United Utilities Profit Jumps 14% After Water Prices RiseLouise Downing
United Utilities Group Plc, the U.K.’s largest publicly traded water company, said fiscal first-half earnings rose 14 percent after regulated prices increased.
Underlying pretax profit jumped to 215.7 million pounds ($349.7 million) in the six months through September from 188.7 million pounds a year earlier, the company said today in a statement. Sales advanced 3.7 percent to 853 million pounds.
The industry regulator Ofwat allowed a price increase of 4 percent including inflation for this fiscal year to enable utilities to invest in infrastructure. The U.K. government, looking for ways to curb rising living costs, urged water companies this month not to raise prices further. Ofwat is currently reviewing rates for the five years starting 2015.
“We’re discounting prices next year so that customers don’t pay the full allowed price increase, meaning that, on average, bills will go up by no more than inflation,” United Utilities Chief Executive Officer Steve Mogford said in the statement. “We’re also committing to further support for customers struggling to pay.”
United Utilities rose as much as 1.7 percent to 668 pence in London trading and was at 667 pence as of 8:03 a.m. local time.
Severn Trent Plc, Britain’s second-largest publicly traded water company, said yesterday that customer-bill increases will be below inflation this year.
Utilities are required to submit their final business plans for 2015-2020 by Dec. 2 and Ofwat will publish its decision a year later.
“Our business plan for the next five-year period means that customers would benefit from below-inflation average household bills for the decade to 2020,” Mogford said.
United Utilities, based in Warrington, England, expects to invest at least 800 million pounds this fiscal year in its networks, service provision and environmental improvements. It will pay an interim dividend of 12.01 pence a share, 5 percent higher than a year earlier.
British water companies, including United Utilities, have been the subject of takeover speculation in recent months in part because they offer investors a reliable income generated from the price regime imposed by Ofwat.