Despite declining profits, United Utilities, a leading water supplier known for its high pollution levels, announced a substantial £110 million dividend for its shareholders.
The company declared an increased interim dividend of 16.59p per share on Thursday, up from 15.17p the previous year.
This announcement came as the firm reported a significant drop in half-year profits, falling from £426 million to £160 million. The decrease was attributed to inflationary challenges and a major pipe burst at a wastewater treatment facility.
United Utilities also anticipates a doubling of its performance-related payments from the regulatory body Ofwat, expecting over £50 million. This is in spite of being labelled as the UK’s most polluting water company by the Environment Agency last year. The agency found that United Utilities owned half of the top 20 most sewage-spilling pipes in 2022, serving areas in the North West and the Lake District.
Under Ofwat’s Outcome Delivery Incentive (ODI) system, water suppliers can earn bonuses or incur penalties based on their performance against regulatory standards, with bonuses being funded by consumer bills.
The decision to increase payouts comes at a time when water companies are set to raise household bills for infrastructure upgrades, following public outrage over sewage discharges into water bodies. United Utilities has proposed a £13.7 billion investment plan from 2025 to 2030, expecting an average bill increase from £417 in 2022/23 to £556 by 2030.
Louise Beardmore, CEO of United Utilities, emphasized the company’s commitment to serving customers, communities, and the environment, noting their progress in customer support and environmental protection. The company aims to achieve the Environment Agency’s highest 4-star rating in 2023.
However, Sharon Graham, general secretary of the Unite union, criticized the increased dividends amidst falling profits, calling it evidence of the need for major reforms in the water industry. She argued that privatization has increased costs, waste, and pollution, advocating for water services to return to public ownership.
United Utilities reported a revenue increase from £919 million to £982 million for the six months ending September 30, primarily due to inflation-linked bill increases. However, profits were impacted by inflationary costs and expenses related to repairing a complex burst pipe at the Fleetwood Wastewater Treatment Works near Blackpool. The incident led to temporary bathing restrictions along the Fylde coast, with a permanent repair currently underway.
