Profits up at sought-after Scottish Power
Tuesday, 14 Nov 2006 08:54
Scottish Power refused to comment on takeover rumours
Takeover target Scottish Power has announced a 77 per cent rise in first half profits this morning, reporting "strong performances" by the company's energy retail and wholesale business and its US wind farm operations.
In a statement, the UK's fifth-largest energy supplier revealed that adjusted pre-tax profits during the six months to September 30th reached £483 million, up from £273 million a year earlier.
But while indicating in a conference call that Scottish Power was looking forward to the second half "with confidence" after publishing a "strong set of results", the company's chief executive Philip Bowman remained tight-lipped over rumours of an anticipated £12 billion takeover bid from Spanish power firm, Iberdrola.
Scottish Power said that adjusted operating profit within its retail and wholesale business was up by £126 million to £216 million during the first half, with "strong generations" from the company's coal fired plant, a "rolling commodity procurement strategy", investment in renewables and a £15 million gain from the sale of Knapton power station all cited as reasons for the growth.
Despite increasing criticism from consumer groups about the rising cost of household energy bills in light of recent falls in wholesale gas prices, Mr Bowman told journalists that when retail tariffs were measured against current wholesale prices, Scottish Power's retail business was actually "loss making".
Mr Bowman, who added that the company had attempted to protect its customers from the worst price rises over past two years, said that while Scottish Power was monitoring situation in the wholesale market "very carefully", it was not prepared to make changes to retail prices at present.
The Scottish Power chief said that its retail arm had "focused hard" on providing customer service and better debt management, while indicating that cash generated from operations had increased by £421 million over the first half.
Some £460 million worth of capital investment was also reported by the company over the period, with spending driven by Scottish Power's wind farm development programme in the UK and US, the upgrading of UK assets and the start of a flue gas desulphurisation project at Scotland's Longannet power station.
In a statement, Mr Bowman said: "These are excellent results and the first reported from the newly restructured and re-focused Scottish Power, since the sale of PacifiCorp in March this year.
"They demonstrate the transformation of the group and the benefits of the actions we have taken to enhance operational performance and generate attractive returns from our investment programme," he added.
But asked about Scottish Power's future structural plans in a conference call, Mr Bowman said he was "not prepared to be drawn" on weekend reports that Iberdrola will make a takeover bid for the UK energy company, claiming that strict takeover panel rules prevented him from commenting.