SSE has warned its profits could be cut to half of that from last year following reduced output from renewables, higher energy costs and a drop in demand.
The Big Six firm has adjusted profits for the first five months of the financial year, that started in April, £190 million lower than forecast – half of which SSE put down to hotter than usual weather, while the other half was due to commodity price changes.
SSE expected the six months to the end of September “to show a significant reduction in adjusted operating profit in generation and an adjusted operating loss of around £100m in energy portfolio management [SSE’s trading business]”.
Following the announcement, the company’s shares plummeted 7.7pc, while rival Centrica’s shares fell 2.2pc.
The loss in profits, as well as the impending introduction of an energy price cap by the UK Government, will mean SSE’s trading business will incur an operating loss of over £300 million in the year ending at the end of March.
“Over time, SSE’s energy portfolio management strategy will evolve to reflect its asset base and operations following the planned SSE Energy Services transaction; and also over time, higher gas, carbon and power prices will support the value of SSE’s assets,” SSE said.
The announcement follows an £80 million loss in first quarter profits as a result of similar issues with weather and higher gas prices.