Efficiency savings key for Severn Trent

Some serious efficiency savings have seen profit rise on flat earnings at Severn Trent.

Turnover at the FTSE100-listed water utility was down marginally year-on-year, sitting at £896.1m (-0.2%), while profit before interest and tax was up 2.6% on an underlying basis to £281m in the first half.

It brings basic earnings per share up 11.4% to 58.6p.

The company said it continued to have the lowest combined customer water bills in Britain during the period, at an average of £329.

But it also pointed out the efficiencies already secured under the new Asset Management Programme 6 regulatory regime, with £372m already and up to £50m more by May 2016.

“Through more intensive management of our network we are seeing reduced supply interruptions, lower sewer flooding incidents and faster incident response times” said chief executive Liv Garfield.

“Our renewable energy programme continues its rapid roll out and we are on track to generate the equivalent of 50% of our energy needs by 2020.”

Wholesale total expenditure for the first half was £467.1m, which included capital expenditure on AMP6 of £184m and infrastructure maintenance expenditure of £52m.

The utility’s net labour costs were down £1.2m, representing £8.2m in savings from the firm’s restructure in the previous year, offset by the cost of a new incentive scheme.

Severn Trent declared an interim dividend of 32.26p per share, down from 33.96p last year.