This article first appeared on GuruFocus .
-
Adjusted Operating Profit:655 million for the first half, in line with seasonal averages.
-
Adjusted EPS:36.1p, meeting expectations for the period.
-
Transmission Investment:Significant increase, with profits almost doubling due to capital project progress.
-
Combined Networks Businesses Profit:Decreased by 84 million in the first half.
-
Renewables Operating Profit:Reduced due to a 20% decrease in hedge prices, despite increased capacity.
-
Interim Dividend:21.4p declared, representing one-third of the annual dividend.
-
Investment Plan:33 billion, with 80% allocated to networks, aiming for a 25% CAGR in regulatory asset base by 2030.
-
Future EPS Target:225 to 250p by 2030, with a 7-9% CAGR from the FY25 baseline.
-
Equity Placing:2 billion to support increased investment, representing approximately 10% of current issued share capital.
Release Date: November 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
SSE PLC ( SSEZF ) announced a transformational, fully funded investment plan of 33 billion, focusing 80% on networks, which is expected to grow the regulatory asset base by a compound annual growth rate of around 25% to 2030.
-
The company aims to achieve between 225 to 250 earnings per share by 2030, supported by a sustainable and progressive dividend policy.
-
SSE PLC ( SSEZF ) has a strong track record of delivering complex projects, such as the Shetland HVDC connection and Viking Wind Farm, and continues to make significant progress on major transmission and renewable projects.
-
The investment plan is largely self-funded, with 90% of the funding coming from operational cash flows and net debt, ensuring a strong balance sheet.
-
SSE PLC ( SSEZF ) is strategically positioned to benefit from the energy transition, with a focus on homegrown, secure, and clean energy infrastructure in the UK and Ireland.
Negative Points
-
The company's adjusted operating profit for the first half fell by 84 million in the combined networks businesses, with distribution profits lower due to nonrecurring inflation adjustments.
-
SSE PLC ( SSEZF ) faces uncertainties in planning consents for major transmission projects, which are outside of its control and could impact timelines.
-
The renewables segment experienced a 20% decrease in hedge prices, affecting adjusted operating profits despite increased capacity.
-
The flexibility segment saw a decline in adjusted operating profits due to lower volumes and a bad debt release in the previous period.
-
The company is dependent on regulatory decisions, such as Ofgem's final determination on Rio T3, which could impact the execution of its investment plan.
Q & A Highlights
Q: Can you clarify the asset rotation plan, specifically the 2 billion pounds funding package? Is it focused on renewables, and are there any plans for stake sales in electricity distribution? A: Barry O'Regan, CFO: Over 25% of the 2 billion pounds will come from non-core assets, primarily the Slough waste energy plant and our stake in the network FY telecoms fiber company. The remaining 75% of disposals will be decided strategically and financially closer to the time, potentially from any business unit.
Q: Regarding the 6 overhead line planning consents expected next year, what gives you confidence that it will take only 52 weeks instead of 2.5 years? A: Martin Pibworth, CEO: We have increased our resourcing fivefold and built strong supply chain frameworks. The Scottish Government has tripled resourcing for consenting units, and recent consents have been progressing well, which gives us confidence in meeting the timeline.
Q: Could you provide more details on the 33 billion pounds investment program for 2030, and is there a possibility for CapEx numbers to increase? A: Barry O'Regan, CFO: 20 billion pounds is allocated for 11 mega projects in transmission, with clear visibility over consenting and supply chain costs. 20% of CapEx is for remaining networks, and 20% for energy businesses, with 3 billion pounds uncommitted. The plan is robust, and any increase would depend on project phasing and equity stakes.
Q: What are the assumptions behind the 225 to 250% earnings guidance, and how does it relate to the 2 billion pounds of unallocated CapEx in renewables? A: Barry O'Regan, CFO: The guidance assumes inflation at 2%, base load power prices in the high GBP60s, and a cost of new debt at 5-5.5%. The unallocated renewables CapEx will contribute to earnings towards the plan's end, with sensible assumptions made for regulatory determinations.
Q: With the strategic update, do you expect to achieve the 9-10% nominal returns in T3 for electricity networks, and what are the return expectations for offshore wind projects like Berwick Bank? A: Martin Pibworth, CEO: We are in constructive discussions with Ofgem and expect the final determinations soon. Barry O'Regan, CFO: For offshore wind, we target equity returns greater than 12%, incorporating lessons from past projects like SeaGreen and Dogger Bank.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
