Severn Trent has reported impressive interim results for the first half of its financial year, ending September 30, 2025. The company experienced a remarkable 74% increase in adjusted earnings per share (EPS), prompting an upgrade to its outcome delivery incentive (ODI) forecast for the fiscal year 2026.
Financial Highlights
Key financial metrics from the report are as follows:
- Revenue: £1,436.9 million (up 18.0% year-over-year)
- Profit Before Interest and Tax (PBIT): £466.2 million (up 56.5%)
- Adjusted EPS: Increased to 101.0p from 58.0p
- Interim Dividend: Up 3.5% to 50.40p
Capital Investment and Infrastructure Growth
Severn Trent has significantly invested in its infrastructure. Capital investment was noted at £769.0 million for the first half of the fiscal year, representing a 15.5% increase from the previous year. This robust investment supports a projected 13% growth in the regulatory asset base, with an expected total of £15.4 billion by year-end.
Debt and Financial Management
In line with its strong financial position, Severn Trent raised over £900 million in new debt this year, achieving some of the lowest credit spreads in the sector. Despite net finance costs rising by 29.4% to £161.2 million due to inflation, the company continues to perform well.
ODI Guidance Upgrade
Severn Trent upgraded its ODI guidance, now forecasting net performance incentives of at least £40 million, an increase from the prior expectation of £25 million. This upgrade stems from improved metrics in leakage reduction and pollution control.
Future Projections
The company anticipates a 5-8% annual rise in operating costs and spending on infrastructure renewals, a better outlook than previously forecasted. Severn Trent remains committed to doubling its adjusted EPS by fiscal year 2028 from 112.1p in fiscal year 2025.
Leadership Transition
James Jesic is set to succeed Liv Garfield as CEO on January 1, 2026. Jesic, currently the Capital and Commercial Services Director and Managing Director of Hafren Dyfrdwy, will begin with a salary of £775,000. This is a decrease from Garfield’s salary of £873,200, with variable remuneration structured similarly to her package.
Environmental Performance
Severn Trent has maintained a four-star rating from environmental regulators for six consecutive years. The company is on track to meet around 90% of its ODI targets and is working to reduce storm overflow spills to approximately 13 by 2025, continuing its push for improved water quality and service.
Liv Garfield emphasized the exciting growth prospects ahead, stating that the company has made a solid start on its most significant investment program to date, which aims to enhance services for customers.
