Utility firm SSE yesterday said it was making progress in putting its house in order as it continued to battle against a “challenging business environment”.
The Perth-based firm announced a “value programme” back in March, and said it had since completed assets disposals worth £440 million and was more than 90% of the way to its target of £100m of annual efficiency savings.
In a third-quarter update to the market yesterday the company also said it had taken steps towards the sale of some of its onshore windfarm assets a process which, along with certain other assets sales, it hopes will eventually secure proceeds of £500m to support future investments.
The firm, which yesterday announced a cut in gas prices, said it remained on track for a flat full-year financial result, with adjusted earnings per share around the same level as the year previous.
The company had initially forecast an improvement in returns for 2014/15, but downrated that target in November due to the challenging market conditions.
However, it reaffirmed yesterday that it still expected to report an increase in the full-year dividend of at least the equivalent of retail price index inflation, and was targeting a similar level of payout in subsequent years.
“The challenging business environment we identified at the start of this financial year is likely to continue into the new financial year and we believe that addressing the resulting issues directly is the right thing to do for customers and the best way of safeguarding the interests of investors,” CEO Alistair Phillips-Davies said.
“That is why, at the same time as reducing tariffs for customers, we’re continuing to make sure our own house is in order for the future, with a clear focus on our value programme to make sure SSE is well-positioned for the long term.”
In the nine months to December 31, total wholesale electricity output from SSE’s gas-fired power stations was 7.5TWh, marginally below the 7.6TWh a year earlier, while coal-fired power output slumped from 11.3TWh to 5.1TWh.
Electricity generated from renewable sources including conventional and pumped storage hydro electric, onshore and offshore windfarm assets and biomass totalled 5.6TWh in the period, down from 6.1TWh a year earlier.
In the firm’s retail business, the number of domestic customer accounts managed by SSE declined from 9.1 million at the end of March to 8.71million at calendar year-end.
Both electricity and gas usage fell as a “prolonged period of mild weather” meant customers were using less power.
The company described the completion of the UK’s first capacity market auction last month in which it secured agreements to provide 4.4GW of de-rated generation capacity from October 2018 to September 2019 as a “major milestone” in the reform of the electricity market in Britain.
However, the upcoming election and the ongoing Competition and Markets Authority (CMA) probe into the energy sector remained major issues for the industry.
“The completion of the first capacity market auction and of the electricity distribution price control review means that the political and regulatory focus is now on the implications of the UK general election in May and the CMA investigation,” SSE said in its statement.
“The CMA is expected to publish an annotated statement of issues in the next few weeks, and to set out its provisional findings and possible remedies (if required) in May or June.
“In engaging with both the CMA investigation and with the political parties, SSE continues to highlight those features of the GB energy market that are well-functioning and benefiting customers, while also proposing sustainable solutions to address widely-shared objectives.”
SSE Shares closed up 12p at 1,504p.