British water supplier United Utilities Group Plc UU.L warned of lower first-half revenue on Thursday, pressured by lesser consumption by businesses due to the COVID-19 pandemic and price cuts set by the sector regulator Ofwat.
The blue-chip utility also said it expected bad debt to increase as government support schemes come to an end, and forecast an about 5% fall in revenue for the half-year ending Sept. 30.
First-half underlying operating profit is expected to be lower, driven by lower revenue and an anticipated moderate increase in infrastructure renewals expenditure, it said.
In December, the Water Services Regulation Authority (Ofwat) set out a spending package of 51 billion pounds over the next five years, and reiterated a previous promise that customers would see a 50 pound reduction in average bills.
The company, which had increased the number of customers eligible for reduced tariffs and also offered assistance schemes to help those struggling to pay their bills amid the pandemic, said cash collection from household customers has been consistent with its targets.
In May, United Utilities said it would reassess its dividend policy for the five-year price review period ending 2025. Stocks of water utilities are deemed safe at times of economic uncertainties due to their stable dividend payment.
The Warrington-headquartered company expects a “small increase” in group net debt position as at Sept. 30, from 7.18 billion pounds at the end of March.