UU expects to meet profit goals despite lower customer bills

UNITED Utilities, the water company said falling customer bills would hit half year operating earnings, but said it still expects to meet profit expectations.

The Warrington company said in a trading statement ahead of its half-year report on November 24 it had made £600m from the sale of most of its non-regulated business interests.

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UU, yesterday criticised by consumer groups for having high levels of customer complaints, said it was confident of out-performing its regulatory performance targets in the period to 2015.

Chief executive Philip Green said: “”The group is on track to deliver results in line with our expectations, reflecting the impact of the recent regulatory price review.

“We believe that, with the group’s consistent focus on its core activities and the low cost of its debt portfolio, we are well positioned to deliver outperformance over the 2010-15 regulatory period.”

The five year deal between UU and Ofwat, the water regulator began in April, and in 2010-11 will see North West customers paying 4.3% less.

This, combined with other factors means that operating profits will be hit. The company said: “In line with these new price limits and as expected, underlying operating profit in the regulated business is anticipated to be lower compared with the prior year.

“This also reflects continuing cost pressures, including an expected increase in property rates and depreciation, partly offset by a reduction in power costs.”

UU added that one-off costs of around £15m, relating to operational restructuring, would be charged in the first half.