Revenue upset is forecast

Jul 23 2008 by Peter McCusker, The Journal

SEVERN Trent has said lower consumption among metered customers will impact revenues by up to £14m in this financial year.

However, the utility company said the decline in demand had not affected its overall performance, with current trading in line with expectations.

Severn added it was closely monitoring customer debt and cash collection, which it sees as a risk given the current economic climate. It said there had been no material deterioration in the year to date.

Yesterday’s trading update left shares 1% lower.

Severn said prices in its regulated water business increased by 5.07% from April 1, including inflation.

It added: “We have previously noted a decline in consumption across our measured income base. We expect this to continue and estimate it will impact revenues by around £12m to £14m in the current financial year.”

The company also said it expects to spend between £130m and £140m on infrastructure renewals during the financial year, which started in April.

Severn Trent serves a population of more than eight million people from the Bristol Channel to the Humber, and from mid-Wales to the East Midlands.