UK-based water supplier United Utilities Group Plc reported interim results slightly ahead of its expectations, following the recent regulatory price review.
United Utilities said it has a robust capital structure and should benefit from predictable regulated revenue streams over the next five years.
The company, which recently announced the departure of its chief executive, said it has made a positive start to the new regulatory period and investment in its assets has continued at high levels.
The predictability of revenue streams over the next five years, coupled with a defined dividend policy, removes much of the uncertainty which investors are encountering elsewhere, said analyst Richard Hunter of Hargreaves Lansdown Stockbrokers.
Hunter said shareholders in this stable company have been well rewarded over the last year as the shares have added 29 percent, as compared to the 5 percent gain in the wider FTSE100 index.
Looking further out, the market recognises the potential for growth whilst remaining realistic, such that the general view is that the shares remain a strong hold in an investor’s portfolio,” said Hunter.
For the half year ended Sept. 30, revenue from continuing operations fell by 24 million pounds to 762 million pounds ($1.2 billion), reflecting a 4.3 percent real price decrease at its regulated business.
The company's regulated division manages water and wastewater networks serving 3.2 million customer premises in north west England.
Underlying pretax profit fell 24 percent to 196 million pounds due to the revenue impact from the regulatory price review, it said.
Reported pretax profit from continuing operations decreased 36 percent to 122 million pounds mainly due to one-off restructuring costs.
United Utilities said it is confident of delivering outperformance over the 2010-15 period with financing outperformance already secured.
The company, which declared an interim dividend of 10 pence, said Monday it appointed Steve Mogford as Chief Executive designate, effective January 5, 2011. He will become Chief Executive on March 31, 2011 when current CEO Philip Green will step down.
Results of United Utilities come a day after rival Severn Trent reported a 51 percent fall in first half pretax profit and it slashed its interim dividend by 2.5 percent to 26.04 pence.
Shares of United Utilities are trading 0.08 percent lower at 617 pence at 09:58 am GMT Wednesday on the London Stock Exchange.