Water company suffers 10% fall

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NORTHUMBRIAN Water's diversification has continued to cause problems, dragging down profits by 10 per cent to pounds 62.8m in the year to 31 March.

The figures were struck after an pounds 8.4m charge for closing Amec, the pipe maintenance operation built up through acquisition in the early 1990s.

Northumbrian, smallest of the privatised water companies, is withdrawing from the underground asset management market. It suffered a pre-tax loss of pounds 12.4m.

Sir Frederick Holliday, chairman, said in a prepared statement that failure of the construction market to recover also led to losses in the drilling and exploration business but that these problems were being sorted out.

The company refused to discuss its results because of the impending announcement of its 'K' factor - the rate by which Northumbrian may raise prices above inflation.

Northumbrian's annual capital expenditure programme, about pounds 80m, is expected to rise rapidly over the next five years.

There is some concern that the water industry watchdog, Ofwat, will not raise the K factor as high as the company would like.

Mr Holliday said the water and sewerage business had a successful year, making operating profits of pounds 80.8m, up 21 per cent.

He added: 'For our other businesses the year was even more challenging, and following some restructuring we are confident that we now have a collection of businesses . . . that are sound and manageable.'

Northumbrian's recently bought waste transport and collection business, Enviricare, contributed a first-time profit of pounds 3.9m.

A final dividend of 16.2p makes 24.3p for the year. Turnover rose 18.4 per cent to pounds 298.6m, while operating profits were pounds 77.6m, up 11.3 per cent.

Investment income of pounds 9.8m included an pounds 8.6m return from a short-term investment realised in May 1992. The shares were up 1p at 568p.