May 22, 2020 / 6:27 AM / 3 months ago

United Utilities posts surprise annual profit rise, to review dividend policy

(Reuters) - British water supplier United Utilities Group Plc (UU.L) on Friday posted a surprise rise in full-year operating profit, but said it would reassess its dividend policy for the five-year price review period ending 2025 amid the COVID-19 crisis.

United Utilities proposed a final dividend of 28.40 pence per share, higher than last year’s payment of 27.52 pence. Stocks of water utilities are deemed safe at times of economic uncertainties due to their stable dividend payment.

The UK’s largest listed water company said underlying operating profit rose about 9% to 743.9 million pounds for the year ended March 31, above analysts’ average estimate of 648.5 million pounds, according to IBES data from Refinitiv.

The company’s earnings jumped as revenue rose by 41 million pounds and infrastructure expenses dropped by 22 million pounds, with a modest fall in operating expenses.

The blue-chip utility also said it has increased the number of customers eligible for reduced tariffs and is offering assistance schemes to help those struggling to pay their bills amid the pandemic.

United Utilities said its Water Plus joint venture with peer Severn Trent (SVT.L) incurred a loss of 51 million pounds in the period due to the COVID-19 outbreak, which has created a “far more challenging” operating environment.

Earlier this week, Severn Trent reported a 0.6% fall in underlying profit before interest and tax for the year as it deferred some net outperformance incentives to the next price period and increased bad debt provisions.

Reporting by Shanima A and Aby Jose Koilparambil in Bengaluru; Editing by Ramakrishnan M.

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