Britain’s most polluting water company has hiked its dividend to £113m despite a 63pc fall in profits, reports Matt Oliver:
United Utilities on Thursday said it was increasing its interim investor payout to 16.59p per share, up from 15.17p a year ago.
It came as the utility giant’s half-year profits plunged from £426m to £160m, as it battled inflationary pressures and a burst pipe at a wastewater treatment site.
The company also said it expects to double the amount of money it receives through performance-linked payments from regulator Ofwat to more than £50m.
That is despite the Environment Agency ranking United Utilities as the UK’s “dirtiest” water company last year.
Its findings revealed that of the 20 pipes to spew out the most sewage in 2022, 10 were owned by United, which supplies water to homes and businesses in the North West and the Lake District.
However, under Ofwat’s so-called outcome delivery incentive (ODI) regime, suppliers can receive bonus payments or financial penalties for hitting or missing regulatory targets, respectively. Bonuses are funded from consumer bills.
The payment will raise eyebrows at a time when water companies are preparing to ramp up household bills to pay for a string of infrastructure improvements, following a public outcry over the dumping of raw sewage into waterways.
United has proposed spending £13.7bn from 2025 to 2030, while it expects bills to rise from an average of £417 per year in 2022/23 to £556 by 2030.
Louise Beardmore, the company’s chief executive, said: “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.”
But Sharon Graham, general secretary of Unite union, said: “The fact that United Utilities is increasing dividend payments to shareholders despite its pretax profits supposedly decreasing by 62.5 per cent is further evidence that the water industry needs serious reform.
“The handing over of such an essential public utility to profit-driven groups has seen countless millions being siphoned off, while costs, waste and pollution have all increased.
“The overwhelming evidence is that privatised utilities are failing the public and the environment – it is time to bring water back into public ownership.”
In its results for the six months to September 30, United said revenues rose from £919m to £982m – largely off the back of inflation-linked increases to consumer bills.
But the company said profits tumbled as it was battered by inflationary cost pressures and one-off costs related to fixing a burst outlet pipe at its Fleetwood Wastewater Treatment Works near Blackpool.
The fracture in June was “more complex than usual” due to its location and the difficulty of repairs needed, United said.
While temporary repairs were taking place, the Environment Agency advised people not to bathe along the Fylde coast amid storm overflows.
A permanent fix is now under way but the site is back at full capacity.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
