United Utilities hikes dividend despite profit decline

United Utilities Group Plc (LSE: UU) shares remained flat during early Thursday trading after announcing a significant dividend increase. Despite half-year profits more than halving, the company cited ‘robust’ underlying results.

In the six months ending September 30, pretax profit fell to £160.0 million, down from £426.3 million a year earlier, while revenue rose 6.8% to £982.0 million.

The dip in profit was driven by a swing to a £79.5 million net finance expense from a £136.4 million income. On an underlying basis, net finance expense reduced to £179.7 million from £266.6 million.

On an underlying basis, United Utilities swung to a pretax profit of £90.3 million from a loss of £7.9 million.

Revenue growth was attributed to an inflation increase allowed under the regulatory revenue cap, but inflation also led to higher operating costs.

Looking ahead, a £150 million revenue increase is anticipated for the entire financial year 2023, primarily due to inflation.

The FTSE 100 listed company declared an interim dividend of 16.59 pence, a 9.4% increase from the 15.17p reported a year ago, in line with UK inflation.

As of September 30, net debt rose by 9.1% to £8.54 billion from £7.83 billion a year before.

CEO Louise Beardmore emphasised the company’s commitment to customers, communities, and the environment.

Year to date, United Utilities shares have risen by 7.4%, and a 6.7% increase year over year.