United Utilities Increases Dividend

United today reported half-year operating profit of £342 million, up 13% from half-year 2016. This is roughly in line with the 12% expected growth rate

Andrew Bischof 24 November, 2017 | 1:21PM

United Utilities (UU.) has increased its interim dividend by 2.2%, in line with management's policy of increasing the dividend in line with the U.K. retail price index. The utilities firm today reported half-year operating profit of £342 million, up 13% from half-year 2016. This is roughly in line with the 12% growth that equity analysts expect over the full year.

As a result, Morningstar equity analysts are reaffirming our £9 per share fair value estimate for United Utilities Group, along with our narrow economic moat and stable moat trend ratings.

The key driver of the operating profit growth is regulatory revenue increases and efficiencies. Revenue grew 3%, reflecting allowed regulatory revenue increases. Underlying operating costs were reduced by £9 million in the first half, despite rising inflation. Controllable costs are 10% below the 2010 level, reflecting good efficiency performance. Net profit grew 5.7% to £160 million, as earnings before tax growth was partially offset by a £29 million increase in finance expense due to higher inflation of the index-linked debt.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
United Utilities Group PLC860.80 GBX-0.81

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Andrew Bischof  

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