ENERGY giant SSE is expected to report earnings ahead of target, driven in part by an increase in operating profits in its wholesale division.
But the group has warned its networks division would see operating profits fall by about £100 million in the 2017/18 financial year, leading it to lower the dividend cover for the year to the bottom of the expected range.
SSE reported that the full-year dividend for the current financial year to March 31 would increase by more than two per cent with adjusted earnings per share of between 122 pence and 125 pence, ahead of the stated target of at least 120 pence.
Dividend cover is towards the top of the range of about 1.2 times to 1.4 times that SSE expects to deliver over the three years to 2018/19.
Following overall interim pre-tax profit that was down 13 per cent to £476m, the Perth-based group said wholesale operating profit is expected to be higher than last year’s £442.5m and retail operating profit would be slight lower than last year’s £455m.
In its largest division, networks, operating profit is expected to be similar to the £927m reported in 2015/16, with higher operating profit in electricity distribution offset by expected reductions from electricity transmission and the impact of the group’s sale of its 16.7 per cent stake in Scotia Gas Networks.
SSE also reported that operating profit in its networks division, including SGN, in 2017/18 will be around £100m lower than in the current year, on a like-for-like basis.
Capital and investment expenditure in the current year will total around £1.7bn. Net debt and hybrid capital will be around £8.6bn at March 31, down from £9.0bn at September 30.
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