United Utilities to increase investments amid nationalisation fears
British water giant United Utilities is planning to dedicate extra funds to new investments and increasing dividends amid the uncertainty of a potential Labour government renationalisation programme.
The FTSE 100 firm had declared a rise in profit for the year ending March 2019, with revenues growing by 4.8 per cent to £1.8 billion.
Underlying operating profit had risen from £645.1 million a year earlier to £684.8 million. This saw total dividends rise by 3.9 per cent compared to the previous financial year, now standing at 41.28p per share.
The utility already supplies water to three million homes and 200,000 businesses in the north-west, but admitted that Labour’s plan to renationalise the water sector constitutes a “key area of uncertainty” for the business, as an extra £100 million is set to be invested this year to hasten its spending plan for the next decade.
The new plans will take its total investment up to £350 million, as the utility responds to regulatory pressure from Ofwat for system improvements following another dry summer in 2018.
“We are increasing our additional investment to accelerate the delivery of further performance improvements and facilitate a flying start to the next regulatory period”, said United Utilities CEO, Steve Mogford.
“We are well placed for the remainder of the current regulatory period and beyond as we maintain our focus on providing great service to customers and creating long-term value for all our stakeholders”.
With a general election touted as a possibility amid continued Brexit uncertainty, a Labour-led nationalisation effort is possibly in the pipeline should party leader Jeremy Corbyn become prime minister
United Utilities has warned in response that shareholders may be forced to hand over equity “below fair market value” under a renationalisation plan, and has been in consultation with the opposition party in a bid to reassure its investors.