Severn Trent in full flow as watchdog applauds being nice to its customers
BEING kind to customers can occasionally pay off, as water company Severn Trent found out this session.
The utility firm clocked up at least £50 million in outperformance payments this year after it recorded a 12% year-on-year reduction in water quality complaints.
Performance payments are doled out by water regulator Ofwat to firms that are delivering a good service for customers.
Severn Trent said: “On water, we have had more supply interruptions than normal in the last quarter, but are encouraged by the reduction in water quality complaints, which were down 12% year on year.”
It reiterated its annual earnings expectation and said its dividend would rise this year. It also revealed that, though its gender pay gap — which stands at 2.4% — has further to go, it is making “strong progress” in supporting workplace diversity.
It spells a strong turnaround for water utilities who had seen their shares fall at the start of the year on worries they would have to cut dividends in response to a price cap review due next year from regulator Ofwat. Severn Trent rose 26.5p to 1842.5 and United Utilities climbed 16.6p to 708.4p.
Overall the FTSE 100 was up 46.03 at 7187.43 as investors timidly returned to the market after a disturbing two days’ trading.
Elsewhere in the top flight Irishheadquartered Smurfit Kappa and DCC had results out.
Higher raw material costs hurt Smurfit last year with Europe’s largest cardboard box-maker reporting full- year profits 12% lower than the previous year. Shares were up 4p at 2454p.
DCC announced its first US healthcare acquisition, adding that operating profits were on track. Shares in the oil distribution, tech and health and beauty products conglomerate were off 30p at 6970p.
Elsewhere, miners were struggling after the row over a new mining code in the Democratic Republic of Congo escalated. According to reports the Minister of Mines in the country, Martin Kabwelulu, declined to say whether President Joseph Kabila had signed a new mining code into law that the industry opposes because it will raise royalties and taxes.
Randgold Resources lost 146.4p at 6311.9p and Antofagasta dropped 15.8p to 896.8p.
Other movers and shakers included Rentokil after Credit Suisse upgraded the pest control firm to outperform.
On AIM high end fashion retailer Mulberry was clocking up losses on worries for the High Street.
In December, half-year losses at the handbag-maker widened, with the luxury fashion brand reporting strong sales to tourists but an “uncertain” UK market. Shares fell 10p to 980p. @spencershapland
More information: standard.co.uk/business