SSE profits drop as oil and gas prices normalise

  • SSE’s adjusted operating profits fell to £2.4bn in the year ending March 2024
  • The decline in earnings was driven by its thermal and gas storage division

SSE’s earnings inched lower last year in tandem with energy prices due to reduced market volatility.

The energy business, formerly Scottish and Southern Energy, revealed its adjusted operating profits fell by about £100million to £2.4billion in the year ending March 2024.

This was driven by its thermal and gas storage division, where profits plunged by around a third to £818.9million amid a normalisation in energy commodity prices.

Weaker result: SSE, formerly Scottish and Southern Energy, revealed its adjusted operating profits fell by about £100million to £2.4billion in the year ending March 2024

In the previous year, the division’s profits almost quadrupled as the Ukraine war and loosening Covid-19 restrictions sent oil and gas prices soaring.

SSE’s performance was also impacted by maintenance work and the timing of cost inflation recovery at its distribution arm, which consequently saw profits slump by 29 per cent to £272.1million.

However, the company’s reported figures showed an impressive turnaround, with a £205.6million pre-tax loss in the 2023 financial year turning into a £2.5billion profit this time around.

The firm’s renewables segment also scored a stronger result, thanks to higher power prices and operating capacity offsetting falling wind speeds across Scotland.

Last October, SSE delivered its first power from Dogger Bank, the world’s largest offshore wind farm under construction, and attained full power at Seagreen, the biggest wind farm in Scotland.

Just before that, the Perth-based group secured 605MW of onshore wind in the UK’s fifth contracts for difference auction.

More recently, it received confirmation to build Eastern Green Link 2, a subsea transmission cable that is predicted to provide enough electricity to power 2 million UK homes.

Alistair Phillips-Davies, chief executive of SSE, remarked: ‘Renewables, flexible power and electricity networks are the building blocks of a cleaner and more secure energy system.

‘With world-class assets and capabilities, and enhanced visibility of growth in transmission, SSE is ideally placed to benefit from this structural trend.’

SSE expects to achieve its financial and operational targets by the end of the 2027 financial year, such as adjusted earnings per share growth of 175p to 200p.

Alongside this, the firm had upheld its commitment for dividend rises of 5 to 10 per cent, based on an annual dividend of 60p per share last year.

John Moore, senior investment manager at RBC Brewin Dolphin, said: ‘SSE is in a sweet spot in terms of the energy transition and the direction of policy, and the company is making significant investments and becoming an increasingly important part of the UK’s infrastructure.

‘At the same time, there is a good balance with shareholder returns, which could make it an attractive option for income-minded investors.’

SSE shares were 2.1 per cent lower at 1,760.5p on late Tuesday morning.