Energy firm signals higher profits

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Gas flameAn energy company whose gas customers face a two-month wait for cuts in their bills said it is on course for a 2% increase in full-year profits.

Shares in SSE, which trades as Southern Electric, Swalec and Scottish Hydro, lifted by more than 2% after it also signalled that its dividend for shareholders will increase by at least 2% more than inflation.

It raised gas prices by an average of 18% in September but its plans for a cut of 4.5% due to recent falls in wholesale prices will not come into force until March 26 - five days before the end of its financial year.

While analysts at Investec currently expect the company's profits for 2011/12 to rise by around 2% to £1.33 billion, the company pointed out in November it had been supplying household energy at a loss because of rising costs and after it delayed increasing bills until September.

It has also seen a slump in the consumption of gas, with usage for the nine months to December 31 down by 26.6% compared with a year ago because of the economic downturn and warmer conditions over the autumn.

Based on the new rates of consumption, it said the amount paid by the average household dual fuel customer fell by £50 in the nine months to £760.

The company reported 9.6 million electricity and gas accounts in the UK and Ireland at the end of 2011, a fall of 50,000 on a year earlier.

It has invested £1.7 billion in commissioning new assets during the current financial year and needs the promise of a healthy dividend to ensure it is able to raise enough money to fund spending on its network.

SSE recently said its onshore wind farm capacity had exceeded conventional hydro electric capacity for the first time.

It expects annual adjusted profits to show a similar level of growth to that seen in each of the last three years. This suggests a rise of around 2% but SSE warned this could be influenced by the weather and consumption levels.

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