United Utilities shares jump 3% after ‘encouraging’ H1 results

Added 23rd November 2016

United Utilities’ share price enjoyed a 3% jump to 922.50p as it reported its first half financial results, with its chief executive saying he was “encouraged” and “confident” with the company’s progress.

United Utilities shares jump 3% after ‘encouraging’ H1 results

With a 9% increase in operating profits versus the previous year - from £278.3m to £303.6m - chief executive Steve Mogford said the company was making “significant progress towards meeting [its] customer, environmental and financial targets”.

Over the six months to 30 September revenue declined slightly, from £857m to £853m while the interim dividend increased 1.1% - in line with its dividend policy - from £12.81 to £12.95.

Graham Spooner, investment research analyst at The Share Centre, said investors should be pleased with the latter’s increase.

“The capital structure remains robust and while many large-cap dividend-paying companies are seeing the strength of the balance sheet dented by pension deficits and the potential for dividend cuts, United continues to manage a pension surplus supported by effective pension hedging.”

In his statement to the stock market, Mogford added that its accelerated capital investment programme continued to deliver early customer service and operational benefits.

“We have invested £383m in the first half of this year and remain on track to invest around £800m for the full year,” he said.

Its initiative around improving operational efficiency and effectiveness – coined ‘systems thinking’ – continued to drive innovation and would be rolled out further this year, including new process technology.

Reporting its best score to date on Ofwat’s service incentive measures United Utilities said it would continue to enhance its customer service offering, including ‘priority services’ for those facing short- or long-term personal or financial challenges.

Further, Mogford said the Environment Agency had granted United “industry leading company status”.

“Overall, we are encouraged by our progress in the early part of this regulatory period. We have a robust financial position and are confident that we can deliver our targets for both customers and shareholders,” he concluded.

Spooner added: “The defensive attractions post Brexit and yield provide support, especially amongst income seekers. Currently the prospective yield for the group is around 4.3%. As a result, we continue to recommend United Utilities as a ‘buy’ for lower risk, income-seeking investors.”

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