Kelda beats forecasts but quashes Northumbrian bid rumours
Higher turnover and a cost-cutting drive at Yorkshire Water helped Kelda Group beat market expectations, but the weak dollar gives a wet look to its US arm, Aquarion.
On the rumour front, there is no foundation to speculation that Bradford-based Kelda is planning to buy its rival Northumbrian Water.
Kelda chief executive Kevin Whiteman says the story is an old chestnut that comes up every six months or so and is beginning to irritate him.
Profit at Aquarion, one of the ten largest investor-owned water utilities in the US and the largest privately owned utility in New England, fell 13% to £17.1 million on 4.9% lower sales of £48.6 million.
Aquarion’s customers include 211,000 homes and businesses, around 677,000 people in Connecticut, New York, Massachusetts and New Hampshire. Almost all the decline was due to the weakness of the US dollar, which continues to knock against its 12-year lows.
Britain's number five water supplier supplies over 4.8 million people in the UK and lifted group turnover 5.5% to £378.6 million in the six months to 30 September against £358.8 million last time.
Profit before tax and exceptional items was £107.9 million against £99.7 million in the first half of 2003, an 8.2% rise. The consensus figure from 14 analysts was £102 million.
Kelda’s dividend is 8.34p, up 3%. The shares added 1p to 566p.
Today’s figures are adjusted to take account of the sale in August 2003 of Kelda’s 46% share of the landfill operator Waste Recycling Group, which produced a one-off profit of £17.1 million and saved interest charges of £4 million. Group net debt is now £1.68 billion against £1.71 billion a year ago.
Yorkshire Water operating profits rose 7.4% to £136.9 million on 5.1% higher sales of £316.2 million.
Kelda’s non-regulated businesses, Yorkshire Water Projects, Loop Customer Management and Keyland Developments, had an excellent first half turning over £40.3 million, an increase of 157%.
It did rather better than its rivals in the water sector over its negotiations with the regulator Ofwat on the capping of price rises up until 2010.
The company wanted to raise its annual bills 4.3% above the rate of inflation and has accepted 3.9%. By 2010 the average bill of its household customers will be 18% higher at £288.
In return Kelda is committed to investing £1.7 billion in its infrastructure, £1.45 billion of it between now and 2010.