United Utilities - but, but, but, Petrofac have debt 😂17 Nov 2023 18:14
One of Britain’s largest water companies has committed itself to paying out more in dividends to shareholders than it made in the spring and summer.
United Utilities, the stock market-listed water supplier and sewage handler for northwest England, said it would increase its interim dividend by nearly 10 per cent to 16.59p a share in the six months to the end of September.
That is despite reporting earnings per share on its preferred measurement of profit of 13.2p.
That means the company will be distributing about £113 million to shareholders despite its profits after tax coming in at £90 million, a differential of 25 per cent or a payout of £5 for every £4 earned. Last year when United Utilities’ accounts were ravaged by rising costs and interest rates, the company paid out an interim dividend of 15.17p or a total of £103 million despite making a loss of £12 million.
The dividends of regulated regional water monopolies have become increasingly contentious when customers see rising bills and booming executive pay but high levels of leakage and pollution across the privatised industry after decades of underinvestment.
The utility defended its dividend payout saying that it has committed itself to raising dividends by the rate of inflation, “a stable and predictable approach that appeals to long-term investors like pension funds who, in turn, support our ambitious plans to invest billions of pounds”.
Inflation, the rising cost of energy and wages, and their impact on interest rates is eating into the finances of UU and companies across the sector.
UU said that increased household bills sent revenues for the half year up 7 per cent to £982 million. After an 11 per cent rise in operating costs to £401 million and £180 million spent in the six months of servicing its net debt of £8.5 billion, plus accounting writedowns, it is left with historically low profits.
At the beginning of the current five-year funding cycle when inflation and interest rates were still benign it was making £174 million at the half year, almost twice as much money as now.
The markets insane.
UU 982mln annual revenue and 8.5bln debt and it’s valued at 7.4bln. Whilst PFC with 1-2bln revenue per annum and 10% of UU’s debt potters along at 250mln valuation.
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