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United Utilities profit up
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December 10, 1999: 9:24 a.m. ET
Water company to increase dividend, cut jobs, spin off telecom unit
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LONDON (CNNfn) - Britain’s United Utilities posted a firm advance in earnings and raised its dividend Friday, sending shares in the water and electricity company soaring after recent weakness.
United also pledged to cut jobs and reduce costs, and announced plans to spin off its telecom arm, Norweb Telecom.
United, based in the north of England, posted a 12.3 percent rise in pretax profit to 487.8 million pounds in the six months ended Sept. 30.
Operating profit climbed 15.7 percent to 691 million pounds, while sales rose 5.9 percent to 2.28 billion pounds.
However it was the decision to boost its dividend by 2 percent that attracted buying interest in the stock that has slumped this year. United (UU-) shares rose 18 percent to 562 pence in midday trade, after having risen as high as 578 pence.
Shares in rival utilities Severn Trent (SVT) and Thames Water (TW) also climbed sharply.
Water stocks were hurt earlier this year after industry regulator Ofwat mandated price cuts, forcing United Utilities to reduce prices by 9.3 percent next year and knocking an estimated 240 million pounds from its sales base.
The price pressure has led a number of rival firms to cut their dividend and also led to warnings of large-scale job cuts to reduce costs. Some industry observers estimate that as many as 10,000 jobs could be lost, a quarter of the industry total.
United said it would announce job cuts in February in a bid to reduce its annual operating costs by 400 million pounds next year.
The plan to spin off its fast-growing telecom business also lured buyers as the company seeks to mimic the success of ScottishPower (SPW), which sold a minority stake in its Thus (THUS) unit earlier this year.
United said it would "aggressively” grow Norweb Telecom, whose sales climbed 75 percent to 37 million pounds in the latest reporting period. 
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