Water groups to post slower flow of profits

WATER companies Severn Trent and Pennon Group are tipped to report a slower flow of profits due to higher costs and pricing pressure when they report half-year numbers this week.

Deutsche Bank expects Midlands water and sewage group Severn to post pre-tax profit tomorrow of about £159m against £188m last time, while others predict about £153.9m.

“We expect to see lower numbers, with prices rebased downwards by one per cent from the beginning of April,” Deutsche said.

Severn is also tipped to update shareholders on its dividend at the results, with other firms in the sector having already unveiled their policies for the five-year regulatory period.

It is forecast to say its dividend will grow by Retail Price Index (RPI) inflation plus three per cent in the four years to 2015.

Severn provides water and sewage services to more than 8m people in an area stretching from the Bristol Channel to the Humber, and from mid-Wales to the East Midlands.

Pennon, which owns South West Water and waste contractor Viridor, is expected on Thursday to post half-year pre-tax profits of £78m versus £97m last time and an eight per cent dividend rise to 7.5p.