SSE guides lower on full-year profits, dividend cover may fall
Energy and power supplier SSE saw a 6.2% drop in reported profit before tax (PBT) to £316.6m in the six months to 30 September.
That came about despite a 15.5% fall in investment and capital expenditure to £679.3m and as adjusted net debt and hybrid capital increased by £185.6m to £7.91bn.
In adjusted terms profit before tax improved by 4.6% to £370.3m.
Referring back to its pre-close statement from 29 November, when it said that “the business environment remains challenging” the company explained that it now expected that its adjusted earnings per share in 2014/2015 would be towards the lower end of the range set out in March 2014.
That was the result, in particular, of both lower production and consumption of energy due to the recent mild weather.
Furthermore, “in view of the wider energy sector conditions” its ability to deliver increases in adjusted EPS is subject to additional risks over the coming two years, the firm said.
Likewise, the so-called dividend cover might fall, temporarily, below its target of 1.5 times and be closer to around 1.2 times in 2016/17.
Also regarding the dividend policy, the company's objective for 2014/15 and subsequent years is to deliver a full-year dividend increase of at least RPI inflation, “and it is on course to achieve this,” the company´s regulatory statement read.
The interim dividend was increased by 2.3% to 26.6p per share.