Gas plants fuel SSE profits outlook

SSE has upgraded its profit forecast following a strong electricity output from its gas-fired generation plants combined with “supportive market conditions”.

The announcement comes amid major sensitivities around the profits being projected by energy companies due to the fall-out from Russia’s invasion of Ukraine, which has already seen the government introduce a windfall tax on excess profits.

In a trading statement released on Friday (20 January) the company updated its current expectations for full-year 2022/23 adjusted earnings per share to more than 150p from the previous guidance of “at least” 120p.

“This update reflects the strength and stability of its balanced mix of regulated and market-facing businesses with continuing good availability and supportive market conditions leading to flexible generation plant and gas storage optimisation significantly offsetting lower than planned renewables output and hedge buy-back costs,” the company said.

Output of electricity from its gas-fired generation plant for the nine months to 31 December 2022 was 27% higher than the same period last year.

Meanwhile unseasonably calm and dry weather, alongside delays to the Seagreen project, meant output from renewables was 0.76TWh, or around 10%, below plan but 0.94TWh higher than the equivalent period last year.

SSE additionally pointed to the decrease in risk from recent falls in forward energy prices and further clarity over the government’s Electricity Generator Levy, both of which reduced uncertainty in the financial outlook as the year has progressed.

Despite this, the company said uncertainties remain in the market and that these will determine its final full-year results.

Elsewhere, the company confirmed it remains “on course to deliver record investment”, with capex “still expected to be in excess of £2.5 billion”.

Gregor Alexander, SSE’s finance director, said: “SSE is performing well in a shifting and volatile energy landscape, underlining the strength of our balanced business mix and the quality of our assets, and we are well placed to deliver a strong financial performance for the full year.

“We are responding to the cost of living and energy crises by investing record amounts and remain committed to investing additional profit we make into critical low-carbon electricity infrastructure. By doing so, we are creating lasting value for SSE’s stakeholders, and society as a whole.”

In 2022 SSE saw its first half profits almost double following a sharp rise in earnings from its gas storage and thermal generation divisions.

Adjusted operating profit for the six months to the end of September rose to £716 million, up from £376.8 million during the same period the year previously.

Elsewhere in the sector, British Gas owner Centrica said it has “continued to deliver strong operational performance from its balanced portfolio”.

In trading update earlier this month it said it expected to report 2022 full year adjusted earnings per share of above 30p and closing net cash to be above £1 billion.