Severn Trent profit slips

The company, which supplies customers in South Yorkshire, said underlying pre-tax profits fell 1.9 per cent to £155m, with revenue 2.1 per cent higher at £886m.

Analysts were expecting pre-tax profits of £157m.

The difficult economic backdrop hit its water services unit, which provides water and waste treatment in Europe and North America, with Italy being particularly hard hit, the company said.

“While the fundamental long term drivers in our markets remain strong, the first six months were a continuation of the challenging economic and operating environments we saw in the second half of last year,” it said in reference to the services unit.

The firm raised its interim dividend to 28.04p from 26.04p a year ago and remained committed to its dividend policy of three per cent above retail price inflation, said Severn Trent chief executive Tony Wray.

The company provides water and sewerage services to over 3.7 million households and businesses.

Earlier this week, larger peer United Utilities reported a lower profit hurt by higher capital spending, while Pennon shares slipped on fears of a slowdown at its key waste management unit Viridor.