United Utilities' pre-tax profits dip as AMP7 tariff cuts bite

Underlying profit before tax at United Utilities was down year on year 14% to £460 for the 12 months to 31 March 2021. The fall in underlying pre-tax income arose largely from an 18% drop in underlying operating profit to £602m offset by interest charges down by £58m from the previous year.

The reduction in underlying operating profit was principally an impact of a fall in revenue for the year of 2.8% to £1.86bn reflecting the impact of tariff reductions under PR19. A £22m increase in Infrastructure Renewals Expenses along with a £22m hike in depreciation off back-end capital expenditure in AMP6 also eroded operating income.

United Utilities’ financial year followed the industry-wide pattern of reduced business revenue offset by increased household consumption resulting from the Covid pandemic. Non household sales were down £47m while domestic revenue increased by the same amount.

An £85.3m gain from the disposal of of its stake in a joint venture in Estonia, Tallinn Water, with a profit of £37m was not included the underlying figures. A £5m share in profits from Tallinn Water was more than offset by a £14m share of losses in its non-household retail joint venture with Severn Trent Water, Water Plus.