Severn Trent profits fall by 16%

Water company Severn Trent today posted a 16% drop in first half profit, hit by price reductions at its water unit, and said the outlook was mixed.

Severn Trent, which supplies water and sewerage services to over 3.7 million households in the Midlands and mid-Wales, reported an underlying pretax profit of £158 million for the six months to the end of September.

The company cut the interim dividend by 2.5% to 26.04 and introduced a new dividend policy for the period between 2011/12 and 2014/15.

"The board has decided that the dividend policy for Severn Trent for the period should be RPI plus 3 percent," the company said in a statement.

"In Severn Trent Services, we expect continued growth in the second half of the year. Water purification has maintained a strong order book, and operating services will continue to focus on cost control and delivery. The market for analytical services remains challenging."