Severn raises cost-cutting target

SEVERN Trent has raised its five-year cost-cutting target by £5m to £75m after reporting flat profits from its regulatory operations but unveiling a higher-than-expected dividend.

Chief executive Robert Walker said the revised savings goal, which compares with the regulator's target for Severn of £60m in the five years to 2005, would be achieved largely through the use of technology and would not lead to further job losses. Severn has cut 1,200 jobs in the past two years.

But he said ongoing cost pressures and flat prices would make the current year 'challenging'. Pre-tax profit rose 5% to £216.3m in the year to 31 March, enabling Severn to pay a full-year dividend of 45.9p a share.

The water assets generated a £334.1m profit before interest and tax, up 1.1%. The Biffa waste management arm's contribution jumped 60% to £73m.