November 21, 2018 / 7:28 AM / 6 months ago

United Utilities HY profit jumps on government incentives, lower costs

FILE PHOTO: A United Utilities engineer arrives at the scene of a burst water main in Liverpool northern England, March 31, 2016. REUTERS/Phil Noble

(Reuters) - British water supplier United Utilities (UU.L) on Wednesday said first-half earnings jumped 23.7 percent, helped by incentives from the country’s regulator and lower costs.

Water utilities in Britain enjoy delivery incentives paid by regulator Ofwat for meeting or exceeding targets, including project completions and customer service.

United Utilities, which supplies water to three million homes and 200,000 businesses across the North West of England, said it expects to meet its target of net delivery incentives outcome over the 2015-20 period.

The company also said it would continue to spend 80 million pounds more during the current year to safeguard the flow of supplies to customers and protect its water resources, after prolonged extreme hot and dry weather in the UK caused cracked pipelines, which led to water leakages.

Water utilities had faced higher regulatory scrutiny over leakages in Britain. Ofwat also issued guidance in July calling on them to be more transparent about their dividend policies, executive pay, debt-to-equity ratio.

United Utilities said on Wednesday that despite the extreme weather in the first half, it expects to meet the regulatory leakage target. It had said in September it aims to reduce leaking by 15 percent as per its 2020-2025 plan.

The FTSE 100 company said its underlying pretax profit rose to 240.3 million pounds for the six months ended Sept. 30, from 194.3 million pounds reported in the year-earlier period.

Reporting by Muvija M in Bengaluru; Editing by Bernard Orr

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