Severn Trent profit stumbles as costs mount

Severn Trent on Thursday reported a drop in interim profit as infrastructure costs offset an increase in revenue, though the company still raised its dividend.

The FTSE 100-listed company booked a profit before tax of £180.7m for the six months ended 30 September, which was down by 11% on the same period last year.

Even so, the utility company hiked its half-year dividend by 7.0% to 40.03p per share.

Severn attributed the profit drop to a 17.0% jump in infrastructure costs to £75.6m, with the figure also impacted by a fall in earnings from property sales of 66% to reach £6.2m.

Revenues meanwhile edged 3.0% higher to £910.0m following tariff increases in the regulated water and waste water segments.

In parallel, turnover from the business services division climbed by 15.0% following the rapid integration of its Agrivert food waste acquisition, which was snapped up for £120.0m in November 2018.

Severn Trent reiterated full year guidance, with turnover still on course to come in between £161bn and £1.64bn and profit before interest and tax, excluding property, in line to grow from last year's £44.0m.

Chief executive Liv Garfield said: "This has been another six month period where we have delivered for all of our stakeholders through strong performance, continued investment and environmental improvement, helping us to fulfil our goal of being the most trusted water company in England."

Severn Trent shares were down by 1.11% at 2,311.00p at 0808 GMT.