Tuesday preview: Severn Trent expected to cut full year dividend

Utility group Severn Trent is expected to report a decline in full year earnings on Tuesday following the regulator’s decision to cut household bills.

Severn Trent

2,687.00p

15:44 15/11/24

0.30%

8.00p

Deutsche Bank has forecast a 5% drop in earnings before interest and tax to £516m, a 4% decrease in adjusted earnings per share to 103.1p and a 5% fall in the dividend per share to 43.9p.

The bank said it sees Severn reporting a 5% fall in EBIT at the core water business with a 4.5% real reduction in prices offset partly by cost cutting.

In December Ofwat announced that the average household water bill would fall by more than 5% over next five years.

The watchdog's decision to cut bills came after water companies were criticised during the previous regulatory period for rising bills and above-inflation dividends paid to shareholders.

Meanwhile, Deutsche Bank said it estimates a 10% increase in EBIT at Severn’s services business, driven by lower financing costs.

Investors will also likely look out for further updates on Severn’s joint venture with United Utilities.

Earlier this month the Competition and Markets Authority approved plans for the two companies to combine their existing non-domestic supply arms into a new offering. The JV will contend for business customers when competition in the water market opens up in England for the first time next year.

Severn Trent will pay £3.5m to create the new 50:50 venture.

Tuesday 17 May

INTERIMS
Enterprise Inns, Greencore Group, Lakehouse, Zytronic

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (EU) (09:30)
Building Permits (US) (13:30)
Capacity Utilisation (US) (14:15)
Consumer Price Index (US) (13:30)
Housing Starts (US) (13:30)
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FINALS
BTG, DCC, Land Securities Group, Premier Foods

SPECIAL DIVIDEND PAYMENT DATE
Lloyds Banking Group

AGMS
Aldermore Group, Burford Capital , Cenkos Securities, Charles Taylor, EG Solutions, Globaldata, Hill & Smith Holdings, Journey Group, Kakuzi Ltd., Metminco Ltd., Mi-Pay Group, Polymetal International, Regus, Rockhopper Exploration, S&U, Sportech, Standard Life

UK ECONOMIC ANNOUNCEMENTS
Consumer Price Index (09:30)
Producer Price Index (09:30)
Retail Price Index (09:30)

FINAL DIVIDEND PAYMENT DATE
Aviva, Lloyds Banking Group, Sagicor Financial Corp., Wood Group (John)

FINAL EX-DIVIDEND DATE
Telefonica SA