SSE Shares Rise on Strong Half-Year Results and Clean Energy Progress

November 13, 2024
SSE Shares Rise on Strong Half-Year Results and Clean Energy Progress

SSE plc (LON:SSE) shares surged following the announcement of the company’s strong half-year results, where the adjusted earnings per share (EPS) came in at 49.8p, significantly exceeding its initial guidance of at least 45p. The company has reaffirmed its projected full-year EPS target and maintains its forecast for an adjusted EPS in the range of 175-200p by the fiscal year 2027. This impressive performance aligns with SSE’s ambitious £20 billion clean energy investment program, with £1.3 billion already invested in capital expenditure this fiscal year. Despite net debt standing at £9.8 billion, SSE plans to spend around £3 billion in capital expenditure for the fiscal year 2025, expecting the net debt-to-EBITDA ratio to remain at the lower end of the 3.5-4.0x range.

SSE’s growth was largely propelled by its Networks division, where earnings before interest and tax (EBIT) soared by 50% to £504 million. A significant portion of this success came from SSEN Distribution, which saw substantial benefits from inflation adjustments. Meanwhile, the Transmission segment faced a 27% decline in EBIT due to capital allowances. In another positive development, the Renewables division reported an astonishing 286% increase in EBIT to £335.6 million, thanks to expanded operating capacity and favorable wind conditions in Scotland. These results underscore the company’s strategic focus on renewable energy as a key driver for future growth.

On the other hand, the Thermal Energy segment experienced a setback, incurring a £44 million EBIT loss. This was largely attributed to limited operational flexibility in a relatively stable market and seasonal issues affecting gas storage. Nevertheless, SSE retained its full-year adjusted operating profit forecast of £200 million for these assets, signaling confidence in navigating these challenges.

Additionally, the company’s CEO, Alistair Phillips-Davies, announced his retirement in 2025 but will stay on until a successor is found, ensuring a seamless transition of leadership. According to analysts at RBC Capital Markets, this planned transition is seen as a positive move, with expectations that gas prices and details of offshore projects will become key points of interest in upcoming discussions.

SSE’s strong financial performance and strategic advancements in clean energy investment demonstrate its robust health, although sector-specific performance revealed some variability. The company remained focused on its long-term goals, bolstered by positive investor sentiment reflecting in rising share prices. The strategic investments and planned leadership changes forecasted a future of continued growth and sustainability for the energy giant.

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