Scottish & Southern Profit Rises on Regulated Network Sales
Scottish & Southern Energy Plc (SSE), the U.K.’s second-largest power producer, said full-year adjusted profit before tax rose 1.6 percent as the company boosted earnings from its electricity transmission business.
Profit before tax for the year ended March 2011 rose to 1.31 billion pounds ($2.1 billion), from 1.29 billion pounds a year earlier, the Perth, Scotland-based company said in a statement today. This was in-line with the 1.28 billion pound median estimate of 17 analysts surveyed by Bloomberg. The company will pay a full-year dividend of 75 pence a share, up from 70 pence a year earlier.
“This leads to earnings growth of two percent,” Investec analyst Angelos Anastasiou said in a note to investors today. “This level of growth is not particularly impressive given the increased level of investment expenditure.”
The utility, which has paid shareholders an above-inflation dividend payment every year for the last 12, committed to paying a full-year dividend of at least 2 percent more than inflation in fiscal year 2012 and 2013. Revenue from new customers and generation projects due to come online this year and next will underpin dividend payouts, Chief Executive Ian Marchant said on a conference call today.
“Our entire investment program is designed to give that continuing momentum to dividend beyond 2013,” Marchant said. The company is seeking to add as many as 100,000 customers over the course of the year, the executive added.
Capital Spending
Scottish & Southern’s capital expenditure totaled 1.4 billion pounds over the year, an increase of 9.8 percent, the company said. About 784 million pounds was spent on renewable energy projects, including the utility’s Greater Gabbard and Walney offshore wind farms. The company will spend 1.7 billion in fiscal year 2012, Marchant said.
Household electricity consumption dropped almost 2.5 percent in the British market during the period, the company said. Income from the company’s regulated businesses compensated for lower-than-expected renewable energy generation.
Scottish & Southern rose 14 pence, or 1.1 percent, to 1,341 pence in London. The stock has risen 9.5 percent this year, valuing the company at 12.6 billion pounds.
Separately, the utility said it completed the purchase of the Skykon wind turbine tower manufacturing and assembly plant. The company also announced the purchase of a 34-turbine wind farm near its Keadby power station in North Lincolnshire, England. Once completed, the farm will be able to supply energy to between 38,000 and 47,000 homes, the company said.
Load Factor Down
The average load factor of Scottish & Southern’s wind farms in the U.K. and Ireland was 24 percent, compared with 26 percent a year earlier, because of “still weather conditions,” the company said. As of March 31, the utility has more than 1,900 megawatts of onshore wind farm capacity in operation, construction or with development consent.
The company is seeking to develop two large-scale pumped storage facilities at Loch Lochy and Loch Ness in Scotland. The Loch Lochy project will have the capability of producing more than 1,000 gigawatt hours of electricity in an average year, Scottish & Southern said. A similar output could be achieved within the same time-frame at Loch Ness, they said.
To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net
To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net
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