THE CHIEF FINANCIAL OFFICER of big six energy firm npower has left the business along with its chief executive after German owner RWE overhauled the management of its UK division following “unexpectedly negative” half-year results.
CFO Jens Madrian and CEO Paul Massara have left the business “by mutual consent” after a steep fall in profits at the UK subsidiary contributed to an 11% fall in operating profits at RWE. Madrian joined RWE in 1999 before moving to npower in 2015.
In August, RWE revealed that npower’s profit for the first six months of 2015 plunged by almost two-thirds, to £38m, while problems with its billing system contributed to the loss of 300,000 customer accounts over the past year.
Npower has been plagued by problems with its billing system. The introduction of a new database 18 months ago resulted in some customers receiving multiple bills while others received no demands at all.
Speaking to Financial Director in April last year, Madrian outlined his ambition to make npower number one for customer service by 2015. An energy satisfaction survey by Which? Switch had previously found that Npower languished at the bottom of the table with a customer satisfaction score of just 31% – the accuracy and clarity of its bills scored particularly badly.
“We can’t deliver a service to our customers and create an experience for our domestic customers that they deserve. It also delivers a high level of inefficiencies and extra cost which we are trying to avoid. This is a no-win story,” he said at the time. “I don’t see this as an IT issue whatsoever. It is a business challenge where IT plays an important part.”
And while the business, which has 5.1 million customer accounts, has moved up from sixth to fifth in the survey, continued problems with its billing system quickly scuppered Madrian’s plans. Indeed, announcing the half-year results earlier this month, Massara said billing issues were the main reason for the drop in profits.
“The challenges that we have faced were tougher than we expected but we know what the problems are and are taking the right steps to fix them. This year, we’ve already made real improvements for our customers and halved the number of complaints we receive, meaning complaints are at their lowest level since 2011,” he said.
However, RWE felt others were better suited to address these problems. Massara is being replaced by chief operating officer Paul Coffey and Madrian is to be replaced by Martin Mikláš, currently CFO of RWE’s Polish business where he is also responsible for invoicing systems and IT. Dirk Simons, currently CFO of RWE Innogy, will become COO.
Peter Terium, CEO of RWE, said: “At this time, we need a CEO at RWE npower who will focus on fixing the basic process improvements and has a track record of implementing operational process changes.
“In his previous functions, Paul Coffey has repeatedly demonstrated this expertise. We are therefore delighted to have him as CEO of the UK supply business and as country chairman in the UK. Martin Mikláš and Dirk Simons, two assertive and experienced managers who have demonstrated their operational strengths in their previous roles, will be at his side.”
In its statement, RWE thanked the departing Massara and Madrian “for their contribution toward moving npower from sixth to fifth in customer service”.
Npower’s new management team have a wealth of problems to address. In addition to the billing woes, the outlook for RWE’s UK energy supply business “had to be corrected downwards considerably” and the problems at the subsidiary are unlikely to be overcome until the end of 2016.