Utility Week

UTILITY Week 15th May 2015

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

Issue link: https://fhpublishing.uberflip.com/i/510855

Contents of this Issue


Page 18 of 31

UTILITY WEEK | 15TH - 21ST MAY 2015 | 19 Finance & Investment Stock watch 1700 1650 1600 1550 1500 SSE SHARE PRICE, 7 - 12 MAY 7 May 7 May 8 May 8 May 11 May 11 May 12 May 12 May 290 280 270 260 250 CENTRICA SHARE PRICE, 7 - 12 MAY Energy company shares climbed on news the Conservatives had won the general election, as investors shrugged off fears of Labour-led plans to enforce potentially damaging price controls on the industry. Before the final result was confirmed, Centrica was up almost 8 per cent and SSE 5 per cent. Although prices softened slightly over subsequent days, the shares held much of their value. This week Tory victory 'also a win for investors' Result a 'benign outcome' for the industry as the 'threat of tariff setting' under Labour diminishes Investors have come out in sup- port of the Conservative Party's general election victory late last week, saying the stability of a majority government will be good news for investment. The warm welcome for a Tory- led government was echoed by the UK's largest utility, Centrica, due to "the certainty and conti- nuity" the outcome brings to the sector. "Our immediate plan is to engage with the new government on the functioning of the energy market, which is already being investigated by the Competition and Markets Authority," said Centrica chief executive Iain Conn. Eclipse Energy analyst Glenn Rickson said the elec- tion result would prove to be "good news" for energy investors, because the outcome offers the best chance of a continuity of previous government policy and stabil- ity relative to the protracted coalition debates which marked the previous government. But a notable exception to this is the Conservatives' pledge to cut support for onshore wind and offer the pub- lic a referendum on the UK's EU membership, he added. "Investor confidence may be fragile at best in the medium term, particularly as so much of the UK's energy policy framework is now determined not in Westminster but in Brussels," Rickson said. Investors at Citigroup said the election result is a "benign outcome" for the industry "as the threat of arbi- trary regulation and tariff setting, which was a high prob- ability under Labour's manifesto, has diminished". JA ENERGY RWE profits set to tumble further RWE's Q1 profits are expected to be lower than those seen at the end of last year, analysts have warned, as power generation earnings continue to plummet. Investment analysts at RBC Capital said the continued weakness in this area is likely to result in Q1 operating profits of around 7 per cent lower than those of Q4 2014 at €1.6 billion. The company's biggest area of weakness remains its beleaguered power generation fleet, which is expected to post an earnings decline of more than 30 per cent from last year aer floundering in recent years amid hostile market conditions, the analysts said. RBC said this would put the company on course to achieve results at the lower end of its full- year guidance at €3.6-3.9 billion. The disappointing results fol- low news that the Npower parent company will implement new measures to cut admin costs by 30 per cent, with a second wave of cost cutting expected in June. ENERGY Eon narrowly beats Q1 expectations German energy giant Eon reported Q1 financial results slightly ahead of investor expectations, due in large part to a positive performance in its domestic networks business, but the company said it still expects a challenging year ahead. Earnings for the first quarter were reported 5 per cent ahead of consensus expectations at €2.8 billion – with investors suggest- ing that full-year earnings for 2015 might come in at the top end of Eon's guidance of €7-7.6 billion – although 9 per cent lower than for the same quarter last year. GAS Ineos completes shale deal with IGas Ineos has completed a deal with independent oil and gas firm IGas to acquire a 50 per cent interest in seven IGas shale gas licences in northwest England. As part of the deal, Ineos will pay IGas a cash sum of £30 mil- lion and provide up to £138 mil- lion funding for shale projects to develop the sites. IGas will reimburse its share of the work to Ineos upon commencement of commercial production. The agreement also includes IGas's Scottish shale site near Ineos's Grangemouth refinery, and will see the chemicals giant take the remaining stake in the licence to give the company 100 per cent ownership. Completion of the contract, announced in March, comes aer all necessary consents and approvals were received by the Department of Energy and Climate Change. Under a cloud?: support for onshore wind

Articles in this issue

Archives of this issue

view archives of Utility Week - UTILITY Week 15th May 2015