SSE says full year earnings will fall

Energy company SSE said it would still lift its dividend 1% despite earnings per share being expected to fall by up to 5.7% for the year to end-March.

The FTSE 100 electricity supplier said adjusted earnings per share were likely to come in between 117p and 119p, which would represent a fall of between 5.7% and 4.1% compared to the 124.1p delivered the previous year.

But SSE assured it would still increase the full-year dividend "at least equal to RPI inflation", which is currently expected to be around 1%.

In light of the difficult wider energy sector conditions, directors explained that as EPS was subject to significant uncertainties, dividend cover, based on dividend increases that at least keep pace with RPI inflation, "could range from around 1.2 times to around 1.4 times over the three years to 2017/18".

SSE expects that its adjusted net debt and hybrid capital will have swelled to £8.5bn at 31 March from to £7.9bn at the end of September last year following the acquisition and resulting investment in new gas production and plant assets acquired in October 2015, and unfavourable movements in foreign exchange rates.

Finance director Gregor Alexander said: "The operating environment remains challenging, due to factors including falling commodity prices and increased retail market competition, and the Competition and Markets Authority's Provisional Decision on Remedies represents a substantial and in places challenging package.

"Nevertheless, completion of the CMA investigation and the UK government's consultation on the future of the electricity Capacity Market imply progress towards a more settled regulatory and policy framework within GB.

"This suggests a more encouraging environment in which to head into the new financial year, and SSE will continue to be focused on delivering for both its customers and shareholders."

Shares in SSE were down by one penny to 1,459p just before 0900 GMT on Thursday.