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Severn Trent is benefiting from lower than expected debt repayments as a result of lower interest rates.
The company revealed in an interim management statement on Tuesday morning that it is delivering in line with expectations, apart from on net interest charges which are lower than predicted due to lower RPI and LIBOR rates.
It added that “very good progress” has been made on delivering efficiency savings across the group and operational costs are expected to be lower year on year due to the impact of “organisational changes and supply chain efficiencies”.
Severn Trent added that it has also made “a good start to our AMP6 capital programme”.
Wholesale totex is expected to be from £1,030 million to £1,060 million for 2015/16, and net capital expenditure is estimated to be £410 million to £430 million. The board estimates a further £125 million to £135 million of net infrastructure renewals expenditure over the year.
The update said there has been “no material change” to the group’s performance or outlook since its preliminary results in May, in which reported Severn Trent recorded an increase in turnover of 2.4 per cent to £1,518 million for the year 2014/15.
The company has also recently completed the sale of its water purification arm in a £62 million deal with Italian frim Industrie de Nora.
Whitman Howard analyst Angelos Anastasiou said “the group is performing well and progressing steadily”.
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