SSE warns of "unintended consequences" of energy price cap as profit edges up but customer numbers drop

 
Courtney Goldsmith
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A picture taken on March 22, 2012 in Qui
The Tory pledge to put a cap on energy prices has already hit SSE's share (Source: Getty)

Big Six energy supplier SSE warned of the potential "unintended consequences" of an energy price cap as profit edged up in its preliminary full-year results.

The figures

The firm posted adjusted pre-tax profit of £1.5bn for the year to the end of March, up 2.1 per cent from the previous year.

Shares in the FTSE 100 firm edged up 1.03 per cent to 1,466p in afternoon trading after initially falling.

SSE increased its recommended full-year dividend 2.1 per cent to 91.3p.‚Äč

Read more: SSE warns of lower full year retail profit

Why it's interesting

SSE warned of continuing "complex challenges" in the sector and cautioned against the Conservative government's proposed energy price cap.

"As ever, SSE's approach will be to engage actively and constructively with that government as it develops and takes forward its policies...however, SSE would caution against potential unintended consequences of any proposed intervention in what is a rapidly changing and increasingly competitive market," it said.

Like its rival British Gas, SSE also lost a slew of customers. The Big Six supplier's customer numbers dropped 210,000 over the last year.

"The main attraction of SSE remains the dividend, which has grown every year since 1992, and the shares currently offer a yield of 6.5 per cent. However, with customer numbers falling and Theresa May’s price cap adding uncertainty to future revenues from the retail division, the group may find itself leaning on the transmission and distribution parts of its business a touch more than it would like in future," said George Salmon, equity analyst at Hargreaves Lansdown.

What SSE said

Richard Gillingwater, chairman of SSE, said:

“The operating environment has presented a number of complex challenges to manage, but SSE is a resilient business with a clearly defined and long-term strategic framework comprising operational efficiency, disciplined investment in new assets and a balanced range of energy businesses. The complex challenges continue, but this strategy puts the company in good stead for the future."

Alistair Phillips-Davies, chief executive of SSE, reiterated the tough environment. He said:

“We have been clear for some time that 2017/18 presents challenges, and the need to engage constructively with a new UK government as it takes forward energy policy will be a key priority for the year ahead and beyond."

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