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Dry summer hits United Utilities' fiscal 2018 earnings

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(Reuters) – Water supplier United Utilities said on Tuesday its annual operating earnings would be hit by costs stemming from dry weather in the summer of 2018 although it still expected underlying profit to rise compared to the previous year.

The company also forecast higher revenue for the year ending March 31 as utilities in Britain benefit from outcome delivery incentives (ODIs) paid by regulator Ofwat for meeting or exceeding targets including project completions.

United Utilities, which supplies water to 3 million homes and 200,000 businesses in the north-west of England, said trading was in line with its expectations for the year ending in March 31.

But the FTSE 100-listed company added that adjusted items, which includes costs due to internal restructuring and the dry conditions which have afflicted some parts of the UK in recent years, would total 52 million pounds for the year.

United Utilities warned in November that an extreme period of hot and dry weather during the summer had caused significant strain on its water resources and network, with reservoir levels running “extremely low”.

The extreme conditions caused cracked pipelines last year, leading to fines from Ofwat for failing to take adequate measures to control water leakages.

United Utilities said its underlying net finance expenses would be 45 million lower than a year earlier as inflation dipped but net debt as of the end of March would see a small rise compared to Sept. 30 as it invests in its asset base.

(Reporting by Muvija M in Bengaluru; editing by Patrick Graham)

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