Severn Trent annual profits fall

Severn Trent says firms are cutting back on their water use

Severn Trent has said rising bad debt among customers and firms going bust or using less water in the recession had eaten into its annual profits.

The firm, which serves more than eight million people, saw pre-tax profits in the year to the end of March fall by 6% to £273.5m.

Growing insolvencies meant that bad debt grew by £6.6m to £34m - more than 2% of its turnover - it said.

And lower commercial consumption cost it £20.8m in lost income.

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.

It had already warned that the closure of High Street stores including Woolworths and MFI had also reduced water usage.

In April, Severn submitted final plans to the industry regulator Ofwat for 2010 to 2015, which it said would lead to average household bills rising 4% over the period.

"We are engaged with Ofwat in reviewing the plan. We believe it to be a high quality, holistic and balanced plan that has customers at its heart," chief executive Tony Wray said.