United Utilities warned on profits on Tuesday, after the water company was hit by lower consumption and higher costs.
The firm, which provides water and wastewater services in the north west, said consumption had been “moderately” lower than forecast so far this year. As a result, interim group revenue is now expected to be around 1% lower than the first half of last year, while full-year revenues are also likely to come in below previous guidance.
The utility reported revenues of £932.3m in the six months to 30 September 2021, while in May it posted revenues for the year to 31 March of £1.9bn. At the time, it said it expected 2022/23 revenue to be around 1% higher than 2021/22. It also forecast an increase of around £100m in underlying operating costs for the current year.
However, on Tuesday it said: “Inflationary increases to our input costs, particularly on chemicals and power, are now expected to be somewhat higher that the forecast used to derive this guidance.”
Underlying operating costs are now expected to be £65m higher for the first half, “leading to lower underling operating profit than the first half of last year”.
United continued: “We expect these factors to also impact the second half of the year. However, we continue to closely monitor the impact of ongoing volatility in power costs and await clarity on the impact if the Energy Bill Relief Scheme for non-household customers.”