Severn Trent makes a splash with dividend hike after eyeing more savings

Rebecca Smith
Severn Trent had a stream of good news in its full-year results
Severn Trent had a stream of good news in its full-year results (Source: Getty)

No leaks to be seen here, as Severn Trent has revealed a rise in profit after boosting service too.

There was good news for investors as the water firm upgraded its dividend policy, after identifying further efficiencies it can make.

Read more: Locals' attempts to thwart Severn Trent's Dee Valley Water takeover fails

The figures

The UK's biggest listed water firm, which serves customers across the Midlands and mid-Wales, has posted a 3.7 per cent rise in turnover to £1.8bn, with the firm's underlying profit before interest and tax up 4.3 per cent to £525m.

It has promised to hike the dividend by four per cent above the RPI measure of inflation, with a proposed final dividend of 48.90p, taking the 2016/17 dividend to 81.50p.

Severn Trent also said a further £100m of savings has been identified taking its total expected cuts to £770m.

As well as that, it said customers enjoyed the lowest combined average bills in Britain of £341 a year.

Shares rose 2.57 per cent to 2,511p in early trading.

Why it's interesting

‚ÄčThe company has been boosted, both by higher savings and newer price regulations. It's now looking to give back to investors.

Also notable for Severn Trent was its full-year net customer outcome delivery incentive rewards, paid out when water firms meet or exceed the target. That was £47.6m, after previous guidance in January pointed to £15m.

The company said this was boosted by increased investment in its assets, as well as a milder winter.

What the company said

Liv Garfield, chief executive, Severn Trent, said: "Customers are at the centre of everything we do and I am delighted that we have been able to deliver significant improvements in the things they care most about.

"Sewer floodings are down 21 per cent, and we have further reduced both supply interruptions and leakages. We have done this while maintaining the lowest bills in Britain. These results are testament to the hard work of my colleagues over the past year."

We are delivering both strong customer-focused and financial outperformance this regulatory period, and we feel it is now appropriate to share this with our investors.

Read more: Severn Trent is set to beat forecasts despite "unpredictable" winter months

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