Operating profits from the firm’s continuing businesses rose by 37% but reported profits were hit by charges on discontinued operations and the coronavirus pandemic
SSE PLC (LON:SSE) shares rose on Wednesday even as the utility unveiled plans to trim its final dividend after profits for the past year more than halved after it took £738.7mln of charges for restructuring and the impact of the coronavirus (COVID-19) pandemic.
The FTSE 100-listed energy company also unveiled a £580mln capital investment in the Viking wind farm on the Shetland islands as part of plans to plough around £7.5bn over the next five years into projects to help its transition to net-zero emissions.
For the year ended March 31, 2020, SSE’s underlying operating profits from continuing operations rose by 37% to £1.5bn and its adjusted earnings per share was up 35% to 83.6p, within the forecast range of 83p-88p.
But reported profit before tax fell by 55% to £587.6mln, which reflected the charges of £529mln on discontinued operations including the sale of retail operations to OVO Energy in January and the closure of its last coal-fired power station in March, plus £209.7mln on continuing operations including £33.7mln relating to the coronavirus pandemic impact on bad debts.
A final dividend of 56p per share has been recommended for payment on September 18, 2020, down 18% on last year’s payout and making for an 18% reduction in the full-year dividend to 80p per share.
For the coming year, SSE chairman Richard Gillingwater said in the results statement that it was too soon to predict the impact of coronavirus on customers and earnings but guidance has been given for a coronavirus impact on operating profit of £150mln-£250mln before mitigation and he said a plan has been put in place to sustain dividend payments.
“Climate change remains a critical issue and we see significant opportunities to create sustainable value for shareholders and society through contributing to a much-needed green economic recovery and supporting the transition to net-zero emissions,” Gillingwate added.
SSE shares rose on today’s news, adding 8.7% at 1,379p.
Russ Mould, AJ Bell investment director commented: “SSE’s decision to withdraw from the rough-and-tumble of the retail energy market, limited hit from unpaid bills and confirmation of its 80p-a-share annual dividend for the last financial year are all generating interest in the utility’s shares from investors as the firm looks to focus on the power generation and transmission markets for the long term.
“SSE has also repeated its commitment to its five-year dividend payment plan that runs to 2023, whereby and the firm will increase dividend distribution by the rate of retail price index (RPI) inflation for each year.”
He added: “This will come as a relief to income-hungry investors, even if the 80p-a-share payment represents a decrease on last year’s distribution and ends a long streak of increases…