United Utilities Group PLC (LON:UU.) said it expects its full-year revenue to dip due to the coronavirus (COVID-19) pandemic, which will also bring its costs up.
The water company forecast revenue for the year to March 31, 2021, to be £1.75bn-£1.8bn, down from £1.85bn recorded last year, reflecting a bill reduction and the impact of COVID-19 on both household and non-household consumption.
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The impact on non-household revenue is expected to be broadly consistent with the first half, while household revenue will not benefit from the increased consumption of water due to the warm weather seen in the first half.
The volume hit is estimated to be £10mln-£60mln but it should be recoverable in two years' time, the water supplier said.
Underlying operating costs are expected to rise due to small inflationary increases in core costs alongside higher infrastructure renewals expenditure to maximise the performance of the network.
The FTSE 100 firm said it has accelerated capital investment plans for the new five-year regulatory period for the water industry ending in 2025, the AMP7, to secure improvements earlier in the period for customers and the environment and contributing to the 'Green recovery' planned by the government.
It is speeding up an already planned £500mln investment and extending the scope by £150mln.
For the six months to September 30, 2020, UU's revenue fell by 4% to £894mln, due to a £40mln reduction in the pricing regime and lower consumption in businesses due to lockdowns.
In the household market there was a £26mln increase in revenue as a result of the first lockdown, a continuation of working from home longer term and the warm weather towards the end of spring.
Underlying profit before tax dropped by 13% to £213mln as net demand rose by 3% but average household bills were cut by 7%.
The group raised its dividend by 1% to 14.41p.
Shares jumped 5% to 939.80p early on Wednesday.
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