Severn Trent has nearly tripled its profits even as the FTSE 100 water company said it had failed to meet a drinking water risk standard.
The company, which serves 4.7 million customers stretching from Bristol and mid-Wales to the Humber, said it would be “in penalty this year” over a measure of water quality known as the compliance risk index (CRI).
Water companies have come under close scrutiny over pollution and water quality in recent years, as politicians have accused the sector of not investing enough in vital infrastructure even as shareholders made impressive returns.
Several other water companies are under severe financial strain as they struggle under big debt loads. Thames Water, which serves London and the south-east of England, is negotiating a £3bn emergency funding package as it tries to raise more equity, while to the capital’s south, Southern Water is seeking to borrow £4bn.
However, Severn Trent’s financial position is stronger, and it cut its debt servicing costs during the half year. Severn’s profits before tax rose to £192m in the six months to the end of September, nearly triple the £71m it made in the same period last year.
The failing relates to the company’s site at Strensham, Worcestershire, Severn Trent said. It added that it expected “significant improvement” from next year because of “our biggest ever ultraviolet disinfection scheme”.
Severn did not disclose the nature of the “asset failure” that led to the missed target. Ultraviolet light is used to eliminate bacteria and viruses. The CRI incorporates risks of a broad range of pollutants, including heavy metals and toxic chemicals.
The company said it was in the middle of its largest ever year of capital investment with planned spending of up to £1.5bn. It also increased returns to shareholders by 4.2% to about £147m for the year to March.
Liv Garfield, Severn Trent’s chief executive, said she was “proud of what we have delivered for customers”, but added that “we know there is more to do”.
Garfield has been among the water company chief executives criticised for high pay even as the industry has struggled to keep Britain’s waterways clean. She received £3.2m in 2024, despite the company being fined £2m for spilling 260m litres of sewage into the River Trent.
Severn’s share price rose 3.6% on Wednesday morning.
