Adjusted first-half earnings top forecasts for SSE

(Sharecast News) - SSE reported first-half adjusted earnings per share of 37p on Wednesday, surpassing pre-close guidance, thanks to improved operational efficiency and a lower anticipated effective tax rate for the full year. The FTSE 100 company said reported earnings per share came in at 28.3p due to non-cash accounting impairment on Triton Power and a movement on financial guarantee liabilities, partly offset by favourable fair value movement on derivatives.

Its profitability in SSEN Transmission increased due to higher investment but was offset by the divestment of a 25% non-controlling interest in November last year.

In contrast, SSEN Distribution saw lower profitability due to the timing of cost inflation recovery. Renewables reported higher hedged prices but faced unfavourable weather conditions affecting planned output.

SSE Thermal reported strong financial performance, with increased capacity from Triton Power and Keadby 2 contributing to market flexibility and supply security.

Gas storage recorded a seasonal half-year loss due to inventory churn and is expected to return to profitability exceeding £75m for the full financial year as gas sales increase over winter.

In September, SSE issued a €750m eight-year green bond, becoming the UK's largest green bond issuer.

The company said it was focused on balance sheet strength, with 91% of adjusted debt at fixed rates and minimal long-term debt refinancing required in the next 24 months.

It declared an interim dividend of 20p, in line with its growth-enabling plan, representing a third of the expected full-year dividend of 60p per share.

Looking ahead, SSE increased its visibility over the medium-term outlook, with upgraded capital investment expectations for the net zero acceleration programme plus (NZAP Plus) targets for the five years to 2026-2027.

The company said it planned to invest around £20.5bn over the period, primarily in electricity networks and renewables.

It aimed to add around 5GW of net renewables capacity and grow net electricity networks RAV to more than £15bn by 2027.

The company also remained committed to annual dividend increases of 5% to 10% to 2026-2027, based on an expected 60p full-year dividend for 2023-2024, with retention of the scrip option and capped dilution from uptake at 25%.

SSE said its investment plan was fully funded, supported by a strong balance sheet, and aims to maintain a net debt-to-EBITDA range of 3.5 to 4.0x across the plan.

"Our performance in the first half of 2023-2024 demonstrates SSE's well-balanced business mix and our ability to adapt and create value while maintaining capital discipline in a fast-evolving energy landscape," said chief executive officer Alistair Phillips-Davies.

"As the visibility of growth options improves, we have upweighted our capex plans to meet the ambitions of the NZAP Plus plan.

"With an enduring broad political consensus behind the need to build the electricity infrastructure required for net zero, a supportive power price outlook, balance sheet strength underpinned by world-class assets and unrivalled optionality across the clean energy value chain, we have increased confidence in our earnings forecasts not only for this year, but out to 2026-2027."

At 0834 GMT, shares in SSE were up 3.16% at 1,765.5p.

Reporting by Josh White for Sharecast.com.