Hot weather blows chill wind over SSE’s profit forecasts

The warm weather claimed a victim today, but sympathy is likely to be thin.

Energy giant SSE, a FTSE 100 giant that is one of the Big Six that dominates the power market, said first-quarter profits will be £80 million lower than the City expected.

That’s due to a lack of wind that led to lower output from its wind turbines and lower household demand for heat given the hot summer.

A higher cost of wholesale gas also affected returns. This comes just months after SSE jacked up prices by an average of £76 a year for its 2 million customers. It put up gas prices by 5.7% and electricity by 7.7%, rises that came into effect last week.

Alistair Phillips-Davies, SSE chief executive, said: “This new financial year has so far been characterised by lower than expected output of renewable energy and persistently high gas prices, but looking ahead, we are very focused on fulfilling our obligations to energy customers and delivering on our key priorities.” SSE saw 320,000 customers jump ship in the three months, as they went in search of better deals in an increasingly competitive market.

It still has 7.45 million customer accounts active, however.

The hit in the first quarter will “potentially” reduce full-year profits, though the company said it remains committed to dividend of almost 100p a share.

The hot weather issue is almost bound to have hurt the rest of the industry.

SSE shares fell 3% to 1341p, which leaves the company valued at £13.7 billion.

Centrica shares fell a more muted 1% to 153p.

SSE noted that the weather in the three months to the end of June was 1.5 degrees Celsius higher than the average over 30 years.

More good weather in July and August could put pressure on the energy giants’ ability to pay dividends.