SSE share price falls as group trims earnings expectations

Shares in SSE (LON:SSE) have fallen into the red as the company posted a trading statement this morning, trimming its earnings forecast. The move followed an EU court ruling which suspends state aid for the UK’s energy capacity market.

As of 08:35 GMT, SSE’s share price had lost 1.45 percent to 1,156.50p, underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.25 percent higher at 7,111.10 points. The group’s shares have lost just under four percent of their value over the past year, as compared with less than a one-percent fall in the Footsie.

SSE trims earnings forecast

SSE said in a statement this morning that the EU’s court decision in November 2018, which had  the effect of removing the European Commission’s State Aid approval of the GB Capacity Market scheme and introducing a ‘standstill period’ until the scheme can be approved again, meant that the company would not be able to recognise the remaining £60-million income derived from the Capacity Market for 2018/19 in the current financial year.

As a result, the blue-chip utility expects that its adjusted earnings per share for 2018/19 will be reduced  by around 6p, with total adjusted EPS for this year therefore now expected to be in the range of 64p to 69p.

The company, however, reiterated its  intention to recommend a full-year dividend for 2018/19 of 97.5 pence per share and to deliver the five-year dividend plan set out in May last year.

Analysts on blue-chip group

Royal Bank of Canada, which rates the company as a ‘sector performer,’ lowered its price target on the stock from 1,250p to 1,225p this week. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average price target of 1,301.60p.

As of 09:18 GMT, Friday, 08 February, SSE PLC share price is 1,156.50p.