Perth-based utility company SSE has warned investors that its retail business, which supplies power to almost 10 million UK households, is heading for a first-half loss.
However, the company said its wholesale and networks segments were expected to be in the black for the six months to September 30 and SSE as a whole would be profitable for the period.
The firm said it expected the figures, which will be published next month following a close period which began on October 1 would be below the £397.5 million achieved in the comparable period last year following a 38% hike in profits.
SSE which has been under scrutiny following Ed Miliband’s conference pledge last month to freeze energy prices if Labour wins the 2015 election does not provide full-year profits guidance ahead of the third quarter.
However, it said it remained on course to achieve its principal financial objective for 2013/14 of delivering an above-RPI inflation dividend to shareholders.
The company said that its retail division which also operates the UK’s second-largest mechanical and electrical contracting business alongside its domestic electricity and gas supply operation had been hit by higher wholesale gas costs and the “heightened impact of fixed distribution and other costs” during the spring and summer, when energy consumption was lower.
The company said that while first-half profits were likely to be lower than in 2012, the situation would have no implications for the full financial year.
SSE finance director Gregor Alexander said the company had made headway in the period.
Major milestones hit included the official opening of the 504MW Greater Gabbard offshore wind farm, a development in which SSE has a 50% stake; and the announcement of an end to the cold calling of customers.
“Despite challenging energy market conditions, SSE has made solid progress in recent months, including taking a number of specific steps to help small business customers and improve standards for household customers,” Mr Alexander said.
“We continue to benefit from maintaining a balanced range of energy businesses, illustrated by again meeting the criteria for a single A credit rating.
“Despite the intensifying political debate, we will maintain our operational and financial discipline to enable us to deliver an above-inflation increase in the dividend for this financial year and beyond.”
SSE also said that ratings agency Standard & Poor’s had confirmed its FFO/debt ratio for the year ended March 2013 as 20.8%, an increase on the 19.5% level of 2011/12.
The figure is above S&P’s 20% criterion, but the agency’s long-term rating for SSE has stayed at A-, with a negative outlook.
Moody’s corporate credit rating of SSE remains A3 with a stable outlook.
SSE said it would publish its full financial results for the first half on November 13.