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Power firm SSE warning after good half year

The 137-mile, £600m Beauly-Denny project used more than 20,000 tonnes of steel and more than four million nuts and bolts  a million more than the number of rivets on the Eiffel Tower.
The 137-mile, £600m Beauly-Denny project used more than 20,000 tonnes of steel and more than four million nuts and bolts a million more than the number of rivets on the Eiffel Tower.

Perth-based SSE made an adjusted pre-tax profit of just under £549 million in the six months to the end of September.

The energy giant’s half-year profits are up 48% on the same period last year.

However, it warned that “half-year profits are only half of the story”.

The rise was helped by wet and windy weather in Scotland and Ireland which boosted renewable output.

SSE expects to have earned more than a third of its full-year profit in the first six months, compared with about a quarter in the same period of last year.

Investment and capital expenditure was up 11.5% at £757.3m.

Retail operating profit was up to £101.5m, with Energy Supply returning to profitability after suffering a loss for the same period last year.

Wholesale operating profits returned to what SSE regards as a more typical level of £159.6m, with a higher output of renewable energy.

Chief executive Alistair Phillips-Davies welcomed the company’s solid start to the financial year, but warned: “half-year profits are only half of the story. There are many variables in energy and so they should be treated with caution that’s why we focus on full-year results.

“The last six months have seen us invest substantially in the UK’s energy infrastructure, committing one and a half times what we’ve made in profit in the first half of the year.

“We’ve upgraded our fleet of gas-fired power stations, opened our new multi-fuel power plant, completed the Beauly to Denny transmission link, and started work on the vital subsea link between Caithness and Moray.”

Mr Phillips-Davies added: “We’ve seen a return to a more typical level of profit in our wholesale and retail business. However, market conditions continue to be challenging in domestic energy supply.

“We expect these profits to be lower at the end of the year.”

Within the £101.5m operating profit in retail, the profit in energy supply was £73.8m compared with a £16.9m loss in the equivalent six months of last year.

The industrial and commercial sector performed better, and lower than average temperatures led to more gas consumption and lower operating costs.

Over the full year SSE expected to report a decline in profit in domestic energy supply as a result of lower customer numbers and the full-year impact of its price cut.

Energy-related operating profits were similar to last year at £11.2m as the company increased customer numbers in its telecoms and home services.