(Reuters) - British energy supplier SSE reported higher full-year earnings per share than expected on Wednesday after its wholesale business swung into profit.
In preliminary results for the year ending March 31, SSE raised its full-year adjusted earnings per share to 125.7 pence from 120 pence the previous year. This was above analyst expectations of 122-125 pence per share.
SSE also raised its full-year dividend per share to 91.3 pence from 89.4 pence last year.
“SSE is committed to delivering for its customers and its investors alike in the years ahead, and to continuing to meet its first financial objective of annual dividend growth of at least RPI inflation,” Chairman Richard Gillingwater said in a statement.
The firm said it was working to keep its dividend cover within an expected range of 1.2-1.4 times, although it was likely to be at the bottom of that range, which meant adjusted earnings per share was likely to be lower than 2016/17.
Analysts at investment bank Jefferies said SSE would not be able to maintain its dividend cover if the Conservative government introduced a proposed energy price cap.
“Over the last few years, SSE has in effect been investing at record levels in order to stand still from a profit perspective,” the analysts said in a research note.
“With headwinds growing in the retail business, along with low power prices, we see this strategy coming under increasing pressure,” they added.
Looking ahead, SSE said it expected to invest about 1.7 billion pounds in building, owning and operating assets, with about two thirds in electricity networks and renewable energy.
SSE reported a 2.7 percent rise in adjusted operating profit to 1.87 billion pounds and a 6.1 percent increase in adjusted profit after tax to 1.27 billion pounds.
Its wholesale business reported an operating profit of 498.2 million pounds after a loss of 481.3 million in 2015/16.
SSE said its gas storage business recorded an adjusted operating loss of 13 million pounds, following a profit of 4 million pounds the previous year, citing challenging market conditions.
SSE has continued to lose customers in the past year. Its total energy customer accounts in Britain and Ireland fell to 8 million compared to 8.21 million a year earlier.
Editing by Louise Heavens and Edmund Blair