Water giant United Utilities forecasted to hit higher profits

United Utilities, the UK’s largest listed water firm, is forecasted to post a rise in earnings and profits when it reveals its first-half results later this week.

According to City estimates the FTSE 100 group is set to report earnings before interest and tax (EBIT) of £360m in the first six months of the financial year, rising from £344m when compared with the same period last year.

“Utility stocks aren’t meant to be exciting, however they’re gearing up for what looks like a tougher regulatory period from 2020 to 2025, courtesy of Ofwat. Heavy regulation ensures some form of return for investors is nigh on guaranteed, although only the regulator has the power to decide what those returns can be,” according to George Salmon, an equity analyst at Hargreaves Lansdown.

Salmon added: “United Utilities has already ramped up spending, and has confirmed plans to introduce ‘real terms’ price reductions of a shade over 10 per cent. If the regulator says more action is needed, investors would be forgiven for wondering if the attractive policy of increasing the dividend by at least the rate of retail price index (RPI) will continue past 2020.”

The news comes several weeks after the group, which manages much of the UK’s north west water system, signed a deal with a Canadian tech firm to rollout artificial intelligene (AI) across its network.