Severn Trent warns on future of water sector

Severn Trent (LON:SVT) posted its annual results on Tuesday in which it underscored its ongoing communication with the government concerning the future of the water sector.

The water utility company, which posted a 4.2% increase in group turnover, said that the renationalisation of the water industry continues to remain a possibility in the event of a change of government. Severn Trent continued, underlining that any associated changes in government policy may ultimately affect its ability to deliver its strategic objectives, also having an impact on shareholder value.

Leader of the Labour party, Jeremy Corbyn, said recently that water, electricity, gas and railway operators would be controlled by the state in the event that Labour comes into power.

Severn Trent aims to ensure that the sector in England and Wales continues to deliver a top service for its customers. It aims to minimise any potential risks and maximise opportunities through regular communication and strong scenario planning alongside the evolution of government policy.

“This has been a year where our teams have really stepped up, whether in response to customer needs in the face of one of the hottest and driest summers we’ve seen or by being named by Ofwat as one of the top companies in the sector when we received fast-track status for our future plans,” Liv Garfield, Chief Executive of Severn Trent commented.

“At the heart of all of that is our drive to succeed for all of our stakeholders, which is shown in the results we’re announcing today. They demonstrate not only that we can deliver for our investors but also that we’re putting ourselves at the heart of the communities in which we live and work by building a lasting legacy for future generations,” the Chief Executive continued.

In its results, Severn Trent revealed that it has maintained the lowest bills in England for ten years, aiming to project this to at least 2025.

Profit for the year was up 6.8%. The company proposed a final dividend of 56.02p, in line with policy.

The company remains on track to exceed its 50% renewable energy self-generation target, which has been boosted by the acquisition of Agrivert UK.

In its half-year results, Severn Trent saw an increase in its half-year underlying profit by over 4%.

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