Wednesday preview: Severn Trent profits set to take a dip

29th May 2012 14:09

It's a case of 'water, water' everywhere' as Severn Trent follows hot on the heels of fellow water supplier Pennon with its full year results.The company said in its third quarter update that it was trading in line with expectations, and utilities are not, by nature, the most volatile of companies, so few surprises are expected.Tina Cook at broker Charles Stanley is predicting adjusted profit before tax of £273m, down from £289m the year before. She forecasts earnings per share of 85.0p, down from 105.1p the year before, and a hike in the full year dividend to 70.1p from 65.1p in the preceding year.Group revenue is seen rising to £1,785m, higher than the market consensus forecast of £1,765m, and operating profit is predicted by the broker to be around £504m on an underlying basis, versus £519m a year earlier. At Severn Trent Water, "allowed price increases of 4.7% (incl. inflation) are expected to be offset by lower demand, higher operating costs, and capital expenditure at £450m - £470m (incl. infrastructure renewals expenditure of £120m-£130m)," Cook predicts."Bad debts are expected to remain stable at 2.2% of turnover. We forecast underlying operating profit of £496m for the core water company (fiscal 201111 £504m)," she added.Of more interest to the man in the street - or, at least, the street served by Severn Trent - the company is expected to meet its 2011/12 leakage target, which it missed the year before because of extreme weather conditions."There is likely to be some interest in recent media coverage of plans for SVT [Severn trent] to sell water to Anglian Water, which introduced a hosepipe ban," Cook suggests.On the economic front, UK mortgage approvals numbers for April are expected to show a small increase to 50,100 from 49,900 in March.Net consumer credit is forecast to ease to £0.2bn in April from £0.4bn the month before.INTERIMSHiwave Technologies, PhytopharmINTERIM EX-DIVIDEND DATEA&J Mucklow Group, Baronsmead VCT, Baronsmead VCT 2, British Empire Securities & General Trust, Britvic, Daily Mail and General Trust, Hargreave Hale AIM VCT 1, Keystone Inv Trust, Local Shopping REIT, London Security, Lowland Investment Co, Majedie Investments, Marston's, Matchtech Group, Town Centre SecuritiesQUARTERLY EX-DIVIDEND DATECanaccord Financial Inc., Energy XXI (Bermuda) (Di), Premier Energy & Water Trust, Schlumberger Ltd.INTERNATIONAL ECONOMIC ANNOUNCEMENTSBusiness Climate Indicator (EU) (10:00)Crude Oil Inventories (US) (15:30)Economic Sentiment Indicator (EU) (10:00)M3 Money Supply (EU) (09:00)MBA Mortgage Applications (US) (12:00)Pending Homes Sales (US) (15:00)PMI Retail (EU) (09:00)PMI Retail (GER) (08:55)FINALSB.P. Marsh & Partners, GB Group, Severn Trent, Straight, Telford HomesANNUAL REPORTRotalaSPECIAL EX-DIVIDEND PAYMENT DATEOctopus Eclipse VCT 2EGMSIrish Continental Group Units, Skywest Airlines Ltd.AGMSCentamin (DI), EnQuest, Gulfsands Petroleum, Hellenic Carriers Ltd., Hiscox Ltd., Irish Continental Group Units, Judges Scientific, London & Associated Properties, Northbridge Industrial Services, Proven Planned Exit VCT, Proven Planned Exit VCT A Shares, Raven Russia Ltd, Rotala, Royal Bank of Scotland Group, Stada Arzneimittel AGUK ECONOMIC ANNOUNCEMENTSConsumer Credit (09:30)M4 Money Supply (09:30)M4 Sterling Lending (09:30)Mortgage Approvals (09:30)Trends in Lending (09:30)FINAL DIVIDEND PAYMENT DATEMaven Income & Growth 3 VCT, Maven Income & Growth 4 VCT, Maven Income & Growth 4 VCT 'S' Shares, SIGFINAL EX-DIVIDEND DATEAmec, BlackRock Smaller Companies Trust, BrainJuicer Group, British American Inv Trust, Cable & Wireless Communications, Capital Shopping Centres Group, Christie Group, Cupid, Dillistone Group, Downing Planned Exit VCT 6, Downing Planned Exit VCT 7, Downing Planned Exit VCT 8, Downing Planned Exit VCT 9, Graphite Enterprise Trust, Great Portland Estates, Headlam Group, Hill & Smith Holdings, Hilton Food Group, Huntsworth, Intermediate Capital Group, Marks & Spencer Group, Martin Currie Global Portfolio Trust, National Grid, Nationwide Accident Repair Services, Networkers International, Octopus Eclipse VCT 2, Pacific Assets Trust, Rotala, S & U, Scottish Mortgage Inv Trust, Slingsby H.C, Spectris, Staffline Group, Tarsus Group, XaarQ1Frutarom Industries Ltd GDR (Reg S), National Bank of Greece ADR JH