SSE profits dip as customers continue to desert big players
Profits at energy giant SSE took a knock last year as it lost 430,000 customers and was stung by charges linked to the merger of its retail arm with rival Npower.
The group reported a 6% fall in adjusted pre-tax profit to £1.45 billion in the year to March 31, while bottom-line profits tumbled 39% to £1.09 billion.
Revenue rose 8% to £31.23 billion.
SSE pointed to competitive pressures as it saw the number of domestic energy accounts fall from 7.23 million to 6.8 million.
Operating profit at its household supply business was flat at £260.4 million, despite higher energy consumption in the final quarter as customers turned up the heat to combat the Beast from the East.
SSE also recognised £213.3 million worth of exceptional charges, including more than £60 million in IT costs related to its deal with Npower.
Chairman Richard Gillingwater said: "As expected, 2017/18 presented a number of complex challenges to manage, but SSE's operational performance was generally very robust.
"The challenges will continue in 2018/19, which is also expected to be a year of major transition for SSE.
"For investors, by giving clarity on the dividend for the five years to March 2023, SSE is demonstrating that remunerating them for their investment is and will remain its first financial objective."
The deal to merge Npower and SSE's retail operations is undergoing a competition investigation after the two energy giants failed to address concerns.
Under the proposed deal, the new company will be listed on the London Stock Exchange, with SSE shareholders holding 65.6% and Npower owner Innogy holding 34.4%.
SSE said the deal remains on track for completion in the last quarter of 2018 or the first quarter of 2019.
The group, formerly known as Scottish and Southern Energy, is Britain's second biggest energy supplier and the merged group will serve around 11.5 million customers.
Centrica, Iberdrola (Scottish Power), E.On and EDF make up the remainder of the Big Six.
The deal has come as the UK energy market is already under pressure amid concerns over unfair tariffs, with a Government-enforced price cap set to be introduced on standard variable tariffs (SVTs) later this year.