United Utilities Group PLC (LON:UU) warned of lower revenue and profit expectations for the year as it is seeing lower consumption and increasing inflation.
Water consumption is expected to be down 1% in the first half of the year and is expected to continue into the second half of the year, which will mean revenue is expected to be lower than the guidance given in May.
Furthermore, cash operating costs are higher than expected due to rising chemicals and power prices, with a £65mln increase in the first half and the same factors anticipated to drag on into the second half.
Following the government’s announcement on freezing energy bills, the FTSE 100 group said it would “await clarity” on the impact of the scheme.
An increase in group net debt is also guided for the 30 September half-year stage compared with the position at the end of March.
It said this largely reflects “the impact of higher inflation leading to a higher indexation of principal on our index-linked debt along with the group's ongoing investment in its asset base, partly offset by the expected receipt of proceeds in relation to the previously announced sale of our renewable energy business”.
UU shares fell 2.5% to 919p on Tuesday morning, hitting lows not seen for over 18 months.