Warrington-based water giant United Utilities said it paid dividends to shareholders of £207 million during the six month period to September 30, 2023,
United Utilities said its net debt at September 30 was £8.541 billion, up from £8.201 billion at March 31.
The company’s revenue rose 6.8% to £982 million during the six months while reported pre-tax profit fell 62.5% to £160 million.
Interim dividend will rise 9.4% to 16.59p.
United Utilities is the UK’s largest listed water and wastewater company and is a constituent of the FTSE 100.
United Utilities CEO Louise Beardmore said: “We are announcing a robust set of underlying financial and operational results today, in what has been a busy six months, including submission of our ambitious business plan for 2025-30.
“We continue to focus on delivering for our customers, communities and the environment – and creating a stronger, greener and healthier North West.
“We are providing affordability support to over 350,000 customers – more than ever before – and we are on track to achieve our best ever year on customer outcome delivery incentives.
“We are doing more to protect and enhance the North West’s waterways and natural habitats and we’re on course to attain the highest 4-star rating from the Environment Agency for 2023.
“Last month, we set out an ambitious £13.7 billion plan for 2025-30, a plan that will transform the delivery of services for customers and the environment in the North West and at the same time supporting 30,000 jobs, 7,000 of which will be new.
“Our strong balance sheet and liquidity puts us in a great position to deliver it, and we aren’t waiting – we have made an early start on overflows, representing £1.2 billion of our proposed programme, and allowing us to press ahead with work to reduce storm overflow spills and deliver the step change we all want to see.”
Aarin Chiekrie, equity analyst at Hargreaves Lansdown: “In return for providing a reliable and affordable water supply to the Northwest of England, the regulator allows United Utilities to earn an acceptable financial return.
“At the half-year mark, higher revenue is being driven by the inflation increase allowed as part of the group’s revenue cap. But inflationary pressures are having an even larger impact on costs, particularly power, labour and chemical costs, meaning profits are growing at a slightly slower rate.
“United Utilities is on track to deliver its best-ever year in terms of customer outcome delivery incentives, which are effectively bonuses for delivering above and beyond their committed levels of service to customers, which should help offset some of these higher costs.
“Net debt has increased but the balance sheet remains stable for now, but given the group’s ambitious £13.7bn plans to expand and upgrade its assets between 2025-2030, United Utilities needs to raise around £5.2bn of cash.
“That’ll require issuing new debt and will likely push debt levels towards the top of the group’s target range, potentially putting pressure on the group’s generous dividend yield.
“It’s also worth keeping in mind that high levels of inflation have mixed impacts for United Utilities. On one hand, it impacts customers’ ability to pay their bills, which are expected to rise by £22 per customer per year.
“United Utilities has announced affordability schemes which should help more than one in six of its struggling customers. But over the medium term, high levels of inflation are likely to be a net benefit for the group.
“That’s because inflation increases the amount of revenue the group’s allowed to earn on its asset base. The mammoth investment plan should help on that front too, raising the group’s assets by 50% before the end of this decade.”