ELECTRICITY firm Scottish & Southern Energy yesterday posted forecast-busting first-half profits and pledged to stick to plans to raise its dividend, boosting its shares.
SSE blamed high wholesale gas prices and low renewable energy output for a 6.1 per cent fall in adjusted first-half pre-tax profit to £386m, beating market forecasts of £361m.
The group’s shares rose 3.8 per cent to 1,160p as it raised its half-year dividend 6.7 per cent to 22.4p and said it was on track for a two per cent real rise in 2010/11 to at least 74.5p per share.
SSE, which has 9.9m customers, will lift household gas prices by 9.4 per cent from 1 December due to “continuing losses” at its gas supply business, Southern Electric Gas,
The group has put off plans to build more gas storage due to regulatory uncertainty and lower profits, but hopes to open its first nuclear plant around 2023, it said.
Chairman Robert Smith said lower renewable energy production and higher gas costs had made the last six months tough, but the group’s underlying performance was good.
“SSE’s key financial objective is dividend growth, and we are on course to meet our target,” he said.
Bank of America Merrill Lynch said the results were slightly above expectations and underpinned medium-term growth prospects.
SSE was expected to report profit of £1.27bn for the year to March 2011, against £1.29bn in 2009/10.
SSE and consortium partners GDF Suez and Iberdrola, expect to decide whether to build a nuclear plant around 2015. It has put off a decision on the Aldbrough II gas storage site on the east coast, a joint venture with Norway’s Statoil, due to uncertainty about usage rules and increasing liquefied natural gas import capacity in Britain.