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United Utilities Group PLC on Tuesday lowered its guidance for the half year ending September 30, due to inflationary pressures and lower consumption.
Shares were down 2.0% at 923.00 pence each in London on Tuesday morning.
The Warrington, England-based water and wastewater company said it expects revenue for the first half of the year ending March 31, 2023 to be around 1% lower than the £932.3 million in the first half of financial 2022.
The decline is due to ‘moderately lower than forecast’ consumption.
The lower consumption levels are expected to continue into the second half, which will mean full-year revenue will be also lower than previous guidance.
Back in May, the utility company said it expected revenue to grow 1% year-on-year for financial 2023. It had also said it expected underlying operating costs to increase by £100 million, as labour, chemicals and other costs increase, as well as the cost of additional investment.
‘Inflationary increases in our input costs, particularly on chemicals and power, are now expected to be somewhat higher than the forecast used to derive this guidance,’ it warned.
United Utilities now expects underlying operating expenses to be £65 million higher in its first half, which will result in a lower underlying operating profit than a year before.
In the first half of financial 2022, it posted an underlying operating profit of £332.8 million.
In the recent half, it also expects underlying net finance expenses to be around £135 million higher, due to higher inflation rates. In May, it had forecast a £150 million rise in underlying finance expenses for the whole year.
Whilst United Utilities expects inflationary pressures to continue into the second half, it said it is actively managing the impact of inflation on costs. It is in ‘strong position’ for the year, having agreed wage deals and hedged the majority of its power consumption.
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