TOP NEWS: United Utilities hikes dividend 9% despite drop in profit

United Utilities Group PLC on Thursday declared a significant dividend increase, despite half-year profit more than halving, as it said underlying results were ‘robust’.

The Warrington, England-based water and waste company said pretax profit fell to £160.0 million in the six months that ended September 30 from £426.3 million a year before. This was despite revenue rising by 6.8% to £982.0 million from £919.3 million.

The fall in pretax profit was primarily due to a swing to £79.5 million in net finance expense from £136.4 million in income. On an underlying basis, net finance expense was £179.7 million, reduced from an expense of £266.6 million a year before.

As a result, on an underlying basis, United Utilities swung to a pretax profit of £90.3 million from a loss of £7.9 million.

United Utilities said its revenue improvement was mainly thanks to an inflation increase allowed as part of its regulatory revenue cap. However, inflation also pushed up operating costs, it said.

Looking ahead, revenue is expected to increase by about £150 million in all of financial 2023, largely due to inflation.

The company declared an interim dividend of 16.59 pence, up 9.4% from 15.17p a year before. It said this was in line with its policy of matching UK inflation based on the consumer prices index including owner occupiers’ housing costs. This was running at 4.7% in October, according to the Office for National Statistics.

Net debt at United Utilities rose by 9.1% to £8.54 billion as of September 30 from £7.83 billion a year before.

‘We continue to focus on delivering for our customers, communities and the environment - and creating a stronger, greener and healthier North West,’ said Chief Executive Officer Louise Beardmore.

Shares were up 0.1% at 1,084.50 pence in London early Thursday. The wider FTSE 100 index was marginally higher.

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