SSE said warm weather and persistently high gas prices have negatively impacted its adjusted operating profit by £190 million in the first five months of the financial year.
The company has also warned the looming price cap will hit profits next year and potentially impact its full-year results.
It suggests that the incoming energy price cap for default tariffs is expected to result in adjusted operating profit for SSE Energy Services in 2018/19 being “significantly lower” than expected at the start of the year.
However in respect of its retail businesses, SSE currently expects adjusted operating profit for the first six months of the financial year to be “around break-even”.
Following completion of its financial assessment to 31 August the company found relatively dry, still and warm weather has continued, as have persistently high gas prices.
This has resulted in energy prices being higher than expected, lower than expected output from renewable resources, lower volumes of energy being consumed and a negative impact in relation to energy portfolio management, the company said.
SSE’s wider adjusted operating profit for the first five months of the financial year has therefore been negatively affected by around £190 million compared with plan.
The net impact of higher than expected gas prices and other commodity price changes has accounted for just under half of this; with the impact of the weather accounting for most of the remainder.
Meanwhile the net result is that the company expects its adjusted operating profit for the six months to 30 September 2018 will be around half of that delivered in the same period in 2017.
A proposed merger between SSE’s retail arm and Npower looks set to go ahead after the Competition and Markets Authority (CMA) announced that it “provisionally found” that the merger between the big six suppliers, which would effectively create a big five, “does not raise competition concerns.”
Alistair Phillips-Davies, chief executive of SSE, described the company’s recent financial performance as “regrettable”.
The trading update follows SSE’s announcement in July when it revealed warm weather “negatively impacted” operating profits by around £80 million in the first quarter of 2018.
Phillips-Davies said: “Lower than expected output of renewable energy and higher than expected gas prices mean that SSE’s financial performance in the first five months has been disappointing and regrettable.
“The underlying quality of SSE’s businesses remains strong, with regulated networks and renewables providing the core of what will be an infrastructure-focused SSE group in the years ahead.
“This year’s £1.7 billion programme of capital investment, mainly in regulated networks and renewables, has continued to go well in recent months; and we are very pleased that the CMA’s provisional findings in relation to the planned SSE Energy Services transaction means we are on course to reshape and renew the SSE group by the end of our financial year.
“Reshaping and renewing the SSE group will support the delivery of our five-year dividend plan in the years ahead.”
Fellow big six supplier Npower has apologised after personal details of around 5,000 customers were accidentally shared with the wrong people.