Thames Water has reported a 24% fall in pre-tax profit for the six months to 30 September, after heavy spending on dealing with leaky pipes and drought.
Thames Water is renewing 1,000 miles of Victorian mains
Pre-tax profit was £133.3m, while operating costs rose 13% to £512m.
Earlier this year, Thames narrowly avoided being fined by industry regulator Ofwat, after it missed its annual target for reducing water leaks.
In October, its German owner, RWE, sold the group to a consortium led by Australian bank Macquarie for £8bn.
"This has been a challenging time for the business," said Thames Water managing director Jeremy Pelczer.
"While Thames Water is not alone in suffering the effects of rising energy costs, the company has also had to bear the costs of dealing with the sustained drought, caused by 19 months of below average rainfall."
Thames is in the middle of a multi-million pound project to replace 1,000 miles of Victorian water pipes in London, many of which are more than 150 years old.