Severn Trent raises dividend and spending
WATER company Severn Trent beat annual profit forecasts yesterday as it promised shareholders a special dividend and raised spending on upgrade work.
Pre-tax profits fell 38.1 per cent to £156.7m as the firm spent around a fifth more on infrastructure improvements, leak reduction and repairs.
Without exceptional charges, the firm reported underlying profit before tax of £275.3m, down 4.6 per cent but above some analyst forecasts.
Operating costs jumped seven per cent to £1.3bn, and the firm plans to spend even more on upgrades this year, with capital expenditure rising to between £570m and £590m.
Severn Trent is already beating targets set by Ofwat to preserve water, and said yesterday it has reduced leaks by seven per cent this year to hit a record low.
The firm also plans to splash out £150m on paying shareholders a special dividend of 63p per share.
Severn Trent’s turnover in the year rose 3.5 per cent to £1.77bn, helped by a price hike last April that has offset a drop in consumption for customers on metered contracts.
The company’s services unit has endured a “challenging” year, with writedowns on its Italian business and a slowdown in US municipal spending causing a 30 per cent drop in underlying profits to £18m.