- Severn Trent shares up 9% year-to-date
- SSE shares up 11% year-to-date
- Record year for Severn Trent
Shares in utility companies Severn Trent (SVT) and SSE (SSE) made marginal gains in morning trading as investors turned to defensive stocks amid global trade tariffs concerns.
Both companies were also reporting their results for the year ending 31 March.
Severn Trent reported a 15.3% rise in pre-tax profit to £590.2 million and said it had been a ‘record year with a new era of growth’.
The UK water company gave an upbeat earnings outlook forecasting adjusted EPS (earnings per share) doubling between 2025 and 2028 and guided operational outperformance of £300 million across five years.
The company said it had secured a regulatory outcome for AMP8 delivering 59% regulatory capital value growth by 2030.
AMP8 is a regulatory cycle set by the water services regulation authority Ofwat that focuses on improving efficiency, service quality and resilience in the water sector.
Severn Trent shareholders were no doubt happy as the UK water company announced a 4.2% rise in full year dividend per ordinary share to 121.71p.
Liv Garfield, Severn Trent’s CEO said: ‘Our strong operational and environmental performance has been made possible by our financial strength.
‘The £1 billion equity raise we secured ahead of this five-year business cycle, combined with strong financing and cost control, has given us the firepower to invest in our growth plan and will see us create 7,000 new jobs in our communities and through our supply chain.’
SSE CUTS INVESTMENT
Meanwhile, it was not good news for energy provider SSE which cut its five-year investment expectations by £3 billion to around £17.5 billion.
The company said this reflected ‘financial discipline in a changing macro environment across the energy businesses.’
Pre-tax profit was 26% lower for the year ending 31 March at £2.1 billion.
SSE also said it was unlikely to meet its 2030 renewable goal set out by the UK government’s net zero plans.
SEEKING SOLACE IN DEFENSIVE STOCKS
Russ Mould, investment director at AJ Bell said: ‘Updates from Severn Trent and SSE were well received by the market. The utilities sector has found itself the centre of attention in recent months as investors look to avoid the drama associated with a global trade war and seek solace in defensive areas.
‘Water company Severn Trent might lack the go-go growth associated with big name US tech stocks, but it is delivering the kind of performance many businesses can only dream of. Profits and dividends are going up, it is creating new jobs, and demand for its services is unaffected by any fluctuations in the economy.
‘Renewable energy generator SSE is a bit less defensive as it is subject to shifting weather patterns, but the company remains upbeat.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
