Recession hits Severn Trent sales

Severn Trent says firms are cutting back on their water use

Severn Trent has warned that its latest annual revenues will be up to £25m less than the year before, because of firms using less water in the recession.

The company supplies water across the Midlands and parts of Wales, a region that includes a number of Jaguar Land Rover plants that have cut production.

Severn Trent said the closure of High Street stores including Woolworths and MFI had also reduced water usage.

Severn Trent's financial year runs until the end of March.

The firm said it now expected reduced water consumption by firms across its region to cut its revenues by between £20m and £25m from the previous financial year.

Severn Trent had previously said it expected a drop of between £12m and £15m from a year earlier.

'Bad for sector'

"Overall we think the news is negative, not just for Severn Trent, but for sector sentiment," said broker Credit Suisse.

Shares in the firm were down 4% or 46 pence to 1141p in afternoon trading in London. Its decline also dragged down other water firms, such as United Utilities, Pennon and Northumbrian Water.

Electricity demand is also falling across the UK as a result of the recession, with firms either cutting back on their output and opening hours, or either shutting up shop for good.

The National Grid predicts that peak UK weekly electricity usage will fall by between 600 and 1,000 megawatts over the course of 2009. This is the equivalent output of one large power station.