SSE PLC (LSE:SSE) has raised its full-year earnings expectations for 2022/23 as higher gas prices and better gas storage optimisation offset lower-than-expected renewables output and hedge buy-back costs.
Earnings per share are now likely to be “more than 150p” against previous guidance of “at least 120p”, the FTSE 100 listed power generator said in an unexpected trading update, while net debt is also expected to be “well below” target.
SSE also pledged to pay a full-year dividend of 85.7p per share plus RPI for 2022/23 followed by a rebase to 60p in 2023/24 to support the group's significant investment and growth plans.
The dividend is then expected to increase by at least 5% per annum in 2024/25 and 2025/26, it said.
The EPS upgrade “reflects the strength of the group's diverse business mix, which continues to create value, alongside the increased certainty from strong operational performance and supportive market conditions” SSE said.
Renewables output for the nine months to the end of December was up year on year but still around 10% below plan, also including delays to the Seagreen offshore wind project, offset by a 27% rise in gas output.
In its trading statement, the company said the EPS upgrade “also reflects a narrower range of probable financial outcomes with the decrease in risk from recent falls in forward power and gas prices and further clarity over the Electricity Generator Levy both reducing uncertainty in the financial outlook as the year has progressed.”
SSE said with market volatility expected to continue in the near term, uncertainties such as plant availability, weather conditions, and the extent to which market conditions lead to further optimisation of flexible generation plant, will determine the final full-year outturn.
The generator also said it remains on course to deliver record investment in excess of £2.5bn this year, backed by its strong balance sheet and credit ratings, while the net debt to EBITDA ratio is anticipated to be well below the target 4.5 times for this financial year.