LONDON |
LONDON (Reuters) - SSE (SSE.L), one of Britain's biggest energy suppliers, reported a 2 percent rise in full-year profit on Wednesday, supported by higher renewable energy output which helped offset a drop in customer numbers and lower energy demand.
SSE, based in Perth, Scotland said operating profit at its wholesale business unit - which includes the production, storage and generation of energy - was up 6.4 percent, helped primarily by higher output of renewables from hydro and wind power.
Total electricity output from all renewable resources rose 73 percent during the year, reflecting extra generation capacity coming into operation and favourable weather conditions.
But profits fell 20 percent at the company's retail business, which supplies electricity and gas to households and businesses, due to a dip in customer numbers as well as lower average consumption.
"Higher wholesale gas prices, falling demand for energy and a succession of winter storms presented major challenges for the wholesale, retail and networks parts of SSE," the company said. It said the economic outlook for the UK and Ireland in 2012/13 remained uncertain.
Earlier this month, British Gas owner Centrica (CNA.L) and E.ON (EONGn.DE) had also warned of rising wholesale prices.
SSE said total energy customer accounts fell by 100,000 during last year to 9.55 million. Average gas use was down 19.9 percent, while electricity consumption dropped 6.9 percent.
The company said the rise in wholesale gas prices hurt spark spreads - the difference between the cost of gas and the price of electricity produced from it - which averaged less than 1 pound/megawatt hour over the year.
"Management are not shy in acknowledging that tough trading conditions persist in the wholesale and retail energy markets," Bank of America Merrill Lynch analyst Fraser McLaren said.
The analyst said the profitability of most divisions could be relatively flat in 2012/13, as depressed spark spreads could fully erode incremental earnings from new wind capacity.
SSE delivered about 570 megawatts (MW) of new renewable energy capacity this year. Analysts at Credit Suisse said another 500 MW of wind capacity should come online in 2013, as well as the impact of the additions this year.
"Given the ?step-up' in new assets this year, we expect a 5 percent increase in adjusted pretax profit, the highest growth since 2008," the Credit Suisse analysts said.
The utility's adjusted profit for the year ended March 2012 came in at 1.34 billion pounds, in line with estimates according to a Thomson Reuters I/B/E/S poll.
SSE is currently expected to report 2012/13 pretax profit of about 1.44 billion pounds, up 7.5 percent from this year's levels, according to a Thomson Reuters I/B/E/S poll.
Its shares were up 0.50 percent at 1,331 pence by 09:45 a.m.
(Reporting by Adveith Nair; Editing by Paul Sandle and Jane Merriman)
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