SEVERN TRENT yesterday blamed rising costs for a 5.8 per cent fall in half-year profits, but raised its dividend and reiterated its promise to keep household bill rises below inflation.
Pre-tax profits at the FTSE 100-listed water company fell to £141.4m from £150m the previous year, but the firm said that results were in line with full-year expectations.
Severn Trent has absorbed costs for maintaining private drains and sewers after new regulation was implemented, and has invested an extra £150m in service improvements over the period. Advisory services related to the hostile takeover approach by a consortium including the Kuwait investment office also added to costs. The dividend was increased by six per cent to 32.16p per share, in line with company policy to raise the payout by three per cent above the inflation rate.
“Many customers are facing serious cost of living pressures and we aim to keep bills to the minimum with below inflation rises across the current regulatory period,” said chief executive Tony Wray. “We remain committed to keeping customers’ bills down.”
The debate into the cost of living has been in the spotlight since Labour leader Ed Miliband accused big energy firms of profiteering and pledged to freeze bills if elected.
Unlike with energy firms, domestic customers cannot switch water suppliers. Water prices have risen in line with inflation in recent years.
Severn Trent announced last week that it has poached Liv Garfield from BT’s Openreach to replace Wray as chief executive, starting next spring.
Severn Trent is submitting its business plan for the next regulatory price cycle next Monday, and it will be published on Tuesday.