Energy supplier SSE (LSE: SSE) reiterated its full year earnings guidance, but said renewables weren’t performing as well as expected. It revealed it was behind its renewable energy target for the first nine months of the financial year.
The FTSE 100 energy company said it expects to recommend a dividend of 80p per share for the current year, in line with that pledge, which would be down from 97.5p a year earlier.
Despite the weather conditions being unhelpful, with renewables output up 6% in the nine months to 31 December but 5% below plan, SSE said it still expects adjusted earnings per share in the range of 83p to 88p for the year to end-March.
“Adjusted EPS expectations are always subject to hydro and wind assets benefiting from normal weather conditions. As at 31 December 2019, output of renewable energy for the first nine months of the financial year was just over 5% behind plan,” the company said in a trading statement.
“The first nine months of the financial year have been generally positive for SSE, and we are on course to deliver our FY 2019/20 financial forecasts,” said finance director Gregor Alexander.
The company said it had taken a final investment decision to proceed with an extra 11 turbines producing up to 38 megawatts at its Gordonbush wind farm in Scotland.
It added it was on course to stop production at its last coal-fired generation plant at Fiddlers Ferry in Cheshire by the end of March.
The shares rose by around 1% on today while the FTSE 100 fell by just over 1%.
While the cutting of the dividend isn’t great for income investors, the share price has been rising since the general election and it gives the company room to invest more into its renewables infrastructure and grow the dividend in future.
Also, many other high-yielding FTSE 100 companies have cut their dividends in recent years, notably Vodafone (LSE: VOD) and others have very low divided cover so are at risk of having to cut investor payouts.