Higher revenues at United Utilities will be offset by impact of inflation

United Utilities reservoir

North West water and wastewater group United Utilities said it expects group revenues to be higher than last year, in a trading update today ahead of its annual results on May 26.

It says this largely reflects higher consumption from business customers. Overall, the net increase in revenue is expected to be around three per cent.

Underlying profits for 2021/22 will be broadly the same as last year.

The Warrington-based group said higher revenue are broadly offset by higher underlying operating costs, largely as a result of inflationary increases in the group’s core costs.

The update says the group expects the underlying net finance expense for 2021/22 to be around £175m higher than 2020/21, largely due to higher inflation applied to its index-linked debt.

However, with inflation at a 30-year high, United Utilities will benefit from higher indexation increasing the regulatory capital value of the regulated business at the year end, as well as increasing future revenues.

The group also expects an increase in group net debt at March 31, 2022, compared with the position in 2021. This largely reflects the inflation accretion on the group’s index-linked debt, along with ongoing investment in its asset base including the acceleration of capital expenditure and the previously announced £365m of incremental totex to deliver service improvements sooner.

The update says current trading within the group is broadly in line with expectations.

In other measures, United Utilities said it was assessed as the joint top performer in regulator Ofwat’s Service Delivery Report for 2021/21, and was the top performer in reducing water supply interruptions and minimising pollution incidents. It has cut pollution incidents by 31% in the first year of its current five-year regulatory period.

United Utilities is investing almost £900m during the five-year period to improve the quality of the region’s rivers and seas.

Click here to sign up to receive our new South West business news...
Close