Market watch: Weather adds to pressure on SSE

TWO of Britain’s biggest pub chains are poised to reveal this week whether last month’s wash-out weather has dampened sales, while SSE will report on whether the wetness boosted demand for electricity and gas.

Perth-based SSE – which trades as Scottish Hydro, Southern Electric and Swalec – was supplying household energy at a loss for much of last year because of rising costs and a delay in increasing bills until September.

It has also reported a slump in the consumption of gas, with usage for the nine months to 31 December down by 26.6 per cent year-on-year because of the economic downturn and warmer conditions over the autumn.

The same weather trends continued over much of the first three months of 2012, meaning there could be further pressure on margins.

The company has pledged to freeze prices until at least October but, with rival Centrica warning on Friday that it is facing rising costs, SSE will be under pressure to provide guidance on the outlook for tariffs this winter.

SSE’s adjusted profits on Wednesday are still expected to show a similar level of growth to that seen in each of the past three years, suggesting a rise of about 2 per cent to £1.33 billion.

Pubs firm Mitchells & Butlers will suffer a hangover from a cocktail of rising taxes and food costs when it posts interim figures on Friday.

The group – which owns the All Bar One, Brown’s, Harvester, O’Neill’s, Sizzling Pubs and Toby Carvery brands – reported a resilient 4.4 per cent sales increase in the 17 weeks to 21 January.

However, trading slowed in January and is expected to have remained subdued in February, although March’s heatwave should have provided a lift. The group has struggled to pass on rising costs – including food and energy prices and hikes in alcohol duty – to customers.

Underlying profits are expected to fall to between £135 million and £138m in the six months to early April, compared to £141m in the previous half-year.

Investors will also be hoping for an update on its hunt for a chief executive to bring an end to the boardroom turmoil that has plagued the group in recent times.

Executive chairman Bob Ivell is in temporary charge after Jeremy Blood and Adam Fowle left in quick succession, while the company also lost its chairman Simon Burke last year.

Strong food sales are likely to boost Pedigree brewer Marston’s on Thursday. The Pitcher & Piano and Tavern Table owner has already reported a 3.5 per cent rise in like-for-like sales in the 23 weeks to 10 March, while profits at its tenanted pubs were about 3 per cent ahead of last year.

Numis analyst Douglas Jack expects pre-tax profits to rise 10 per cent to £32m in the six months to 31 March.

Strong growth in emerging markets will help the world’s biggest caterer, Compass Group, shrug off rising food prices and tough conditions in the UK on Wednesday.

The City expects pre-tax profits to increase 9 per cent to £581m as the firm makes cost savings to fight rising food prices.

Monday: Dignity, Serco

Tuesday: G4S, Enterprise Inns

Wednesday: Alliance Boots, Cineworld, Greggs, SSE

Thursday: Aviva, French Connection, Lloyds, Marston’s, Premier Oil, Prudential

Friday: Mitchells & Butlers