United Utilities warns on H1 revenue, says current trading in line

United Utilities said on Tuesday that it expects revenue for the first half of this year to be slightly lower than the same period last year, reflecting the accounting impact of its Water Plus business retail joint venture, partly offset by its allowed regulatory revenue changes, but underlying operating profit is seen marginally higher.

The water company said current trading is in line with the group's expectations for the six months ending 30 September 2016.

In addition, United said it is anticipated that infrastructure renewals expenditure (IRE) in the first half of this year will be slightly lower than last year. In line with its planned capital investment phasing, it expects an increase in IRE in the second half compared with the first.

Meanwhile, the underlying net finance expense is expected to be around £20m higher than the first half of last year, mainly due to the impact of higher RPI inflation on its index-linked debt and slightly higher net debt.

Net debt at the end of September is expected to be slightly higher than at the end of March as the group continues to invest in its asset base.This principally reflects regulatory capital expenditure, payment of the 2015/16 final dividend and payments in relation to interest and tax, largely offset by operational cash flows, United said.

“Gearing remains comfortably within our target range of 55% to 65% net debt to regulatory capital value, supporting a solid A3 credit rating for United Utilities Water. The group has financing headroom into 2018.”