Thames Water, the prominent UK water company catering to approximately 15 million households across London and nearby regions, has initiated a comprehensive three-year plan for a significant turnaround. This endeavor comes as the utility giant disclosed a noteworthy decline in its profits during the initial half of the year.
In the six months leading up to September 30, Thames Water recorded a 54% plunge in pre-tax profits, totaling £246 million. Despite this, the company reported a 12% surge in revenues, reaching £1.2 billion within the same period.
Addressing the concerning figures, the interim co-CEOs, Cathryn Ross and Alastair Cochran, acknowledged the existing performance gaps, emphasizing the necessity for an extended timeline to rectify these issues. They stressed the challenges in meeting the diverse expectations of customers and stakeholders, highlighting the constraints in terms of pace and cost.
Several financial strains have contributed to Thames Water’s recent hurdles, notably the amplified financing expenses linked to its substantial £14.7 billion debt portfolio. Additionally, escalating labor and energy costs have further intensified the situation.
Last week, the Financial Times exposed Thames Water’s portrayal of a shareholder loan to its parent company as fresh equity, leading to heightened apprehensions regarding the water utility’s financial stability. However, Thames Water contends that describing the £500 million loan as equity is an accurate representation.
As of the end of September, Thames Water reported a total liquidity of £3.5 billion, drawing support from an array of stakeholders comprising sovereign wealth funds, private equity firms, and pension funds.
The company encountered a significant setback in June following the abrupt departure of Sarah Bentley, the former chief executive, amid internal conflicts within the boardroom.
Looking ahead, Thames Water is pursuing approval from Ofwat, the water regulator, to implement a substantial increase of about 40% in customer bills by 2030, pre-inflation. This proposal remains under scrutiny and is subject to