Scottish energy supplier SSE saw its profits drop by nearly 40% in 2018 as a result of “persistently high gas prices”.
Adjusted profit before tax was £725.7m, down from £1.1bn the previous year, while adjusted operating profit also dipped by 27% to £1.1bn, compared to £1.5bn at the end of 2017.
SSE said it reflects a £284.9milliion operating loss from its Energy Portfolio Management (EPM) business which came as a result of the “negative impact” of gas prices on its energy provision.
The firm said that while the results “fell well short” of its targets, it hailed significant progress in becoming a low-carbon energy company, including completion of the Beatrice Offshore Windfarm and the £1bn Caithness-Moray Transmission link.
SSE has interests in several North Sea gas fields, including a 20% stake in the Greater Laggan Area in the West of Shetland operated by Total, which includes the new 175million barrel Glendronach discovery.
The company said Glendronach was “clearly a positive development” but gas production is “ultimately inconsistent with its focus on decarbonisation” and is seeking to dispose of investments in it when it is in the interest of shareholders to do so.
In contrast to the EPM side, the gas production business had adjusted profit of £48.9m mostly due to lower depreciation, higher gas prices and the absence of exploration write-offs.
SSE also stated that it has held for disposal its Energy Services business, which is not reflected in the results.
Chairman Richard Gillingwater said: “While our financial results clearly fell well short of what we hoped to achieve at the start of the year, we’ve made significant progress towards our ambition to be a leading energy company in a low-carbon world.
“We have continued to develop our core businesses of regulated energy networks and renewables; demonstrated our ability to create and unlock value from developing and operating, as well as owning, assets; and adopted clear long-term goals as we set up the business for long-term success.
“The fundamental strengths of our business and the strategic opportunities afforded by the transition to a low-carbon economy will support the delivery of our five-year dividend plan and creation of value for society as a whole.”