United Utilities Group PLC (LSE:UU.) announced a 4% rise in profit in the first half, reflecting higher consumption as business activity returned to pre-pandemic levels.
Underlying profit in the six months to 30 September 2021 amounted to £332.8mln, up from £318.5mln in the same period last year. Revenue was £932.2mln compared with £894.4mln.
As more businesses opened up following the lifting of Coronavirus (COVID-19) lockdown restrictions, non-household revenue increased £68mln, while revenue from households fell by £20mln, reflecting the exceptionally high consumption from households last year when most people stayed at home.
The company said inflationary pressure led to a £9mln rise in core costs, “a relatively modest increase” reflecting its cost control and hedging policies. It has hedged around 95% of the power commodity price for the current year.
Household bad debt in the first half improved to 1.8% of regulated revenue from 2.2% as cash collection remained strong.
The company raised its interim dividend to 14.50p from 14.41p.
United Utilities forecast revenue growth of 2% for the full year to end-March 2022, boosted by higher overall consumption.
But inflation is expected to lead to higher underlying operating costs and finance costs in the full year.
The company said it is on track for £20m net customer outcome delivery incentives (ODI) rewards in 2021/22, which is consistent with its overall target of £150mln in its current asset management plan AMP7.
Chief executive Steve Mogford said the company is addressing the increased cost of living by reducing its water bills.
"At a time when many families are struggling with a higher cost of living, we have reduced typical water bills for households in our region by 6% in real terms over the last two years,” he said.
The company is also making progress on its climate goals.
"We're committed to delivering our six carbon pledges, which will help us achieve our ambition of net zero by 2030,” commented Mogford. “We have already delivered our pledge to source 100 per cent of our electricity from renewable sources. As well as reducing our carbon footprint, we are committed to protecting the natural environment and ensuring no net loss of biodiversity.”
Commenting on the investigation by the Environment Agency and Ofwat into the water industry's illegal releases of untreated waste into rivers, United Utilities said: “We take our environmental responsibilities very seriously and are highly transparent about our performance as evidenced by our high levels of self-reporting on pollution.”
Cash and short-term deposits at 30 September 2021 amounted to £656mln, while net debt stood at £7.4bn compared with £7.3bn at 31 March.