We have redefined our company as an international energy business

Ian Russell chief executive Scottish Power

Profits fell during a difficult year for the utility which pushed ahead with a wide reaching restructuring plan.

But the changes produced results, with the group's UK business managing to stem a decline in customer numbers, the company said.

"The second half of the year showed continuing improvement," said chief executive Ian Russell.

Investors welcomed the news, marking Scottish Power shares 11p higher at 406p at the close on Wednesday.

Restructuring

Referring to the merger talks rumours, Mr Russell acknowledged that it might be seen as the "sensible thing to do" to join forces with its Scottish rival, though the regulatory issues would be tough to overcome.

Mr Russell preferred to focus on the performance of its US units which had driven the group forward.

"We have redefined our company as an international energy business through a series of disposals in line with the strategic aim we set out twelve months ago."

"Having completed our strategic disposals, Scottish Power's strategy is now to become a leading international energy company," he said.

"Two-thirds of our business is in the US and there has hardly been any consolidation there at all," he said.