Tacking leakage drives Welsh Water half-year operating profit into the red

Welsh Water’s half-year results saw operating profit move into a loss of £1.3m, compared to a profit of £37.2m at September 2023. Infrastructure renewals expenditure increased by 54%, due mainly to significantly higher volumes of leakage repairs to support delivery of leakage performance commitments. It delivered its largest ever half-year capital investment between April and September 2024, totalling £295m.

Welsh Water recognised clearly that there are key areas where its performance is falling short of targets –including number of pollution incidents, levels of leakage, and the length of time customers experience interruptions to water supplies. The company is rated as 2 star in its Environmental Performance Assessment, and is categorised by Ofwat as a company that is ‘Lagging Behind’. It recorded five serious pollution incidents up to September 2024 and the overall number of pollution incidents (per 10,000km of sewer) was 27.59, which is worse than last year at 18.48 and behind its target of 16.28.

Gearing has increased to 61% since March 2024 from 60% at 30 September 2023. Management pointed out that its credit ratings continue to be amongst the highest in the sector at A-/A3/A for senior Class B debt from Standard and Poor’s, Moody’s and Fitch respectively.