SSE share price down on H1 loss at retail business

on Nov 13, 2013
Updated: Oct 21, 2019
Listen Wednesday November 13: Shares in SSE (LON:SSE) lost some ground in the first half of today’s trading session after the British energy supplier said first half profit declined because the part of its business which supplies households swung to a loss.

SSE today announced that its retail business slumped to an ₤89.4 million operating loss in the six months to the end of September, battered by higher wholesale energy prices and rising distribution, environmental and social costs. Adjusted pre-tax profit at the Scotland-based company came in at ₤354 million, 12 percent lower than in the same period a year earlier. A Bloomberg survey of analysts had forecast a profit of ₤328.2 million. Half-year revenue rose from ₤11.4 billion in 2012 to ₤13.6 billion this year.

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“Energy-market conditions generally have been difficult for some time,” Chairman Robert Smith said in today’s statement.
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
SSE normally sees a drop in retailing revenue and profits during the spring and summer months because of lower consumption. The company announced last month that it will raise gas prices by an average 8.2 percent from this Friday. As a result, today it predicted a recovery in profits at its retailing arm during the colder winter months. “It is expected that retail will be profitable in 2013/14 as a whole,” SSE said. “It is expected that profit margin in energy supply will remain below 5 per cent. In 2012/13 it was 4.2 per cent, up from 3.5 per cent in the previous year.”

SSE raised its interim dividend by 3.2 percent to 26p a share. The company remains on course to lift its full-year distribution by more than retail-price inflation, which was 2.6 percent in October.
Alan Young, managing director of corporate affairs at SSE, defended SSE’s generous dividends: “SSE is a good performer when it comes to paying dividends, but those dividends have got a purpose. We want to make sure we are able to continue to attract the investment … that is needed to make sure the UK has secure energy supplies for many years to come.”

SSE was the first of the ‘big six’ energy companies to raise its tariffs ahead of the winter (Energy giant hikes prices) and has since been followed by British Gas, Scottish Power, nPower and EDF Energy. SSE has promised to trim back the announced price increase if the government moved the increasing environmental and social charges from customer bills into the general tax system. Npower has adopted a similar stance, saying yesterday that it would consider reducing its planned price hikes if the government reduced green levies.

**Analysts on SSE**
Deutsche Bank reaffirmed its ‘hold’ rating and 1,400.00p price target for SSE’s shares in a note sent to investors today.
Seven investment analysts have rated SSE’s shares with a ‘sell’ rating, seven have given them a ‘hold’ rating and eight have assigned them a ‘buy’ rating. SSE’s stock has an average rating of ‘hold’ and a consensus price target of 1,512.76p.
**As of 11.36 UTC buy SSE shares at 1,400.00p.**
**As of 11.36 UTC sell SSE shares at 1,398.00p.**
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.


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