Southern Water half-year operating profit back in positive territory

Southern Water made an operating profit of £3.8m in the half year to 30 September 2024, recovering from an £8.5m loss in the same period last year.

The loss before tax remained negative at £97.8m, but improved compared to a loss of £127.7m at September 2023.

Capital expenditure increased by 26.5% to £459.7m as the company invested to improve performance and asset resilience. It improved some aspects of its performance including leakage, sewer collapses, internal sewer floods (-25%) and supply interruptions, but saw deterioration in water quality, pace of mains repairs and treatment works compliance.

On financing, chief executive Lawrence Gosden said: “The credit ratings agencies recognise that we have strong liquidity through to March 2026, having secured a total of £1.5bn of new debt financing over the past 12 months, including a £300m bond issue completed earlier this month. However [with Moody’s rating under review for downgrade and the others on Negative CreditWatch/Rating Watch], a future downgrade to a sub-investment grade credit rating would result in a breach of the company’s licence and borrowing covenants. Given the recent downgrades and market sentiment, debt refinancing or equity raising required before March 2026 represents a material uncertainty on the company’s ability to continue as a going concern.”