(Adds details, CEO comment)
By Nina Chestney
May 17 (Reuters) - British energy supplier SSE reported higher full-year earnings per share than expected on Wednesday due to an increase in its wholesale business.
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 and 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 Chairman Richard Gillingwater said the company continues to face a number of challenges.
“This strategy puts the company in good stead for the future and 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,” he added in a statement.
The firm said it is working to keep its dividend cover within an expected range of 1.2-1.4 times, though it is likely to be at the bottom of that range, which means adjusted earnings per share is likely to be lower than it was in 2016/17.
Looking ahead, SSE said it expected to invest around 1.7 billion pounds in building, owning and operating assets. Around two thirds of that is investment in electricity networks and renewable energy.
The company reported a 2.7 percent rise in adjusted operating profit to 1.87 billion pounds ($2.42 billion) 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 compared with an operating loss of 481.3 million in 2015/16.
However, SSE’s gas storage business recorded an adjusted operating loss of 13 million pounds, compared with an adjusted operating profit of 4 million pounds the previous year, due to challenging market conditions.
Analysts at Morgan Stanley said the wholesale business delivered results above expectations, driven by better gas production, thermal generation and energy trading.
“Better gas production volumes should continue in to future years following Greater Laggan (gas fields) ramp-up. However, renewables output was low and there was a 18 million pound write-down of gas production assets following an audit of reserves,” they said in a note. ($1 = 0.7745 pounds) (Reporting by Nina Chestney and the Bangalore newsroom, editing by Louise Heavens)