Severn Trent plc (LON: SVT) said on Thursday that its profit was lower in the fiscal first half than the same period last year. The company attributed the decline to the ongoing Coronavirus pandemic that weighed on water consumption in recent months.
Severn Trent shares are currently about 1% down on the intraday chart on Thursday. On a year to date basis, it is close to 2% down in the stock market after recovering more than 20% since March. The insight into the price action should come in handy if you are interested in investing in the stock market.
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Severn Trent reports a 21% decline in underlying profit
Severn Trent reported £126.5 million of pre-tax profit in the six months that concluded on 30th September. In comparison, its profit was recorded at a higher £180.7 million in H1 of the prior year. In separate news from the UK, pub operator Fuller, Smith & Turner plc said on Thursday that it swung to a loss in H1 due to the COVID-19 crisis.
Severn Trent also revealed a 21% year over year decline in its underlying profit before interest and taxes to £225.6 million. The water services company said its turnover saw a 2.5% annualised decline in the fiscal first half to £887.6 million. The Coventry-based company valued the COVID-19 related hit to its revenue at £33 million in H1.
The novel flu-like virus has so far infected more than 1.5 million people in the United Kingdom and caused over 56 thousand deaths. Severn Trent has forecast an up to £85 million hit to its revenue in the first half due to the Coronavirus pandemic.
CEO Liv Garfield’s comments on Thursday
CEO Liv Garfield commented on the financial update on Thursday and said:
“The investment we made at the end of AMP6 in assets, technology and our people is paying off, with around 80% of our ODIs across waste, water and the environment in positive territory, giving us confidence in a full-year outturn of at least £25 million of ODI reward.”
The board declared 40.63 pence per share of interim dividend on Thursday versus 40.03 pence per share in the same period last year. Severn Trent expressed plans of taking on 500 people earlier this week as part of the government’s new kickstart scheme.
At the time of writing, Severn Trent is valued at £5.89 billion and has a price to earnings ratio of 37.15.