Nov 23, 2017

Opening Quote: Severn Trent stems floods, Thames Water comes back onshore

Severn Trent as much as confirmed it - attributing the ODI improvement to a 38 per cent reduction in internal sewer floodings and a 50 per cent reduction in external floodings. Deutsche's analysts had also forecast a 6 per cent increase in earnings per share in the full-year, to 66.0p - which Severn Trent essentially achieved, posting underlying EPS of 65.9p. And they pencilled in a 7 per cent increase in dividends - a focus for critics of privatised water companies - to 34.9p, in-line with a policy to target RPI plus 4 percentage points each year through to 2020. Severn Trent said it would increase the interim dividend by a little less: by 6.2 per cent, to 34.63p. Still, at least Severn Trent customers have the lowest bills: averaging less than £1 per day, and some £32 a year less than the next cheapest water company in England and Wales. "Analysts at RBC think it might. They recently identified Severn Trent, Pennon and United Utilities as being"aligned with Ofwat's agenda" - which meant their long-term dividends should prove sustainable. The FT recently noted that "When Thames Water spilled billions of litres of excrement into public waterways in 2013, its chief executive was not sacked. He later received a 60 per cent pay rise, to £2m.".

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