United Utilities profits fall in first half as costs rise
North West-focused water group United Utilities recorded a 7% drop in interim operating profits despite benefitting from higher customer bills, as costs increased.
Revenues were up 6.8% year-on-year at £982m in the six months to 30 September, but operating profits were down 6.9% at £240.6m as a result of higher operating expenses, infrastructure renewals spending and increased depreciation and amortisation.
However, reported pre-tax profit dropped by 62.5% to £160m, mainly due to a £216m increase in net finance expenses after a big reduction in net fair value gains on debt and derivatives. As such, earnings per share slumped by 67% to just 17.1p.
The interim dividend was raised to 16.59p, from 15.17p the year before.
"We are announcing a robust set of underlying financial and operational results today, in what has been a busy six months, including submission of our ambitious business plan for 2025-30," said chief executive Louise Beardmore.
For the full year ending 31 March 2024, the company is still guiding to revenues of around £1.97bn, up £150m from last year, reflecting the 9.4% CPIH inflation rate as of November 2022.
In line with guidance given at the time of its full-year results in May, underlying operating costs are expected to rise by £60m on the last financial year due to inflationary pressures on power and labour costs.
Shares were more or less flat at 1,081.5p by 0828 GMT.