UU on track to meet profit targets

UNITED Utilities, the North West’s only FTSE 100 company, is on track to meet City expectations for its half year figures.

The Warrington company, which has seen its shares hit recently on speculation it would be launching a rights issue to boost its balance sheet, made no comment on this but said it had the “headroom” to cover its financing needs to the second half of 2011.

The group said underlying operating profit in its regulated business for the six months to end-September would be broadly in line with last year, reflecting revenue and cost pressures.

UU, which supplies seven million people across the North West, said it had incurred one off costs of around £10m in the half year, relating to restructuring the business, into regulated and non-regulated activities.

A spokesperson said: “We’ve looked at office costs and administration and also taken out some agency staff. It’s all part of our renewed focus on the regulated activity.”

UU said in its trading update reduced demand for water meant revenue growth in its regulated business for the year would be lower than the 6% price rise allowed by the regulator.

The company said it was facing cost pressures in areas such as power and bad debts, alongside an increase in depreciation.

On the issue of funding the group said that since the start of the 2009/10 financial year it has improved  its liquidity position through the issue of three new long-term bonds worth £220m.

It added:”United Utilities Water now has in  place around £2bn of index-linked funding.”

Commenting on the trading position chief executive Philip Green, said: “The group is on track to deliver results in line with our expectations of a sound underlying financial performance for the six months ending September 30.

“Earlier this month we submitted our written response to Ofwat’s draft  determination of prices for the 2010-15 period and we will be discussing this with the regulator ahead of the final determination in November.”