United Utilities (UU.) is confident it can outperform against its outcome delivery incentive targets during the current AMP6 regulatory period, having recently achieved its best ever customer satisfaction scores under Ofwat's qualitative service incentive mechanism. This is judged according to customer feedback and ended in an upper-quartile performance for the company against its peers. What's more, management has committed an additional £100m in efficiency improvement investment during the next three years to make sure it can keep this up.
Other improvements last year included a 27 per cent reduction in complaints and a 55 per cent decline in issues not resolved at first contact. Operational improvements resulted in a net reward of £6.7m, which exceeded management's expectations. It also made progress in reducing bad debt to 2.5 per cent of regulated revenue, from 3 per cent the previous year.
Operating profits were up £38m to £606m after last year's restructuring costs and the water quality incident were not repeated. Although underlying net finance expense was £36m higher at £237m due to higher inflation on the group's index-linked debt. The group invested £804m in regulatory capital during the year, including £148m of infrastructure renewals expenditure. This brings total investments during the first two years of the regulatory period to £1.6bn of its planned £3.6bn during the five years to 2020.
Analysts at Agency Partners expect adjusted pre-tax profits of £388m during the 12 months to March 2018, with EPS of 45.8p (from £429m and 52.5p in 2017).
UNITED UTILITIES (UU.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,035p | MARKET VALUE: | £7.06bn | |
| TOUCH: | 1,034-1,035p | 12-MONTH HIGH: | 1,078p | LOW: 854p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 414p | NET DEBT: | £6.6bn | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 1.64 | 305 | 43.5 | 34.30 |
| 2014 | 1.69 | 543 | 36.0 | 36.00 |
| 2015 | 1.72 | 342 | 39.8 | 37.70 |
| 2016 | 1.73 | 354 | 58.3 | 38.45 |
| 2017 | 1.70 | 442 | 63.6 | 38.87 |
| % change | -2 | +25 | +9 | +1 |
Ex-div:22 Jun Payment:04 Aug | ||||
