LONDON (ShareCast) - Energy (NYSEArca: JJE - news) supplier SSE (Xetra: A0RFBG - news) was making decent gains on Wednesday afternoon after its well-received first-half results, providing a lift to the electricity sector.
The firm posted a 38% jump in profits in the first half as it immediately moved to offset a media storm over its hike in household bills last month. It also pushed up its dividend 5% to 25.2p as earnings per share leapt 40.6% to 35.3p.
In a move clearly meant to limit reputational damage, its financial report begins with Lord Smith of Kelvin, Chairman of SSE, explaining why the jump in profit could be justified after the rise in bills: "Prices achieved for generating electricity have been weak, and higher gas and non-energy costs unfortunately had to be reflected in the increase in household energy prices which SSE implemented last month," he said.
"The Energy Supply business accounted for 8.1% of SSE's adjusted operating profit in the period and its profit margin was 1.5%."
The company also announced that it was paying £33m to buy a bigger share in three North Sea gas fields. The agreement with oil and gas independent Perenco will see SSE increase its equity stake in the Apollo, Minerva (Xetra: 909871 - news) and Mercury fields in the Southern North Sea.
Meanwhile, FTSE 250 (FTSE: ^FTMC - news) coal-fired power station group Drax was also performing well today. The company cheered investors last month with news that since its half year results at the end of July, its trading conditions have generally improved, with full year expectations unchanged on the back of a continued good operating performance.
Heading the other way was the automobile and parts sector, owing mainly to a 2% fall from heavyweight constituent GKN (LSE: GKN.L - news) .
Galvan Research said this morning that the share price now is taking into account the cautious comments made by the engineering firm last month. The group warned on October 16th that macroeconomic conditions had deteriorated in recent weeks and it was seeing evidence of softening in order books.
The broker's head of research, Andrew Gibson, said today :"Although the October 16th update hinted at a possible cooling in some of GKN's markets, the price action towards post summer resistance now fully factors in any fundamental deterioration.
"Given this backdrop, while there is no sustained price action below 200p Galvan Research rate GKN shares a 'buy' for recovery, a view also supported by the strong autumn sales figures."
Top performing sectors so far today
Electricity 8,813.72 +1.37%
Technology Hardware & Equipment 908.46 +0.93%
Gas, Water & Multiutilities 5,124.81 +0.90%
Software (Xetra: 11213895.DE - news) & Computer Services 863.77 +0.84%
Life Insurance (Other OTC: LINS.PK - news) 4,904.67 +0.53%
Bottom performing sectors so far today
Industrial Metals & Mining 2,341.86 -2.00%
Automobiles (Euronext: SAU.NX - news) & Parts 4,769.65 -1.78%
Fixed Line Telecommunications 2,649.99 -1.49%
Mobile Telecommunications 3,739.38 -1.25%
Mining (Euronext: SMI.NX - news) 17,985.17 -1.16%