Energy firm SSE has reported a drop in profit due to a significant reduction in electricity demand brought about by the Covid-19 pandemic.
The company, which recently sold a 51% interest in its Seagreen Offshore Wind Farm project to French oil giant Total, reported pre-tax profits of £587m, down from £1.3 billion during the same period in 2019.
SSE’s 55% profit dive was also met with a capital and investment expenditure dip of 5% to £1.3bn.
However, the firm also presented figures adjusted to reflect the impact of the Covid-19 crisis, which showed profit before tax up 49% to £1bn.
Richard Gillingwater, chairman of SSE, said:”2019/20 was a year of progress for SSE. Financially, there was a solid recovery from the previous year. Strategically, we reshaped the group with the sale of Energy Services and increased our focus on our core businesses of regulated electricity networks and renewable energy.
“Operationally, these businesses made significant progress towards our strategic priorities and ambition to be a leading energy company in a net zero world.
“Since March, SSE’s overriding priority has been to support the safe and reliable supply of the electricity upon which the people and organisations responding directly to coronavirus depend and the commitment of people across SSE in challenging circumstances has been outstanding.
“It is still too soon to predict with accuracy the full human, social, economic and business impact of coronavirus; but we have put in place a comprehensive plan to achieve the related objectives of sustaining the dividend payments which provides vital income for people’s pensions and savings – income which is now more important than ever; and promoting the long-term success of SSE for the benefit of all its stakeholders.”
SSE said it expects to see a coronavirus impact on operating profit of between £150m and £250m before mitigation.
The firm plans a reduced cash outflow of mainly capital expenditure, of at least £250m in 2020 and 2021.
John Moore, senior investment manager at Brewin Dolphin, added: “SSE has committed to its progressive dividend policy, which will be a massive relief to many income investors in the current climate. Aside from that, it’s a mixed bag for the underlying business, with its generation assets picking up slack from regulated activities.
“The investment in a major onshore wind project in Shetland is a significant move, as it helps grow the successful renewable energy division.
“However, in overall terms, the immediate trading picture appears more challenging and, although it appears to be in decent shape, SSE remains a business in transition. Whilst the dividend commitment will be welcome in many quarters, it does leave the company with little financial flexibility.”