SSE PLC (LSE:SSE) raised its profit forecast for the year to end-March 2022 after a good performance from its flexible thermal and hydro plant more than offset a lower-than-planned renewables output, caused by a wind-free summer.
The power company, which last autumn had activist investor Elliott Management calling for a break-up of the business, said it expects to report adjusted earnings per share of at least 90p, higher than its previous guidance of 83p.
The company said it plans to recommend a full-year dividend of 81p per share plus RPI for 2021/22. It will continues to target an RPI-linked dividend in the current year, which will be followed by a rebase to 60p in the following year and increases of at least 5% in 2024/25 and 2025/26.
SSE also said it is on track to report full-year 2021/22 capital expenditure in excess of £2bn.
The company said total rewables output was 5,920GW in the nine months to end-December 2021, 19% below the planned output and 16% lower than the same period last year, largely due to an exceptionally still and dry summer in the UK and Ireland.
In the thermal business, electricity output from SSE's gas-fired generation plant in the nine-month period was around 14% lower than in the same period in 2020.
However, the company said the profitability of the thermal operations is not dependent on output, with the role of thermal generation now focused on balancing supply and demand to enable a renewables-led system.
It therefore expects the financial performance for thermal to be ahead of plan for the current year.
"SSE's performance in the year so far gives us renewed confidence about delivery of good financial results for the full year," commented finance director Gregor Alexander.
"The significant bolstering of SSE Renewables' pipeline, the increased visibility we have over opportunities for greater growth in SSEN Transmission and the balance provided by SSE Thermal through a turbulent trading period have demonstrated yet again the value of SSE's integrated business mix and its capacity for delivering sustainable shareholder returns over the long term."
Net debt is expected to be around £9bn at 31 March 2022, assuming it receives the proceeds from the sale of its 33.3% stake in SGN before the end of the year.
SSE shares rose 1.26% to 1,571.00p midmorning.