SSE PLC (LON:SSE) expects a significant reduction in profit at its Wholesale business after a "challenging" year, although it plans to raise its full-year dividend and continues to look at options for its energy services unit.
In a pre-close season full-year trading update, the FTSE 100-listed electricity provider said it expects its adjusted earnings per share to be in a range of 64-69p, nearly half the 121.1p it reported a year earlier.
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The company added that its Wholesale division is forecast to see a "significant reduction" in adjusted operating profit year-on-year reflecting power purchase agreements, a lower hedged price for renewable energy and losses incurred at its Energy Portfolio Management operation.
It said its Business Energy, SSE Airtricity and Enterprise units - all part of its Retail division - are all anticipated to show "broadly flat" adjusted operating profit performance. The firm expects adjusted operating profit at SSE's Networks unit to show a mid-single digit increase.
Energy Services options considered
The power provider added that its SSE Energy Services unit is forecast to be both profitable and cash flow positive in financial 2019 and financial 2020.
SSE said it is still considering its options for SSE Energy Services, after being blocked from merging the business with German-owned nPower last year, including the potential for disposing of the business.
However, should this not be viable, SSE added, it would retain the unit as a separate business within the group and expects to decide the fate of the services business by the end of May.
It expects net debt at the end of March to be £9.5bn, lower than the initially estimated figure of £9.8bn, up from £8.38bn a year earlier.
The group anticipates declaring an annual dividend of 97.5p per share, which would be a 3.0% increase on the 94.7p paid the year before.
SSE’s finance director, Gregor Alexander said: "This year has clearly presented significant challenges and uncertainty in the operating environment persists, but our optionality and agility mean we are well placed to deliver on the strategy we presented last year to create value for shareholders and society from developing, owning and operating energy and related infrastructure in a sustainable way, as well as delivering against our five-year dividend plan.”