportive policy environment”.

This would help “speed up the energy transition” and create and support thousands of jobs, he said.

SSE said in the past year, the group contributed £6.8bn to the UK and Irish GDP, which included supporting over 56,000 jobs both directly and in its supply chain.

RBC Brewin Dolphin senior investment manager John Moore said SSE delivered a “steady set of results” despite challenges in the past year.

“Unfavourable weather has had a temporary impact and the company still managed to deliver towards the upper end of previous guidance,” Mr Moore said.

“SSE is in a sweet spot in terms of the energy transition and the direction of policy, and the company is making significant investments and becoming an increasingly important part of the UK’s infrastructure.

“At the same time, there is a good balance with shareholder returns, which could make it an attractive option for income-minded investors.”