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SSE Raises Medium-Term Earnings Growth Guidance; Shares Jump — Update

By Jaime Llinares Taboada

 

Shares in SSE PLC climbed Wednesday in early trading after it raised earnings growth guidance for the five years to March 2026, reported higher profits for fiscal 2022 and said that they will grow further this year.

The U.K. energy group now expects to deliver an adjusted earnings per share compound annual growth rate of between 7% and 10% in that five-year period, up from previous forecasts of 5%-7%. SSE said that this is based on its strong performance in fiscal 2022, higher inflation forecasts, higher and volatile energy commodity prices and increased value creation potential for its thermal, hydro and gas storage assets.

The new EPS guidance is a clear positive and should be well received by investors, RBC Capital Markets analyst John Musk said.

Shares at 0702 GMT were up 5.2% at 1,858 pence.

In addition, the FTSE 100 company reported a pretax profit of 3.48 billion pounds ($4.36 billion) in the year ended March 31, up from GBP2.42 billion a year earlier.

Adjusted EPS rose 22% to 95.4 pence, within the company's guidance range of between 92 pence and 97 pence.

Increased profitability was mainly driven by higher regulated revenues for SSE's transmission networks and higher prices for the power generated at its thermal plants.

Moreover, SSE forecast adjusted EPS of at least 120 pence for fiscal 2023. Capital expenditure and investment is expected to total more than GBP2.5 billion, which would be up from a record of GBP2.1 billion in fiscal 2022.

The company said that it has started a sales process for a 25% share of its SSEN Transmission business which is expected to formally start in the summer. A decision on the timing of the sale of a similar stake in SSEN Distribution will be made later in the year. These disposals are meant to fund growth in the renewables business.

"We are delivering major projects, building pipelines, and have made inroads in Southern Europe and Japan as we export our renewables capabilities internationally to fulfill SSE's considerable potential," Chief Executive Alistair Phillips-Davies said.

The group declared a final dividend of 60.2 pence a share, bringing the full-year payment to 85.7 pence, up from 81.0 pence in fiscal 2021. SSE's dividend is linked to inflation but will be cut in fiscal 2024.

 

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

 

Corrections & Amplifications

This story was corrected at 0924 GMT. The original misspelled RBC Capital Markets as "RBC Captial Markets."

(END) Dow Jones Newswires

May 25, 2022 03:22 ET (07:22 GMT)

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