Severn Trent's first-half underlying pre-tax profits climbed 22 per cent to £188m, although the water utility did have an unexpected £10m reduction in interest charges to thank for the better-than-expected performance.
That said, the group did also benefit from price increases in the regulated water business, which saw turnover in Severn Trent Water climb 4 per cent to £695m. That more than offset cost increases, which included a £1.7m rise in bad debts and a £2.1m increase in energy costs.
However, the 5.3 per cent increase in sales prices could prove a temporary fillip - Ofwat is due to reveal its final determination on pricing for the next five years this week. However, capital expenditure remains "in line" and the group remains on target to deliver the .
Meanwhile, the group reported £11.5m of exceptional items, mostly relating to restructuring costs at its non-regulated division, Severn Trent Services, following the sale of its metering division and its withdrawal from the soils testing market. Underlying profits in the division fell 8.3 per cent to £12.2m, but management expects an "improved performance" in the second half of the year, thanks to strong order growth for water purification.
Broker Credit Suisse forecasts full-year pre-tax profits of £306m and EPS of 87p.
| SEVERN TRENT (SVT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,010p | MARKET VALUE: | £ 2.39bn | |
| TOUCH: | 1008-1009p | 12-MONTH HIGH: | 1,284p | LOW: 921p |
| DIVIDEND YIELD: | 6.7% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 395p | NET DEBT: | 378% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2008 | 814 | 138 | -35.8 | 26.29 |
| 2009 | 852 | 208 | 63.4 | 26.71 |
| % change | +5 | +51 | - | +2 |
Ex-div: 2 Dec Payment: 15 Jan | ||||
