LONDON (ShareCast) - Water and sewerage services company Severn Trent said in a third-quarter update that it is on track to hit expectations this financial year, though inflation and taxes will lead to higher operating costs.
In line with its previous guidance for its regulated business, the company said consumption across its measured income base is expected to be slightly higher than last year as a result of warmer weather.

Operating expenditure continues to be in line with expectations for the year and in line with the level determined by Ofwat's asset management plans for the five-year planning period between 2010 and 2015.

"Operating costs are expected to rise year on year due to the impact of inflation and quasi taxes, partially offset by efficiency improvements," the company said.

The target for net capital expenditure remains at £530m-545m.

Meanwhile in the non-regulated business, top line growth is expected to moderate in the second half, but full-year profits will still meet forecasts, the company said.

Market consensus forecasts a group pre-tax profit of £284.2m for the year ending 31 March 2015, up from £282.7m the year before.

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