Shares in United Utilities (LSE: UU) (NASDAQOTH: UUGRY.US) lifted by over 1.5% in early trade this morning, following the release of its half-yearly report covering the six months to 30 September 2013.
Operating profit jumped up to £341.7m against £314.1m in H1 2012, due to an increase in regulated prices, with pre-tax profit leaping 14% to £215.7m from £188.7m, and revenue advancing 3.7% to £853.3m. Management pointed towards this outperformance as continuing “to benefit customers and shareholders”.
The water company announced that it will discount prices next year in a move that is expected to save customers around £5 per household, following pressure from its regulator Ofwat not to raise prices by more than 4% (including inflation). United Utilities also revealed that a revised tax rebate has been agreed with HMRC, worth around £75m, of which £20m is going towards the “special customer discount” that is offsetting the ‘real price’ increase for 2014-15.
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Steve Mogford, chief executive officer, commented:
“We are discounting prices next year so that customers do not pay the full allowed price increase, meaning that, on average, bills will go up by no more than inflation. We are also committing to further support for customers struggling to pay. This is in addition to the previously announced reinvestment of £240 million of outperformance for the benefit of our customers and the environment.
“Our business plan for the next five-year period means that customers would benefit from below inflation average household bills for the decade to 2020.”
Elsewhere in the update, United Utilities announced an increase to its interim dividend that brings it up to 12.01p per ordinary share, putting the company on a healthy yield of 5.2%, comfortably beating the FTSE 100 average of 3.52%.
