SSE cuts earnings outlook as customer numbers drop

SSE is the UK’s second largest provider of natural gas and electricity and the largest generator of renewable energy.

SSE has cut its earnings outlook for 2018/19 and reported a significant drop in customer numbers. 

The “big six” energy giant,  headquartered in Perth, Scotland, said domestic customers dropped from 6.04 million at the end of September to 5.88 million in December – a 160,000 fall in three months.

The company said it now expects adjusted earnings per share for fiscal 2019 to be in the range of 64-69p, down from earlier estimates of 70-75p.

SSE said it cut its earnings outlook under the assumption that it will not be able to recognise £60 million in income derived from the Capacity Market for 2018/19 in the current financial year. 

The company said that it is exploring options for its retail business, SSE Energy Services, after a planned merger with Npower Ltd. was scrapped because of “very challenging market conditions”. 

SSE believes that its retail business would perform best outside the group.

It is assessing a number of options for SSE Energy Services, including: a standalone demerger and listing; a sale; or an alternative transaction. If there are no viable options then SSE said it would retain Energy Services as a “separate, ring-fenced business” within the group. 

Alistair Phillips-Davies, Chief Executive of SSE, said:

“We continue to make good progress in our core businesses of regulated energy networks and renewable energy, complemented by flexible thermal generation and business energy sales.

“We have also demonstrated our ability to create value for shareholders through the recent sales of stakes in our telecoms business and selected onshore wind farms with expected proceeds of over £1bn. We are also making progress in assessing the options for the future of the Energy Services business.

“SSE has a clear strategy and good long-term prospects for its high-quality core businesses and assets that contribute to the transition to a low carbon economy and will support the creation of value and delivery of our dividend plan in the years to come.”

SSE said it still expects capital and investment expenditure to total around £1.7 billion for the full year.