United Utilities Group PLC (LSE:UU.) warned revenue and profits would be lower than expected on the back of falling consumption and inflation.
Due to moderately lower than forecast consumption, group revenue for the first half of 2022/23 is expected to be around 1 per cent lower than the first half of last year, the group said.
This lower consumption is expected to continue into the second half and mean full-year group revenue will be lower than the guidance given in May.
Furthermore, underlying operating costs are now expected to be £65 million higher for the first half of 2022/23 leading to a lower underlying operating profit than the first half of last year. The company said it expects these factors to also impact the second half of the year.
In addition, the underlying net finance expense for the first half of 2022/23 is expected to be around £135 mln higher than the first half of last year, largely as a consequence of higher inflation rates. Cash interest is expected to remain stable when compared with the first half of last year.
Following the government’s announcement on freezing energy bills, the FTSE 100 group said it would “await clarity” on the impact of the scheme.
An increase in group net debt is also guided for the 30 September half-year stage compared with the position at the end of March.
It said this largely reflects “the impact of higher inflation leading to a higher indexation of principal on our index-linked debt along with the group's ongoing investment in its asset base, partly offset by the expected receipt of proceeds in relation to the previously announced sale of our renewable energy business”.
UU shares fell 2.5% to 919p on Tuesday morning, hitting lows not seen for over 18 months.