SSE lifts dividend as renewable energy underpins profit rise

SSE announced on Wednesday that its long-serving CEO, Alistair Phillips-Davies, will retire in 2025 after leading the company for 11 years. He will remain in his role until a successor is appointed, with the search process overseen by Chair, John Manzoni.

SSE lifts dividend as renewable energy underpins profit rise

The announcement came alongside a report of strong half-year results, with pretax profit rising 38% to £845.9 million for the six months to September 30, up from £615.3 million in the same period last year. Adjusted pretax profit increased by 26%, reaching £714.5 million from £565.2 million. Earnings per share jumped 55% to 47.7 pence from 30.7 pence, while adjusted EPS rose 35% to 49.8 pence from 37.0 pence, in line with company guidance. In October, SSE had projected adjusted EPS of over 45 pence for the period. However, revenue fell 7.4% to £4.46 billion from £4.79 billion a year earlier.

"Strong interim results"

"This is a strong set of interim results," said CEO Phillips-Davies. SSE attributed the strong performance to "value-creating" investments, which contributed to increased earnings from electricity networks and renewables, accounting for over 95% of adjusted operating profits for the half-year. The company also noted that favorable weather conditions boosted profitability in its Renewables division, which helped offset a lower contribution from its Thermal division. Adjusted EBITDA in the Renewables unit surged to £335.6 million from £86.8 million. However, the Thermal segment recorded an adjusted EBITDA loss of £43.8 million, down from a profit of £226.2 million in the prior year. "The first half of SSE’s financial year has seen the group deliver strong performance, in line with expectations, in an evolving market environment. The greater operating profit contribution from electricity networks' businesses has reduced the seasonality of the half-year results, with higher output from renewables meaning flexible thermal generation capacity was less frequently needed in a stable market," SSE said in a statement.

What's next

Looking ahead, SSE is on track to meet its 2027 adjusted EPS target of between 175p and 200p. Guidance for financial 2025 will be provided later in the year. The company also reiterated that full-year operating profit expectations remain broadly unchanged, with capital expenditure expected to rise significantly to around £3 billion. The net debt-to-EBITDA ratio is anticipated to be at the lower end of the 3.5 to 4.0 times target range. For the year to March 2024, SSE reported adjusted investment and capital expenditure of £2.48 billion. SSE increased its interim dividend by 6.0%, from 20.0p to 21.2p, and reaffirmed its commitment to annual dividend increases of between 5% and 10% through to March 2027.