Scottish Power recruits 1m customers

ELECTRICITY giant Scottish Power reported a 9% surge in third-quarter profits, helped by an increase in customer numbers and higher electricity prices.

Pre-tax profit excluding goodwill rose to £281m, easily beating City expectations, as the company revealed its customer base had leapt from 4m to 5m. Analysts had forecast profits of around £267m.

Operating profit from UK customers nearly doubled, jumping from £53m to £104m for the nine months to 31 December. The increase came despite the company hiking gas bills by 11.8% and electricity by up to 9% in October. All power companies increased bills last year, passing on the cost of spiralling wholesale oil and gas prices in 2004.

Scottish Power's earnings per share rose 8.8% to 11.1p, ahead of an average analyst forecast of 10½5p. 'The group has performed well, and our outlook for the year remains unchanged,' said Ian Russell, chief executive.

Scottish Power shares rose 1.1% to 429½p in early trading. The stock has gained around 9% since the start of 2005.

'It was a good set of results, and it underpins the recent share price recovery,' said Williams de Broe analyst Angelos Anastasiou, who rates Scottish Power as a 'buy', with a price target of 450p.

Scottish Power is Britain's biggest electricity company, ranking just above Scottish & Southern Energy in terms of stock market size. British Gas, owned by Centrica, is bigger in terms of customer numbers in the UK.

The company said the situation had improved for its US division. In November, the company warned that its key American business, PacifiCorp, would miss its full-year earnings target. Scottish Power bought PacifiCorp for around $10bn in 1999. PacifiCorp now accounts for around 50% of overall earnings, but the US electricity producer has recently suffered from bad weather and plant outages.

However, Scottish Power said that although the outlook for PacifiCorp remained unchanged, market conditions had since improved in the United States.

Scottish Power shares have risen around 20% over the past year compared with a 4% rise in the FTSE 100.