Full-year consumption levels to fall at Severn Trent

Water supplier and waste water treatment group Severn Trent says that trading has been in line with expectations since October 1st, but full-year consumption levels across its measured income base are expected to be lower than last year, in line with the trend seen in the first half.

By MoneyWeek

published 17 February 2012

in Features

Nevertheless, the firm said that no new material trading events or transactions have occurred since the end of the first half, and that operating expenditure remains in line with the board's forecasts. These costs are still expected to be higher than last year as a result of inflation, investment in its networks and quasi taxes.

On a positive note, Severn Trent does not foresee any usage restrictions this year despite the record-low levels of rainfall during winter. "This situation remains under constant review however and the company is taking steps to improve supply resilience this year," the group said.

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Its US division, Severn Trent Services, is expected to deliver an improved second half performance, compared with the first half, however with markets remaining challenging, "no significant upturn is expected before the start of the next financial year," the group said.

The group will take an exceptional finance charge worth £16m relating to the costs of the tender offer for its 2014 £200m bond it completed in January.