SSE profit rise forecast as chief retires

Share this article
Have your say

SSE CHIEF executive Ian Marchant will attempt this week to draw a line under the company’s mis-selling scandal, putting an end to what has been an uncomfortable close to his ten-year tenure.

On Wednesday, Marchant will present the Perth-based group’s year-end results for the final time, having already announced plans to retire at the end of June.

The figures will include the latest tally on compensation for mis-selling energy contracts to as many as 23,000 residential customers.

SSE has set aside £5 million to cover potential pay-outs after being fined a record £10.5m in April by Ofgem.

Approximately 11,000 people filed claims in the first two weeks after the fine from Ofgem.

Alistair Phillips-Davies, who takes over from Marchant in the summer, told MPs last month that SSE expected to pay out a total of about £1.5m.

The number of claimants has gone up since then, but one analyst said this would have little impact on the company’s finances.

“There’s no doubt this has been awkward for SSE and Ian Marchant, who has had a pretty­ laudable career at the company up until now,” he said. “But the likelihood ­remains that they won’t reach that £5m figure, never mind going above that.”

Ofgem cited a “woeful catalogue of failures by the SSE management” that led to years of mis-selling over the phone, in stores and on customers’ doorsteps.

SSE stopped door-to-door sales in 2011, but dodgy practices persisted in its other sales channels until September 2012.

As a result, some customers were wrongly led to believe that they would save money by signing up with the company, which operates as Scottish Hydro north of the Border.

Marchant is keen for SSE to be seen as quickly and fairly putting things right, having already admitted he is deeply ashamed by a turn of events that he will “regret for the rest of my career”.

However, in an interview last week with the BBC, he ­insisted the examples of SSE lying to customers were few and far between, with “a more common thing that was ­happening was misunderstanding – either deliberate or accidental.”

SSE will reiterate its apologies on Wednesday, but the ­executive team will focus ­primarily upon the financial results, which are expected to show a roughly 5 per cent increase on last year’s profits of £1.3 billion.

In a trading update in March, SSE said it was on course to post a “solid” set of annual results, with all three of its divisions – networks, ­retail and wholesale – delivering profits.

Analysts at Société Générale are predicting an overall pre-tax profit of £1.4bn, with the results bolstered by unusually cool weather.

In keeping with SSE’s commitment to above-inflation dividend hikes, the full-year pay-out will be roughly 84p per share.