SSE profits have fallen after its networks division reported a sharp decline in earnings over the first half of its financial year.
Adjusted operating profits for the group dropped to £627.2 million in the sixth months to the end of September – a 6.5 per cent decrease on the same period last year.
Despite seeing losses from household sales due to declining customer numbers and the introduction of a prepayment price cap, adjusted operating profits from supply were broadly level at £46.7 million.
Household electricity accounts plunged to 3.9 million – down 160,000 over the last six months and 210,000 year-on-year – whilst household gas accounts dropped to 2.58 million – falling by 120,000 during the first half of the year and by 180,000 in the last 12 months.
Strong results from SSE’s energy services enterprise businesses meant overall retail earnings grew by 16 per cent year-on-year to £70.3 million.
Adjusted operating profits from the wholesale division increased by roughly a third to £159.9 million, owing to higher output from renewable and gas-fired generation. Earnings from gas production more than doubled to £4.5 million, although losses from gas storage increased by almost a quarter to £5.3 million.
The networks division saw a 22 per cent decline in adjusted operating profits to £355.1 million, primarily due to the timing of investments in transmission.
Earnings from electricity transmission were down almost 28 per cent at £97.9m, whilst the figure for electricity distribution fell by just under 3 per cent to £176 million. After selling a 16.7 per cent stake in the gas distribution business in October 2016, SSE’s share of earnings from SGN dropped more than 40 per cent to £81.2 million.
SSE said it expects its network activities to drag down operating profits by £150 million over the full financial year.
Adjusted pre-tax profits for the group decreased by almost 14 per cent to £409.6 million.
Earlier today SSE announced it had agreed to combine its supply business with Innogy’s Npower. The new company they plan to create will become the UK’s largest domestic electricity supplier and second largest domestic gas supplier, with market shares of 24 per cent and 18 per cent respectively.