SSE PLC (LSE:SSE) shares bounced back from talk of a windfall tax as the company reported a stronger jump in profits for the past year and guided to higher earnings for 2022.
The power generation and supply group, which produces electricity from gas and renewables, reported a profit before tax of £1.16bn for the year ended 31 March 2022, up 23% on a year ago.
Adjusted earnings per share came to 95.4p, up 22% and in line with the 92-97p guidance given in a year-end update, where it revealed higher profits from its transmission network, and gas and hydro plants offset lower input from its wind farms due to unhelpful weather.
A final dividend of 60.2p makes for a year’s total of 85.7p, which was also above the 81p expected.
For the current year, the company said it expects to report full-year adjusted earnings per share of at least 120p and updated its guidance to adjusted EPS compound annual growth of between 7%-10% for the five years to March 2026.
A dividend increase next year is planned to be in line with retail price inflation, before a rebase to 60p the year after, with growth of “at least 5%” planned from there.
Amid government talk of the increased investment needed in UK energy infrastructure, the former Scottish and Southern Energy said it invested what was a record for it of £2.1bn in the past year and expects to up capital expenditure and investment to at least £2.5bn in 2022/23. Some 2.4 gigawatts (GW) of renewables projects are under construction, with more than 1GW pipeline additions through ScotWind and up to 4.9GW future additions through a Southern Europe acquisition expected to complete by September.
“Net investment into vital UK and Ireland infrastructure could exceed £25bn this decade,” the FTSE 100 group said, insisting it is investing “far more” than it makes in profit.
SSE said it recently started a sales process for a 25% share of its SSEN Transmission business, which is expected to formally begin in the coming months.
The shares rose 4% to 1,839p in early trading.
This came a day after a 7% fall as it was hit, along with fellow FTSE energy companies Drax and Centrica by reports that a UK windfall tax could be extended to power generators as well as oil and gas companies.
Chancellor Rishi Sunak was reported to have the support of the Prime Minister in imposing a windfall tax on oil and gas companies if they do not invest more in Britain while profits soar because of high commodity prices.