Severn Trent profits rise as prices go up
UTILITY Severn Trent saw its pre-tax profits surge yesterday, as a slump in consumption was offset by price rises.
Profits went up by 51 per cent to £208.2m in the six months to September, beating analysts’ expectations. But Severn Trent still warned that demand was falling at a similar rate to last year.
The group, which supplies water to over 3.7m homes and companies around the UK, added it was on target to meet the £5m cost savings it had promised for the year.
As utilities struggle to fight off a fall in demand during the downturn, Severn Trent said it had “worked hard” to keep on top of its bad debt levels, which were staying at 2.3 per cent of the group’s turnover.
The company’s report comes ahead of the industry regulator Ofwat’s ruling on how much water companies cat put up prices for the next five years.
Severn Trent said it would take time to analyse the report before commenting.
In July, Ofwat suggested it is expecting Severn’s average bill to drop by eight per cent over the course of the next five years from April 2010.
The company’s interim dividend is being put up by 1.6 per cent to 26.71p.
Turnover from Severn Trent’s regulated water arm — the main core of its business — went up by four per cent to £695m.
But turnover from metered customers, who usually run factories or business buildings rather than homes, dropped by £8.8m in the half from the same time a year ago, as companies collapsed.
FAST FACTS SEVERN TRENT
&9679; Profits are up at the water company despite demand falling in the downturn.
&9679; Ofwat, which regulates the industry, will this week make a ruling on how much firms like Severn Trent can charge for the next five years.