SSE share price: 4 things we learnt from its annual results

The British energy supplier ended the financial year with its profit falling by more than a third amid calls to renationalise UK energy networks by Jeremy Corbyn.

SSE Source: Bloomberg

SSE had a terrible end to the year, with the energy provider seeing its profits take a major tumble after losing around 500,000 customers and leaving investors concerned about its future performance.

‘While our financial results clearly fell well short of what we hoped to achieve at the start of the year, we’ve made significant progress towards our ambition to be a leading energy company in a low-carbon world,’ SSE Chairman Richard Gillingwater said.

SSE faces threat of renationalisation

The company’s future is also becoming increasingly unclear as calls from the Labour Party to renationalise Britain’s energy networks grow louder.

Despite the next general election not expected until 2022, and it unlikely that the opposing Labour party will garner enough support to control a majority in parliament, its leader Jeremy Corbyn laid out plans to renationalise British energy networks.

The news has created a high degree of uncertainty for SSE and other energy providers who are already struggling to compete with smaller, more nimble rivals and increased costs of doing business.

Total GDP contribution to UK economy of £8.9bn and to Irish economy of €689m due to direct and supply chain activities, supporting an estimated 105,000 jobs across both countries.

Change needed at SSE as profits tumble

SSE recorded a 38% decline in pre-tax profit to £725.7 million in its full-year results that helped send its share price lower on Wednesday as the company faces stiff competition and rising costs.

‘The fundamental strengths of our business and the strategic opportunities afforded by the transition to a low-carbon economy will support the delivery of our five-year dividend plan and creation of value for society as a whole,’ Gillingwater said.

SSE to sell home energy business by mid-2020

Following its disappointing set of results that saw it lose half a million customers, SSE announced plans to sell its distressed energy supply business by mid-2020.

The company is considering all options for the unit’s disposal, with SSE looking to pursue a dual-track sale process that could see it sold at auction or spun off via a public listing.

SSE outlook unclear

Looking ahead, the next 12 months of trading are likely to be challenging, especially with output from its renewable electricity generation being hedged below current market prices and the business being hit by regulators decision to cap the price of standard variable tariffs.

Last year also saw the collapse of its planned merger with rival npower, with the pair blaming the failure on the government’s price cap and increasing competition in the UK energy market.

With the myriad of headwinds the path ahead looks unclear for the Big Six energy supplier, with investors’ fears reflected in its share price as the business looks at risk of recording another disappointing FY19/20.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

See an opportunity to trade?

Go long or short on more than 16,000 markets with IG.

Spread bet and trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Bid
Offer
-
-
China 300
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.