Severn Trent: water company ups investor dividend despite bill, price and sewage spills increase - results

Severn Trent has increased its dividend to shareholders following a 20% rise in profits last year, despite sewage spills under the company’s watch growing by a third in 2023.

The FTSE-listed company, which supplies water to homes and businesses in the Midlands, boosted its final dividend by 9% to 70.1p per share, with profits reaching £201.3 million. The water company also announced it successfully raised £1 billion from investors in 2023.

Severn Trent was responsible for over 60,000 sewage spills last year, with those spill events lasting for more than 440,000 hours  – equivalent to around 50 years.

It said it is investing £450 million to improve 900 storm overflow points, about a third of the total across its infrastructure network, as part of a push to halve its average spill rate by 2030.

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Severn also said it had invested £1.2 billion this year to “continue improving performance levels”. However, it comes after the water company asked to increase bills by 35.7% over the next five years.

In its five-year plan submitted to Ofwat, Severn Trent wants to invest £12.9 billion and increase customer bills to £546. Between 2020 and 2025, the average annual bill for Severn Trent was £402.63.

The latest bill hike demands come ahead of a crucial meeting this week when the industry regulator Ofwat will decide what companies can charge between 2025 and 2030.

Liv Garfield, chief executive of Severn Trent, said: “I’m proud of the performance our brilliant teams have delivered this year, whether for our customers, the environment or the wider region.

“The extra £1 billion we raised from our investors will help us continue to transform the network, reducing spills, improving river health and providing our customers with the best and most reliable service.

“We are planning record levels of investment in the coming years, while also keeping bills the second lowest in the country. Our customers and the communities in which they live are at the heart of our business and we’re doing more than ever to ensure we have a positive economic, environmental and social impact across our region.”

Garfield faced heavy criticism earlier this week for her £3.2 million pay packet for 2023, which includes salary, bonuses and shares. Meanwhile, over the past four years she has earned nearly £13 million.

The news comes just a day after the owner of South West Water (SWW) announced it had seen increased annual earnings and a higher dividend for investors, even as it works to restore a safe water supply following a parasite outbreak in Devon.

Read more: Higher earnings for South West Water amid parasite contamination

Over 16,000 households and businesses in the Brixham area were instructed to boil their drinking water since 15 May due to the presence of cryptosporidium in the supply.

Cryptosporidium is a waterborne parasite that can cause symptoms like diarrhea and vomiting. The outbreak, likely caused by animal faeces entering a damaged pipe, has resulted in two hospitalisations and hundreds of illnesses.

In results out on Tuesday (21 May), the Pennon group courted further controversy after revealing it had increased its full-year dividend payout to investors, despite reducing it by £2.4 million after it was handed a record fine for sewage spills.

The figures also showed underlying operating profits lifted 8.6% to £166.3 million in the year to 31 March.