SSE (LON:SSE), one of Britain’s big six energy companies, has seen its share price slump as profits plummet amid rising operating costs.
Reported profit before tax plunged 40.4% to £402.2 million, mainly due to SSE’s partial equity disposal in October 2016, as well as the phasing of regulatory revenue, sharing of out-performance with customers and the phasing of capital expenditure on significant projects.
The costs of phasing of capital expenditure on significant transmission projects also resulted in a decline of SSE’s earnings per share by 43.9% to 29.8p.
The energy provider has seen their share price drop 10% since the start of the year in a testing economic climate. In early October Theresa May promised to continue with plans to impose a price cap in the sector.
In addition to this, recent times have seen a great increase in competition for the big six in the industry. Small cap companies are the main provider of this competition as both private and council owned energy providers look to undercut the main suppliers and increasingly savvy consumers are taking the opportunity to save money.
Richard Gillingwater, chairman of SSE, said “the operating environment continues to present a number of complex challenges to manage, with significant political and regulatory intervention an ongoing feature of the energy sector. SSE is focused, resilient and adaptable and those qualities continue to stand the company in good stead in responding to such interventions and other key changes.”
In more positive news the company confirmed an interim dividend that was up 3.6% to 28.4p and committed to maintaining a dividend that keeps pace with the rising RPI.
SSE’s earnings report for the quarter comes just one day after it was announced that they intended to merge with Npower, creating the UK’s second largest energy supplier.
SSE’s share price fell 1.2% to 1,393p at the time of writing.