SSE goes big on green energy plans as pandemic takes spark out of profits
SSE, the Perth-headquartered energy giant, revealed a £115 million hit from the pandemic as it set out ambitious plans to treble its renewable output over the next decade.
While the estimated impact from Covid during the first half is slightly lower than expected it puts the group on course for a full-year earnings blow from the pandemic in the middle of the £150m to £250m range previously announced.
SSE reported underlying pre-tax profits of £193.9m for the six months to the end of September, down from £263.4m a year earlier. Underlying earnings were 15 per cent lower at £418.3m.
Energy suppliers have taken a knock from the pandemic as lockdowns and restrictions to control the virus have impacted demand and new supply connections. Its distribution business saw earnings drop 27 per cent to £109.6m in the first half.
However, SSE is forging ahead with £7.5 billion spending plans, which will see the firm further invest in renewables and electricity networks.
Chief executive Alistair Phillips-Davies said: “Today is an important day, not just for us as we publish our results and our low-carbon investment plans, but for anyone who supports the effort to tackle climate change as the Prime Minister sets out his welcome ten-point plan to build back greener.
“As we seek a recovery from the effects of coronavirus, investments in low-carbon infrastructure that help stimulate the economy, boost jobs and level up regions while tackling climate change are a win-win.
“We’ve led from the front on the green recovery, creating over 1,000 jobs through our low-carbon projects and with more to come as we support efforts to build back greener. And with clear policy signals from government and the regulator, we can do more.”
The group sold its household energy supply and services arm to Ovo Energy at the beginning of the year.
Outgoing chairman Richard Gillingwater said: “Challenges lie ahead – not least in navigating another wave of the pandemic, the potential operational impact of the weather in the second half and the lingering uncertainties around Brexit – but these are far outweighed by the wealth of significant opportunities we have to create value in the transition to net zero emissions.”
Donald Brown, senior investment manager at wealth management firm Brewin Dolphin, said: “The £115m profit hit from Covid-19 aside, SSE has made significant progress in re-shaping its business.
“A ‘green recovery’ from the economic impact of Covid-19 and a focus on transitioning the UK economy towards net zero should play to SSE’s strengths and position it well for the future.”
William Ryder, equity analyst at Hargreaves Lansdown, noted: “SSE’s journey towards being a green energy powerhouse is continuing apace.
“The group is making significant steps to decarbonise its power generation, mainly by selling existing fossil fuel investments and building a portfolio of renewables. Long term this is almost certainly the way to go, but in the short term there may be challenges – as there always are with large-scale portfolio changes.
“The pandemic has hit results harder than you might have expected too.”
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