Thames Water’s profits slumped by over 60 per cent in the last six months, as ‘extreme’ weather pushed up costs and penalties took their toll.
During the Beast from the East in March, nearly 75,000 Thames Water customers were ‘in some way affected by supply outages.’ The group admitted: ‘We didn’t cover ourselves in glory’ during the incident.
In the six months to 30 September, the number of customers who submitted a complaint to Thames Water surged to 11,083, up from 8,242 a year earlier.
Falling: Thames Water’s profits slumped by over 60 per cent in the last six months
During the cold spell in March, freezing temperatures cracked pipes in Thames Water’s system, pushing up its repair bill in the months after. Months later, faced with a hot summer, extra water demand to counter the heat then burst more pipes with the increased pressure from the extra litres pumped, as well as increasing the cost of treating the water.
Chief executive Steve Robertson said: ‘During the intense summer heatwave we worked tirelessly to protect our customers from supply restrictions.
‘However, along with the impact of the Beast from the East, it has delayed our progress on leakage and other performance measures.’
The group said it was still suffering the effects of the heatwave, with visible leaks springing up, highlighting the ‘lasting impact of extreme weather on our network.’
Earlier this year, Mr Robertson agreed to forgo bonuses for the next two years after the company forked out £120million in compensation to customers and penalties for missing targets to cut leaks.
But, under overhauled pay plans unveiled in the group’s annual report, Thames Water revealed it will pay out a maximum £3.75million to Mr Robertson in 2020 if all targets on leaks and pollution are met.
Outages: Nearly 75,000 Thames Water customers were ‘in some way affected by supply outages’ during the Beast from the East
None of the 2020 bonus will be linked to financial performance, in a shift away from traditional corporate pay deals.
Underlying pre-tax profits, which exclude the gains on the 2017 sale of Thames Water’s non-household business and wastewater revenues from the Thames Tideway Tunnel, which Thames Water passes on, dropped from £116million to £43million.
The group’s underlying revenue for the six month period ended 30 September fell by 2.8 per cent to just over £1billion.
Explaining the drop in revenue, the group said: ‘The decrease has been driven by bringing forward £40 million of penalties incurred during years one and two of the current regulatory period and an increase in the number of vacant properties, offset by inflation increases.’
The number of pollution incidents at the group rose to 217, up from 202 a year earlier.
The group said it was aiming to install 700,000 smart meters between 2020 and 2025.
Complaints: The number of customers who submitted a complaint to Thames Water surged to 11,083
Looking ahead to Brexit, the group said: ‘To mitigate any potential impact on our operations and our customers we’ve been working with our supply chain, peers and industry bodies to understand where potential risks may lie.
‘We have identified some critical areas of our supply chain which could affect our business in the event of a ‘no-deal’, and we’re working on appropriate plans to protect the delivery of our services.’
Mr Robertson told the Press Association that the group is ‘working closely’ with the department for Environment, Food and Rural Affairs as the industry scrambles to ensure it has enough supplies of chemicals to treat drinking water.
No dividends, to external shareholders or to other group companies, were paid by Thames Water during the six month period.