Thames Water slumps into the red, warns turnaround will take 'at least' a decade

(Sharecast News) - Crisis-struck Thames Water plunged to £1.6bn loss last year, it confirmed on Tuesday, as debts and sewage spills continued to mount. Publishing its annual report, the debt-laden water utility - the UK's largest - said underlying revenues increased 8% to £2.6bn in the year to 31 March, while underlying earnings before interest, tax, depreciation and amortisation rose 10% to £1.3bn.

However, including exceptional items, pre-tax losses came in at £1.6bn, compared to profits of £157m a year previously.

The £1.8bn of one-off costs included a £1.3bn provision after a loan from its parent company was deemed unrecoverable; £122m set against regulator fines; £151m of restructuring costs; and £198m of consent fees relating to the plan.

Statutory net debt climbed £1.65bn to £16.79bn.

On an operational level, meanwhile, pollutions soared 34.3%.

Chris Weston, chief executive, said reducing pollution continued to be a "significant challenge" for the struggling business.

"Prolonged wet weather meant further rain had nowhere to go other than to inundate our ageing and fragile sewer network. Reducing pollutions and discharges is something we're really focused on."

Thames Water, which has around 16m customers across London and the south of England, has been battling the threat of bankruptcy and renationalisation since March 2024, when its original investors refused to put extra equity into the business, calling it "uninvestable".

If has also faced stringent criticism for paying out dividends and building up debts while failing to invest in infrastructure.

Senior creditors last month laid out a rescue package after private equity giant KKR pulled out of plans to inject fresh cash into the business.

Ofwat, the regulator, is currently reviewing the plan, but is known to be concerned about potentially inadequate losses for debt holders. The plan also relies on Ofwat lowering environmental standards and being more lenient about any future fines.

Weston said: "Thames Water has made good progress in operational performance, despite the ongoing challenging financial situation.

"We recognise that our current gearing is too high, and to address this, we are progressing with our senior creditors' plan to recapitalise the business, which will see us return to a more stable financial foundation."

But he warned: "This will come with a requirement to re-set the regulatory landscape and acknowledge it will take a least a decade to turn Thames around."