United Utilities boosts profits despite Brexit inflation lifting debt costs
Half-year pre-tax profits rose £5 million to £194 million.
Water supplier United Utilities has lifted revenues and profits despite Brexit-induced inflation pushing up debt costs.
Half-year pre-tax profits rose £5 million to £194 million, as total costs fell by £16 million and it took a greater share of the profits from joint venture Water Plus.
Revenues also climbed by £23 million to £876 million, with income from property sales coming in £13 million higher compared to the same period last year.
However, the firm said its underlying net finance expense jumped by £29 million, as rising RPI inflation pushed up its index-linked debt.
Chief executive Steve Mogford said: “This has been a strong first-half performance in which we have delivered further value for customers and shareholders.
“We continue to put customers first, achieving significant further improvements in customer satisfaction, and positioning us as a leader in our sector.
“Average bills are set to reduce in real terms over the 10-year period to 2020 and we expect to double the number of customers we help through our award-winning affordability schemes over AMP6.”
The North West-focused firm said half-year operating profit was up £32 million at £344 million.
Shares rose 0.5% in morning trading on the London Stock Exchange, as it increased the interim dividend by 2% to 13.24p.
George Salmon, equity analyst at Hargreaves Lansdown, said: “The prospect of higher interest rates has contributed to United Utilities losing the premium rating it has enjoyed over the last few years.
“With both the dividend and £3.7 billion of debt linked to inflation, finance costs are looking more weighty.
“However, it shouldn’t be forgotten that revenues are also tied to inflation, so unless the group scores a major operational own-goal, the dividend should continue to look rock-solid.
“That makes the prospect of an inflation-linked income, from a yield of over 5%, alluring to income-seeking investors.”