Profits at United Utilities hit by last summer’s heatwave

United Utilities reservoir

North West firm United Utilities has warned that its profits for the year are likely to be affected by last summer’s heatwave.

Revenues are expected to be higher at Warrington based United Utilities – according to a trading statement.

Underlying operating profit for the last 12 months is expected to be higher than 2017/18.

And underlying infrastructure renewals expenditure in the second half of the year is expected to be broadly consistent with the first half of the year.

However, operating profit will be hit by costs relating to the exceptional period of dry weather in the summer, guaranteed minimum pension (GMP) equalisation and restructuring within the business.

Operating costs associated with these items will be excluded from the underlying profit measures.

These adjusted items are expected to total £52m for the full year, of which £29m was recognised in the first half.

The RPI inflation that is applied to the group’s index-linked debt is lower than last year and the firm expects the underlying net finance expense for 2018/19 to be around £45m lower than 2017/18.

Unted Utilities was awarded fast-track status when Ofwat published its initial assessment of company business plans for the 2020-25 period.

As a fast-track company, the firm says it has greater clarity with a year to go before the start of the next regulatory period.

A statement said: “Our approach to innovation and the use of advanced technology from around the world alongside our capital investment is delivering better service, greater resilience and improved efficiency for customers.

“In January, Ofwat published the results of its annual company monitoring framework assessment which measures the quality and transparency of company reporting and the level of trust and confidence that customers and other stakeholders can place in it.

“We are delighted to have retained “self assurance” status in this assessment. This is the highest category available and we are the only company in the sector to have held this status for three consecutive years.”