United Utilities Group PLC (LSE:UU.) said household consumption remains high as many customers continue to work from home and consumption from businesses has started to return to pre-Covid levels as restrictions are lifted.
The water supplier said current trading is in line with expectations, while revenue in the first half is expected to rise 4% as higher consumption offsets the planned regulatory revenue reduction.
The FTSE 100 group said interim underlying operating profit will also be above last year’s level thanks to higher revenue and cost-saving measures, although underlying operating costs have been widened by inflation.
Underlying net finance expense for the first half will be £25mln higher than last year, due to inflation applied to the group's index-linked debt.
The introduction of capital allowances super deductions announced in the Chancellor's Budget is expected to reduce the group's current tax charge significantly in 2021/22 and result in an underlying tax rate of around 5% in the period.
United Utilities will incur in a deferred tax charge of £380mln, while net debt will be slightly higher due to ongoing investment to improve the service.
The firm has 7mln customers in the North West, 200,000 of which are part of affordability schemes.