United Utilities profits jump as revenue rises, costs narrow

(Sharecast News) - North West England-focussed water company United Utilities reported a 109% increase in pre-tax profit to £355m for the year ended 31 March on Thursday, driven by higher revenue, operational efficiencies and lower costs. Underlying profit before tax rose 54% to £339m, while operating profit increased 31.5% to £631.5m.

Earnings per share more than doubled to 38.8p, or 49.6p on an underlying basis, and the total dividend was raised 4.2% to 51.85p, in line with the group's policy of growing in line with CPIH.

Revenue rose 10% to £2.15bn, while net regulatory capital expenditure jumped 47% to £1.08bn as the company accelerated investment ahead of the next regulatory period.

Return on regulated equity fell to 1.1%, down 6.4%, partly reflecting prior-year comparatives that included higher rewards.

Gearing remained moderate at 60%, with the company fully equity funded for AMP8 and liquidity secured through to 2027.

Operationally, United Utilities said it achieved top-quartile performance across most of its regulatory targets and reported the highest average performance in the sector over the AMP7 period.

It said it had reduced storm overflow spills by 39% since 2020 and received a four-star rating in the Environment Agency's latest environmental performance assessment.

Looking ahead, the FTSE 100 company said it expected to invest around £9bn in AMP8, target RCV growth of about 7% per year, and deliver dividend growth in line with inflation while maintaining gearing between 55% to 65%.

"We have delivered another strong set of results for customers, communities and the environment in the north west," said chief executive officer Louise Beardmore.

"Our focus on performance has seen us meet or surpass around 80% of our performance targets over the last five years, the best performance of any water company.

"Our long-term strategy of investment helped us cut spills per storm overflow by 24% last year, a total of 20,000 fewer spills and the biggest year-on-year reduction in the sector."

Beardmore said the company was one of three to have achieved its customer targets for services provided to families, businesses and housing developers every year, adding that it had also helped more than 400,000 households in the north west with affordability support since 2020.

"Looking to the future, we have already started work on our ambitious £13bn plan for the next five years - the biggest investment in improving water and wastewater infrastructure in more than a century.

"We're proud our plans will deliver a huge boost to customers and communities across the north west, supporting 30,000 jobs and creating an estimated £35bn of economic value for the region."

At 0844 BST, shares in United Utilities Group were down 2.38% at 1,044.5p.

Reporting by Josh White for Sharecast.com.