United Utilities reports trading in line with expectations

United Utilities said it was trading in line with management expectations for the year to the end of March.

Underlying operating profit will be moderately higher than the year before after spending on infrastructure renewals rose slightly in the second half, the water company said in a trading statement.

Revenue will rise slightly as higher charges allowed by the regulator are partly offset by the accounting effect of a business retail joint venture.

Higher inflation has increased the rate on United Utilities’ index-linked debt, leading to a net finance expense about £40m higher than last year. There will be a small increase in net debt compared with the end of September due to investment in the asset base.

United Utilities supplies and treats water in the North West of England. UK water companies face political uncertainty because the Labour opposition has said it will take their operations back into state control.

The companies are also under pressure from Ofwat, the regulator, to make bills affordable, improve service and be cut out waste. In January Goldman Sachs said water company dividends would be hard to sustain while meeting Ofsted’s requirements.

United Utilities said its plans to meet customer needs and priorities were advanced and that it was confident about meeting Ofwat’s requirements. Plans are in place to build on these efforts for the regulator’s next five-year asset management plan, it added.