United Utilities reports a 9% increase in underlying full-year operating profit

United Utilities reports a 9% increase in underlying full-year operating profit

  • United Utilities records a 9% increase to £743.9 million in full-year operating profit.
  • The water supplier says it will re-evaluate its dividend policy for the next five years.
  • The British company posts a £51 million loss attributed to its joint venture, Water Plus.

United Utilities (LON: UU) said on Friday that it saw an unexpected increase in its annual operating profit. Owing to the Coronavirus pandemic, however, the company announced its plan of re-evaluating the dividend policy for the next five years.   

The British water supplier proposed a 28.40 pence per share of final dividend that was reported higher than 27.52 pence a share last year. Thanks to stable dividend payments, water utilities are widely known as safer stocks amidst economic uncertainties. United’s workers will be starring in the second series of the documentary, Sewermen.

Shares of the company are currently posting a 5% intraday loss. At 880 pence per share, United Utilities is roughly 8% down year to date in the stock market. Learn more about how to invest in the stock market.

United’s revenue increases by £41 million

At £743.9 million, United Utilities recorded a 9% increase in full-year operating profit. United’s fiscal year ended on 31st March. According to Refinitiv, experts had forecast the company to print a much lower £648.5 million in underlying operating profit.

Other noticeable figures in the company’s report on Friday include a £41 million increase in revenue. A £22 million decline in infrastructure expenses and an additional modest drop in the company’s operating expenses further served to push its earnings higher in the recently ended fiscal year.

The blue-chip firm also accentuated on Friday that it has broadened the eligibility to include more customers that can benefit from reduced tariffs. United Utilities also launched an assistance programme aimed at helping customers that are finding it hard to pay bills due to the novel financial challenges posed by COVID-19.  

United posts a £51 million loss attributed to Water Plus

United also highlighted a £51 million loss attributed to its joint venture with Severn Trend that it calls Water Plus, due to the ongoing health crisis. This loss, as per the company, turns its operating environment unprecedently challenging.

In its announcement earlier this week, Severn Trent also said that its underlying profit before interest and tax tanked 0.6% in the financial year. The Coventry-headquartered water company attributed a decline in its profit to higher bad debt provisions as it also postponed a few net outperformance incentives.

In March, United Utilities dropped to as low as 764 pence per share in the stock market. Its performance in 2019, on the contrary, was reasonably upbeat with an annual gain of about 25%.

At the time of writing, the Warrington-headquartered firm is valued at £6 billion and has a price to earnings ratio of 19.42.

By Wajeeh Khan
Mr. Khan specialises in Public Health by academia but is a trader by passion. Taking up two new hobbies of writing and trading in his teen years, he is now a professional trader and news writer with over 5 years of experience in various financial markets. Khan is passionate about bringing insightful articles to his readers and hopes to add value to their portfolios.

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