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Vietnam Holding Investor Presentation November 2021
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United Utilities increases dividend despite inflation squeeze
United Utilities have once again increased their payouts to investors through an increase in the ordinary dividend, but does so at a time inflation squeezes the company’s earnings.
United Utilities reported an increase in revenue to £932.3m in the six months ended 30th September, up from £894.4m in the same period last year.
This helped increase operating profit by 4.4% to £332.8m but underlying earnings per share fell to 28.4p from 29.2p as increased costs on inflation-linked debt eroded the bottom line.
Despite pressure on earnings, United Utilities increases their interim dividend by 0.6% to 14.50p.
“The return to the office meant United Utilities saw overall consumption rise. While fewer people at home meant residential revenue was down, it remained above pre-pandemic levels suggesting this hybrid-homeworking environment will be a net positive for UU,” said Laura Hoy, Equity Analyst at Hargreaves Lansdown.
“However, inflation took a bite out of profits in more ways than one. The group saw core costs rise and is expecting this trend to continue through to the full year. More concerning was an increase in net finance costs. A portion of United Utilities’ debt is linked to inflation, and the sharp increase in consumer prices this year meant it rose substantially. This burden together with a one-time tax charge meant the group’s bottom line was in the red.”
“This isn’t necessarily a long-term trend to worry about. If inflation does ease as many are predicting, this should be a blip on the radar. And in any case the group’s revenues should be inflation linked. However if this new level is sustained it will chip away at United Utilities’ balance sheet.”
United Utilities CEO, Steve Mogford, highlighted the real terms reduction in household bills when taking into consideration inflation and provided comment on their push to net zero by 2030.
“At a time when many families are struggling with a higher cost of living, we have reduced typical water bills forhouseholds in our region by 6 per cent in real terms over the last two years. We’re also offering more help thanever before for vulnerable customers and households that are struggling to pay,” said Steve Mogford.
“Climate change and population growth are challenges we must all confront, and we will continue to invest tomake our services more resilient and strengthen our ability to respond to, and recover from, extreme weather events. Our £2 billion investment programme will also help our region’s economy to grow, generate jobs anddevelop skills in our communities.”
“We’re committed to delivering our six carbon pledges, which will help us achieve our ambition of net zero by 2030. We have already delivered our pledge to source 100 per cent of our electricity from renewable sources. As well as reducing our carbon footprint, we are committed to protecting the natural environment and ensuring no net loss of biodiversity.”
Pret sales suffer in the City
Pret lunch sales have fully recovered across the whole of the UK, however, are still down in the City of London.
Sales were down 13% last week as people in the City are still working from home part-time. Despite this lull, sales across the UK more generally have hit pre-pandemic levels.
“On average around the country, we’re back at the level of business we were at before the pandemic hit,” said chief executive, Panu Christou.
“But we know we need to keep pushing in London’s business districts and constantly think about new ways to grow our business in those crucial markets.”
Mulberry sales jump
Mulberry has reported strong results and has returned to pre-pandemic levels.
The group said that first-half revenue soared 34% thanks to strong UK sales and growth in Asia.
Profits at Mulberry were £10.4m, which is compared to the £2.4m loss posted a year earlier. Sales in the UK jumped 36% to £38.0m, which was a £10m increase compared to the year previous.
“I am proud of Mulberry’s performance during the period. Our long-term strategy, namely our innovative and sustainable products made in our carbon neutral Somerset factories, our market-leading omni-channel distribution model, and our expansion into Asia Pacific, has delivered a strong financial performance,” said Thierry Andretta, CEO.
“Product innovation and sustainability are central to our strategy, demonstrated by the recent launch of our “The Lowest Carbon collection”, further supporting the commitments we made in our Made to Last manifesto and our goal to reach zero carbon emissions by 2035.
“The bold decisions we have taken with regards to focussing on our UK production capabilities, means that we are well placed for the festive trading period and beyond. Finally, I would like to take this opportunity to thank my colleagues for their hard work, commitment and achievement over the period.”
Lidl plans for 1,100 UK stores
Lidl has plans to have 1,100 stores across the UK by 2025.
The discount supermarket will create an additional 4,000 jobs and has already opened 55 stores in the past year.
In the 12 months to the end of February, revenues increased 12% to £7.7bn. The retailer posted £9.8m in profits, which is compared to the £25m loss posted in the same period a year earlier.
The supermarket is on track to have a total of 1,000 supermarkets by the end of 2023.
“Our new store target today marks a significant investment for the business. We remain committed to our bricks and mortar strategy and maintaining our store opening pace; roughly a store a week for the next four years,” said Christian Härtnagel, Lidl GB CEO.
“We will continue to bring our offer of great quality products at unbeatable value to even more communities across the country. I am also looking forward to welcoming even more colleagues to the Lidl GB team.”
