Profits plummet at Scottish Power as customer losses continue
Generation and supply division sees earnings down by almost 75 per cent
Scottish Power's profits have taken a sharp downturn, largely due to the poor performance of its retail arm, which continued to lose customers over the third quarter of 2017.
Earnings before interest, depreciation and amortisation (EBITDA) fell by nearly 11 per cent year-on-year to £825.3 million.
The generation and supply division saw its EBITDA for the three months to the end of September plunge by nearly three quarters to £46.5m - down from £187.1 million in the same period last year.
Retail earnings fell by £92.9 million, as demand for electricity and gas dropped by 6.8 per cent and 6.6 per cent respectively. Customer numbers declined by roughly 80,000 over the quarter to 5.22 million – marking a fall of around 120,000 over the past year.
Reduced output and lower margins on ancillary services meant earnings from generation decreased by £47.7 million.
EBITDA for SP Energy Networks also dropped by 2.4 per cent to £567.2 million due to the timing of investments under the RIIO settlements for transmission and distribution.
The renewables division was the only part of the group to see an increase in profits as its EBIDTA rose by nearly 35 per cent year-on-year to £211.6 million. Total installed capacity surpassed 2GW during the quarter as Scottish Power completed a two-year programme to build eight new onshore wind farms in Scotland at a cost of £650 million.
Commenting on the results, Scottish Power chief corporate office Keith Anderson said: “Scottish Power continues to invest heavily to deliver a clean, reliable and fairer electricity system for the UK despite continued political uncertainty."
“In retail, we have more customers on fairer deals than any other big six suppliers and we are the only bigger company to have increased its market share since 2011,” he added. “We believe that putting our existing customers before new customers is the best way to compete in this marketplace.”
Anderson reiterated his opposition to the government’s planned price cap, saying it will be “bad for consumers, energy companies big and small, as well as investor confidence".
He continued: “The key question the government needs to answer is whether they still believe customers benefit most from free market competition.
“If they do, any intervention must be designed to increase consumer engagement, which is the biggest thing wrong in this sector. Otherwise, we would urge the government to opt for a fully regulated market.
“We need clarity one way or the other.”