United Utilities PLC (LON:UU.) said it expects revenues in the year to end-March 2021 to be lower than expected though lower interest payments will offset a drop in operating profits.
Revenue has been affected by COVID-19, it said, though lower consumption from businesses has been largely offset by higher consumption from households. Overall, the net reduction in revenue is expected to be around 3%, the utility said in a statement.
Underlying operating profit for 2020/21 is expected to be lower than 2019/20 largely reflecting the lower revenue and higher infrastructure renewals expenditure but underlying net finance expense will be around £100mln lower than in 2019/20.
Roughly half of the reduction is due to lower inflation applied to the group's index-linked debt and a half due to the change in performance measures.
Profits will also include the proceeds of the sale of a 35.3% stake in Tallinn Water for €100.3mln. Given the one-off nature of this transaction, the profit generated on disposal will be excluded from the underlying results.
United Utilities added that its operations had continued to perform well during the pandemic with its lowest ever level of leakage while interruptions to water supply more than halved in the last 12 months.
As a result, the utility company expects to achieve a reward of up to £20mln against its customer outcome delivery incentives (ODIs) for this year.