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SSE warms investors with dividend hike as households brace for price rise

Last updated: 19:17 13 Nov 2013 AEDT, First published: 20:17 13 Nov 2013 AEDT

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Energy firm SSE (LON:SSE) has boosted its interim dividend just two days before its controversial price rises come into effect.

The company lifted its interim dividend by 3.2% to 26p a share as it posted a half-year pre-tax profit of £336mln from a loss of £41mln a year ago.

The retail business, however, which powers British homes, reported an operating loss of £89mln, including a £115mln loss in energy supply, which it blamed on higher wholesale gas costs and the rising cost of the government’s green levies.

Its other two divisions, networks and wholesale, both made substantial profits.

SSE was the first of the ‘Big Six’ energy firms to announce it was raising its gas and electricity tariffs by an average of 8.2% from November 15.

The major suppliers have come under fire for lifting prices well above inflation as they bid to offset rising costs.

The string of tariff hikes prompted a pledge from Labour leader Ed Miliband to freeze energy prices for two years from 2015 if his party is voted in at the next general election.

“By paying dividends, SSE attracts the investment in energy that is, ultimately, in the best long-term interest of customers,” Sally Fairburn, SSE’s head of investor relations, argued.

Paying a dividend is vital to SSE’s business, finance director Gregor Alexander explained.

“SSE’s got a big investment programme and we need to attract capital and to attract capital we have to pay dividends and grow dividends,” he said.

“As you invest in infrastructure, you expect to make a profit and some of that profit is then redistributed to shareholders in the form of a dividend.”

SSE shares dipped 8p to £13.97.

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