SSE warns over next year's earnings

Energy supplier SSE said on Thursday that it expects operating profit in its networks division to be around £100m lower in 2017/18 than the current year on a like-for-like basis.

In addition, changes in the gas distribution revenue earned by SGN are likely to reduce its operating profit contribution to SSE by around £20m, after taking account of SSE's sale of a 16.7% stake in the business.

SSE said it now expects its dividend cover for 2017/18 to be within, but towards the bottom of the expected range of around 1.2 times to 1.4 times that it set outs in its annual report 2016 for the three years to 2018/19.

On a brighter note, the company said it expects adjusted earnings per share of between 122p and 125p for 2016/17, up from a stated target of at least 120p. It also said dividend cover is likely to be at the top of the range of around 1.2 times to 1.4 times that it expected, as stated in May last year.

Finance director Gregor Alexander said: “The operating environment has presented SSE with a number of complex issues to manage, but in this financial year we have been able to offset the impact of disappointing renewable energy output caused by drier and less windy weather conditions.

"We can expect additional challenges in the new financial year, but we are committed to delivering annual dividend growth that at least keeps pace with inflation, and to working towards ensuring that dividend cover remains within the expected range, albeit towards the bottom of it.”

At 0900 BST, the shares were down 1.7% to 1,462.80p.