United Utilities helped by price rises in the first half

published 28 November 2012

Revenues at water and sewage services group United Utilities edged higher in the first half, helped by regulated price increases.

Turnover came in at £823m in the six months to the end of September, up from £793m the year before. However, this missed the £835m consensus forecast.

Nevertheless, the company said that the £30m year-on-year growth was down to regulated prices increases for 2012/13 of 5.8% nominal (0.6% real price increase plus 5.2% RPI inflation), however this was partially offset by reduced commercial volumes and lower property sales associated with the water business.

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Underlying pre-tax profit came in £190m, up 3% year-on-year and slightly higher than the £188m analyst estimate. This was down to a lower net finance expense (reflecting lower RPI inflation), which outweighed a reduction in underlying operation profit.

Chief Executive Steve Mogford said: "The recent progress we have made reinforces our confidence in delivering our 2010-15 regulatory outperformance targets. Alongside our operational and customer service improvements, we have delivered another good financial performance despite a tough economic environment."

Gearing (measured as group net debt to regulatory capital value) was at 60% at the end of the period, within Ofwat's assumed range of 55% to 65%, "supporting a solid investment grade credit rating", the comp y said.

The firm declared an interim dividend of 11.44p per share, up 7.2% on last year's payment and in line with its dividend policy of targeting a growth rate of RPI+2% per annum through to at least 2015.