Severn Trent Plc (LSE:SVT) said it has made a solid start to the new regulatory cycle, with operational and environmental metrics progressing in line with internal targets and financial performance matching expectations. Supported by greater insourcing and the accelerated rollout of key programmes, the company now expects annual capital expenditure to reach the top of its previously guided £1.7 billion to £1.9 billion range — the largest investment commitment in its history.
The group forecasts at least £40 million in benefits this year from outcome delivery incentives and price control deliverables. It also anticipates securing a four-star rating under the Environmental Performance Assessment for the seventh year in a row, underlining its focus on environmental standards and service reliability.
Chief executive James Jesic said the investment programme is advancing well and reiterated the outlook provided at interim results. He also welcomed the Government’s recent water sector White Paper as a constructive development, noting that further regulatory clarity is expected later in the year.
From an investment standpoint, sentiment on recent earnings calls has been positive and technical indicators remain supportive. While the company’s balance sheet reflects relatively high leverage and negative free cash flow, overall trading performance remains resilient. Valuation levels appear reasonable, with an attractive dividend yield contributing to a steady investment case.
More about Severn Trent
Severn Trent is a UK-regulated provider of water and wastewater services, operating within Ofwat’s regulatory framework. Its returns and operational objectives are shaped by capital investment allowances, outcome delivery incentives and price control mechanisms, with a strategic emphasis on environmental performance and reliable service delivery for customers and communities.
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