United Utilities Expects "Good Performance"


LONDON -- The shares of United Utilities advanced 10 pence to 750 pence during early London trade this morning after the company confirmed it was "confident of delivering a good underlying performance" for the year to March.

United Utilities, which supplies water to about 7 million people in North West England, also claimed today that it continues to be "on track to meet its 2010-2015 regulatory outperformance targets." Within today's statement, the FTSE 100 member admitted sales since October had increased at a rate "slightly below" the allowed regulated price rise for 2012/2013. The shortfall was blamed on the "on-going impact of a tough economic climate on commercial volumes."

United Utilities added that its capital expenditure for the current year would be £750 million and that its current net debt was similar to the £5.3 billion seen at the end of September.

Today's statement did not mention anything about the dividend, which United Utilities has previously indicated should grow annually by 2% plus the rate of inflation as measured by the Retail Price Index until 2015. Within November's half-year results, the group lifted its interim payout by 7% to 11.44 pence per share and the current-year payout is forecast to gain 7% as well to 34.4 pence per share.

The near-term yield is therefore 4.6%, which is greater than the 3.5% currently on offer from the FTSE 100 but less than the 5.7% provided by an alternative blue-chip utility share.

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