Severn Trent hit by flood costs

After the cost of dealing with the summer floods, Severn Trent has made a pre-tax profit of £149.5 million in the half year to 30 September, down 6.4% compared with the same period 12 months ago.

Severe flooding affected the regions of Tewkesbury, Gloucester and Cheltenham and cost the group £23.2 million. It hopes to be able to reclaim between £10-£20 million from its insurance.

The floods were the worst to hit Britain for 60 years this summer and killed at least 9 people, delayed harvests and caused over £2 billion of damage to homes and businesses.

However, the group commended a ‘magnificent response’ which saw water supplies restored to all homes within 17 days. The utility company said it is continuing to review long-term damage to over 150 waste water sites in the areas affected by the floods.

Shares in the company rose 2% this morning to £14.91, valuing the group at approximately £3.4 billion.

Severn Trent is confident of achieving its full-year target of reducing leakage to 505 million litres a day and said it continues with plans to be more efficient and increase standards.

The group added that it was on course to meet the water regulator’s determination for full-year operating costs.

Analysts at UBS said they were a good set of results, best value in an M&A driven sector.

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