Southern Electric surges to pounds 222m: More job cuts planned in programme aimed at annual savings of pounds 25m

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The Independent Online
SOUTHERN ELECTRIC, the second-largest regional electricity company in England and Wales, increased pre-tax profits last year by 18.5 per cent to pounds 222m. The company shed 500 jobs, more than 9 per cent of the workforce, and is expected to cut at least 265 more by the end of this year.

A further 2,000 electricity jobs may go over the next two years at Nuclear Electric, the state-owned power generator. Nuclear Electric blamed a price cap in the electricity trading pool, imposed by the regulator Offer, which will reduce profits by pounds 200m in 1994/95.

Southern said that with economic recovery still at an early stage, it would continue to focus on reducing operating costs and increasing efficiency. Reductions in labour costs, restructuring and investments in new technology are estimated to bring savings of pounds 25m a year from the middle of the decade.

Turnover in the year to 31 March fell slightly to pounds 1.78bn from pounds 1.79bn the previous year. Earnings per share rose by 17.4 per cent to 64p, and the total dividend is up 15.8 per cent to 22.7p. Dividend cover is unchanged at 2.8 times.

Geoffrey Wilson, chairman, said earnings and dividends would continue to grow whatever the outcome of the current review of electricity distribution prices. He said it was imperative that companies that had improved efficiency and customer service should be properly rewarded by the regulatory regime.

Southern's contracting businesses tripled operating profit from pounds 3.4m in 1992/93 to about pounds 10m last year. The company said its retail arm, a joint venture with Eastern Electricity and Midlands Electricity, suffered from lack of consumer confidence. But Southern's share of the retail losses reduced to pounds 1.7m last year from pounds 7.2m.

The company has invested in three independent power generating projects. A combined heat and power plant in Derbyshire, a partnership with Courtaulds, will be operating later this year. Combined Cycle Gas Turbine projects at Barking, east London, and in Medway will be commissioned next year.

Southern said that 8 per cent of its earnings came from non-regulated businesses last year, and that it is on target to achieve 15 per cent by the end of the decade.