UPDATE 3-SSE ups interim dividend, delays gas storage plan
* Adjusted pretax profit 386 mln pounds, vs forecast 361 mln
* Delays gas storage decision, sees nuclear plant in 2023
* Interim dividend raised 6.7 percent to 22.4 pence
* Shares up 3.4 percent
(Adds gas storage, nuclear plant details, graphic)
By Golnar Motevalli and Daniel Fineren
LONDON, Nov 10 (Reuters) - Scottish & Southern Energy (SSE.L), one of Britain's biggest utilities, reported better than expected first-half profits on Wednesday and raised its interim dividend, causing a jump in the share price.
SSE said high wholesale gas prices and low renewable energy output led to a 6.1 percent decline in adjusted first-half pretax profit of 386 million pounds ($616 million), better than the average market forecast of 361 million pounds according to Thomson Reuters I/B/E/S Estimates.
The Perth, Scotland-based company, which has 9.9 million customers and a market value of more than 10 billion pounds, raised its interim dividend 6.7 percent to 22.4 pence.
"We've been crystal clear we can sustain the dividend growth by 2 percent above inflation. We constantly review our capital programme," Chief Executive Ian Marchant told reporters in a conference call.
Earlier on Wednesday Germany's E.ON (EONGn.DE), the world's largest utility, promised its investors a minimum level of dividend payout for the next two years, seeking to restore confidence in an industry unsettled by falling prices and demand. [ID:LDE6A90NG]
Bank of America Merrill Lynch analyst Fraser McLaren said the SSE results brought a sense of clarity which should support medium-term growth and raised his rating on the shares to 'buy'.
"With the stock having underperformed the UK utilities since June, we see the renewed clarity and management confidence as positive".
SSE's share price was up 3.8 percent at 1,160 pence by 1533 GMT, off a 16-week high of 1,174 pence hit earlier in the session.
For ANALYSIS pieces on UK summer gas price surge
click on [ID:nLDE664195] [ID:nLDE65L1T0]
Graphic on shrinking winter-summer gas price spread:
Table on UK gas storage projects: [ID:LDE6A90Y8] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
NEW GAS STORAGE ?
Marchant also said the firm has deferred making a final decision on the proposed Aldbrough II gas storage facility, a joint venture with Norway's Statoil (STL.OL).
The delay was due to uncertainty over regulations and the shrinking premium of winter gas prices over summer contracts, Marchant said, caused by an increasing capacity for Britain to import liquefied natural gas (LNG).
"The market environment is not brilliant ... Even if the market were looking good we would be holding off, because we do not know what the intervention would be," he said.
"We're deferring that until all the regulations are settled on gas storage."
SSE, together with consortium partners GDF Suez (GSZ.PA) and Iberdrola (IBE.MC), expect to make a final investment decision on building a nuclear power plant around 2015.
Marchant said the nuclear consortium had not yet exercised its option to buy a site at Sellafield in northwest England to build a new plant, adding that the option had several years to run. [ID:nLDE6A910W]
SSE has so far only spent a "few hundred thousand pounds" on its nuclear expansion plans, excluding the cost of holding the option on the land, Marchant added.
The British government has said it hopes many of Europe's largest utilities will build enough nuclear power plants to replace the country's ageing state-built plants.
Many have signed up but say the British power market needs to be radically changed if a revival in nuclear power generation is to materialse.
SSE is on average expected by analysts to report a pretax profit of 1.25 billion pounds for the year to March 2011, down from the 1.29 billion made the previous year, with the forecast 0.6 percent higher at 1.255 billion euros according to the Thomson Reuters StarMine 'SmartEstimate' which weights analysts' forecasts according to their track record. ($1=0.6256 pounds) (Additional reporting by Karolin Schaps; Editing by Greg Mahlich)
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