Half-year revenue at water group United Utilities (UU.) rose in line with the inflation-linked price increases allowed by regulator Ofwat - that helped offset reduced domestic and commercial consumption. The group delivered another inflation-busting dividend hike, too.
However, underlying operating profit fell 3 per cent year on year to £316m - largely reflecting the depreciation effect of higher infrastructure spending and costs such as the transfer of private sewers. Capital investment rose 29 per cent in the period to £354m, with a full-year target of £750m. Still, much reduced borrowing costs are providing a fillip. Indeed, the group's average underlying interest rate fell from 5.8 per cent in the prior period to 5 per cent, resulting in a £19.1m reduction in finance-related costs. What's more, the group is on track to deliver against its regulatory outperformance targets for the 2010-15 period - these include £300m of financing outperformance and at least £50m of operating expenditure outperformance. Management remains committed to growing the dividend by 2 per cent a year above the inflation rate through to at least 2015, too.
Analysts at Deutsche Bank forecast full-year adjusted pre-tax profit of £362m, giving EPS of 40.92p (from £327m and 38.9p in 2012).
UNITED UTILITIES (UU.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 683p | MARKET VALUE: | £4.66bn | |
| TOUCH: | 683-684p | 12-MONTH HIGH: | 816p | LOW: 584p |
| DIVIDEND YIELD: | 4.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 267p | NET DEBT: | 292% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 793 | 124 | 20.8 | 10.7 |
| 2012 | 823 | 136 | 23.0 | 11.4 |
| % change | +4 | +10 | +11 | +7 |
Ex-div: 19 Dec Payment: 1 Feb | ||||
