Thames Water’s half-year profits plunged by nearly 50 per cent today, as a combination of extreme weather and regulatory fines threw light on the mounting pressures that loom over one of Britain’s largest utility companies.
The under-fire firm posted pre-tax profits of £67.7m in the six months to September, falling from £129m in the same period a year earlier.
According to the company, this year’s adverse weather conditions had an "enduring impact on leakage", with the ‘Beast from the East’ causing pipes to burst and the UK’s subsequent prolonged hot summer weather driving supply shortages.
The firm said that it received more than 11,000 written complaints about supply interruptions in the half-year to 30 September, rising from just over 8,000 in the same period a year earlier.
Thames Water has been slapped with more than £128m of fines for poor management of leaks since 2017, prompting political tussles over whether the water industry should be taken back into public ownership.
Moody's said today that the UK water utilities outlook was negative amid the mounting regulatory, political and public pressure.
"Although companies' business plans seek to address regulatory priorities, including a reduction in customer bills while also promising more investments, their plans will be subject to regulatory scrutiny and they could struggle to maintain credit quality," said Stefanie Voelz, Moody's vice president and senior credit officer.
In a statement today chief executive Steve Robertson said: "During the intense summer heatwave we worked tirelessly to protect our customers from supply restrictions. However, along with the impact of the 'Beast from the East', it has delayed our progress on leakage and other performance measures. We remain focused on building a better future for our customers and the environment.
"Our profit decreased over the period as we brought forward regulatory penalties, to benefit customers, and hired more employees to improve customer service and tackle leakage. Our capital investment increased, with £554m spent on improving our water and waste networks."
The news comes six months after Thames Water was found to have “failed its customers” by regulator Ofwat, which said that the company “did not pay enough attention” to solving water leakage problems.
In September Thames Water revealed a five-year plan that will involve the company spending £11.7bn on its infrastructure.