SSE lifts 2018 EPS guidance

Gas and electricity supplier SSE upped its guidance for adjusted earnings per share on Thursday.

The company now expects to report adjusted EPS of just above 120p a share, up from a previous range of between 116p and 120p. This is the second successive increase in EPS guidance as management also upgraded EPS in the third quarter trading statement from around 116p a share.

In addition, adjusted operating profit for the wholesale division is expected to be significantly higher than in 2016/17, mainly reflecting the increase in electricity output from its renewable and gas-fired generation plant. Adjusted operating profit for Networks, meanwhile, is expected to be around £150m lower than in 2016/17, as previously stated.

Guidance for capex was cut to £1.5bn for FY18 from £1.6bn and SSE said it expects net debt to come in at £9.3bn at 31 March.

SSE said the planned demerger of its GB household energy supply and services business remains on track.

Finance director Gregor Alexander said: "As expected, 2017/18 has involved a number of significant challenges, but SSE is a robust, sustainable business that has kept its strong operational focus on meeting the needs of customers. It has also kept its focus on efficient investment in the energy assets needed now and in the future. This means we are in a good position to deliver financial results ahead of our expectations at the start of this financial year.

"The challenges are not expected to relent in 2018/19, and it will be a year of major transition and change for SSE. Throughout the year, we will retain our strong operational and investment focus, while preparing the businesses in the SSE group for the important developments that lie ahead. In this way, we will do the best possible job for customers and other stakeholders, and build options and opportunities for the future, while delivering on our dividend commitment to investors. That has been, and will remain, the SSE way."

RBC Capital Markets said the increased EPS guidance was not entirely unexpected and will be primarily due to favourable weather conditions in the first quarter increasing renewable output and increased energy demand from end customers.

“Overall this is a positive statement from SSE which reaffirms our positive view on the stock,” it said. RBC rates the stock at 'outperform' with a 1,550p price target.