Severn Trent boosts guidance after robust year

(Sharecast News) - Severn Trent boosted its full-year outlook on Wednesday after annual earnings came in ahead of forecasts, boosted by higher bills.

The utility - which provides water and sewage services to around 9m people in the Midlands and South West - saw revenues rise 16.6% in the year to 31 March to �2.8bn, while profits before interest and tax surged nearly 46% to �861m. Consensus had been for �847m.

Severn said it had benefited from tariff increases in its regulated business as well as higher consumption during last year's drought.

Recently-installed chief executive James Jesic said it had been a year of "exceptional growth" for the company.

"We have invested �1.9bn to deliver long-term benefits for customers. Our unique strength of internal capabilities, coupled with strong supply chain relationships, have enabled acceleration of investment delivery and growth in our water and wastewater infrastructure," he said.

Severn said it had reduced leakage by 8% and sewer floodings by 12% during the year.

Looking to the current trading, and Severn now expects annual earnings per share - which came in at 184.4p in the most recent year - to reach 250p, a notable uplift on previous guidance for 224p. It is also targeting investments of between �2.2bn and �2.5bn, with regulatory asset base growth of 13% to �17.4bn.

Jesic, who has spent his entire career at Severn Trent, took over as chief executive in January following the departure of former incumbent Liv Garfield after 11 years in the role. Garfield had been the FTSE 100's longest-serving female chief executive.

As a 0900 BST, the stock was up 3% at 3,088p.

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