SSE Plc’s Shares Dip
The share prices of SSE Plc fell after the electricity producer in the UK said that the construction of a major wind farm will be postponed by several months. The disclosure of the setback to the Seagreen project, which is slated to be the largest offshore wind farm in the world, led to the share price of SSE to drop as high as 1.9%.
Unfavorable weather conditions and delay led to a slowdown in the renewables division of SSE Plc, highlighting challenges with offshore development. A day before the government was poised to increase the windfall tax on the company, it nonetheless reported a set of expected gains from rising prices of energy. The UK power producers’ gains draw more attention to utilities that are thought to be profiting from higher wholesale prices because of the Russia-Ukraine conflict.
SSE Plc’s Revenue and Net Profit
On November 17, 2022, British Chancellor Jeremy Hunt was expected to present a massive package of increase in tariffs and budget cuts, which include a 40% windfall tax on “excess returns.” Despite the company’s increasing focus on green energy, a significant portion of its earnings increased from gas-fired generation. Due to lower-than-expected hydropower and wind power generation, which made it necessary to purchase power at higher prices to fulfill its commitments, the company also reported a decline in earnings from its renewables sector. As reported by the company, the total revenue increased significantly in the second half that ended September 2022 over revenue in the previous half year, but there was a significant net loss during this period.
Earnings per share (EPS) increased to 42 pence from 11 pence in the previous year. The company maintained its EPS forecast for the full year at £1.20. Owing to the requirement to repurchase hedged electricity, the delay in the building of the Seagreen project, which will now likely be operational in first quarter 2022 rather than April, cost the company £57 million. As the company focuses increasingly on wind and hydropower in Scotland, it continues efforts to sell a 25% ownership in its power transmission assets to raise capital for renewable power generation. The company expects to finalize a sales agreement shortly.
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