- SSE announces £40 billion of clean energy investments
- Adjusted profit more than doubles in year to 31 March 2023
- Dividend hiked by 13%
Energy firm SSE (SSE) made modest gains off the back of a doubling of annual headline profit and as it announced a £40 billion programme of investment in clean energy.
The shares, which have enjoyed a decent run of late, traded up 1% to £18.89 – close to a 52-week high of £19.33.
While the company posted a statutory pre-tax loss of £205.6 million for the 12 months to 31 March, from a pre-tax profit of £3.5 billion in the previous year, this reflected movement on derivative contracts and on an adjusted basis profit more than doubled from £1.16 billion to £2.18 billion. Adjusted earnings per share was up 75% to 166p – ahead of the 160p guidance given in March.
Earnings from its gas-fired power plants were up almost fourfold year-on-year to £1.24 billion. The full-year dividend was hiked 13% to 96.7p.
BIG INVESTMENT PLANS
CEO Alistair Phillips-Davies was keen to head off concerns about bumper profit at a time when many UK households are struggling with the cost of heating and lighting their homes. He said: ‘The results that we have reported today are profits with a purpose. We are creating value for all of our stakeholders and our investments exceed our earnings.’
The company outlined plans to invest up to £40 billion this decade on clean energy projects, the company also flagged that it had allocated £43 million for the final quarter of the year to cover the costs of the UK Energy Generator Levy windfall tax.
AJ Bell investment director Russ Mould said: ‘SSE’s spending commitment is undoubtedly eye-catching and is good news for a government which has often attracted criticism for not doing enough to promote investment in areas like wind and solar compared with the EU and US.
‘Profit with a purpose is a good soundbite, but shareholders will want to see evidence that they are being rewarded for funding the company too.’
In 2021 SSE resisted a push from activist investor Elliott to spin off the renewables part of the business and notably today it forestalled a plan to sell 25% of the distribution business.
Mould added: ‘SSE can argue that its balanced integrated model, incorporating transmission and distribution assets, is what is helping to deliver the proposed record investment.’
DISCLAIMER: AJ Bell is the publisher of Shares magazine. The author (Tom Sieber) and editor (Martin Gamble) of this article own shares in AJ Bell.
