Water firms to hand out £550m to shareholders
Two of Britain’s largest water companies are expected to pay out £550m to shareholders – despite profits being squeezed by higher borrowing costs
Under Pressure: Severn Trent’s Liv Garfield
Two of Britain’s largest water companies are expected to pay out £550 million to shareholders, despite profits being washed away by higher borrowing costs.
Severn Trent, led by Liv Garfield, and United Utilities are under pressure to curb dividends and bonuses amid rising public anger over the dumping of millions of tons of sewage into rivers and seas.
Industry bosses apologized last week for not making improvements to Victorian infrastructure, allowing the spills.
But United Utilities, the biggest polluter, is set to pay an estimated £310 million in dividends, up 5 per cent from last year, despite predictions it will plunge into the red.
The monopolistic water supplier for North West England has been hit by a rise in interest payments on its £8 billion mountain of debt.
About half of this is linked to inflation, which has risen to double digits since the Russian invasion of Ukraine, driving energy costs skyrocketing. Analysts say these interest payments have risen by more than half, leading to a pre-tax loss of £35 million. United made £302 million last year.
Profit at Severn Trent, also reporting this week, is expected to more than halve from £276 million to £136 million, and dividends to rise 5 percent to £270 million.
According to the Environment Agency, there were an average of 825 discharges per day in England’s waterways, with a total duration of 1.75 million hours by 2022.
United was the worst offender, responsible for 40 percent of the mostly legal discharges that keep sewage from reaching homes and businesses.
Outgoing United boss Steve Mogford received a bonus of £727,000 last year as part of his £3.2 million salary package. Garfield took in £3.9 million.
Both companies have a top four-star rating from the Environment Agency, but last night’s activists reacted angrily to the news.
“We need to completely rethink the way water is regulated and financed,” said Jamie Woodward, a professor of physical geography at the University of Manchester.
“Clients expect revenue from bills to be invested in infrastructure to build reservoirs, fix leaks and address the sewage scandal.
“They don’t expect companies to pay generous dividends to shareholders on the other side of the world who don’t care about the serious environmental impact of pollution.”