READING: Thames Water today pledged a “radical” turnaround but warned that it would take time to deliver change after announcing a slump in profits and mounting debt during its first half.
Profit after tax tumbled 57% to £172.3 million in the six months to the end of September despite an emergency financial rescue, UK’s biggest water supplier said in a results statement.
Net debt grew 7% to £14.74 billion for the company that supplies more than 16 million homes and businesses in London and elsewhere in the southern UK.
“Our financial performance…needs to improve. It is clear that immediate and radical action is required,” group interim co-chief executive officers Cathryn Ross and Alastair Cochran said in today’s statement.
However, they warned that “turning around Thames will take time. We simply cannot do everything that our customers and stakeholders wish to see at a pace and for a price that everyone would like”.
The pair replaced Sarah Bentley, who resigned in June.
The following month, Thames announced a significant financial injection from shareholders that kept it afloat.
On the eve of today’s results update, auditors warned that the company risked running out of money by April without further financial support.
Thames, reported to have been at risk of renationalisation without July’s bailout, saw shareholders provide funding worth £750 million.
However, it fell short of the £1 billion the group sought on top of £500 million secured from shareholders in March.
Thames has noted that it would need a further £2.5 billion of support between 2025 and 2030.
The indebted company and its peers in the UK and Wales have announced plans to nearly double infrastructure investment as they seek to reduce leaks and cut river sewage, triggering higher bills for customers.
Companies will together spend £96 billion on water and sewage infrastructure between 2025 and 2030, a 90% increase on the current five-year period.
Thames Water’s co-CEOs today acknowledged that “performance needs to improve, including some areas of operational and environmental performance that matter most to our customers and communities”.
UK regulators recently ordered water companies in the UK and Wales to return a combined £114 million to customers for failing to meet performance targets, including over river pollution.
Thames Water was ordered to return the highest amount at £101 million.
The British government in July announced that any company or individual polluting the country’s rivers and other ecosystems would be liable for unlimited fines.