Southern Water Suspends Dividend Until 2025
Southern Water, one of the largest water companies in the United Kingdom, has announced that it will suspend its dividend payments until 2025. This decision comes as the company faces increasing debt costs and a challenging economic environment.
Background of Southern Water
Southern Water is a water and wastewater company that serves over 4.3 million customers in the south of England. It is one of the largest water companies in the UK, with a turnover of £1.2 billion in 2020. The company is owned by a consortium of investors, including the Ontario Teachers’ Pension Plan, the Abu Dhabi Investment Authority, and the China Investment Corporation.
Rising Debt Costs
Southern Water has been struggling with rising debt costs in recent years. The company has taken on significant debt to finance its operations and investments, and the cost of servicing this debt has been increasing. In 2020, the company’s debt costs rose to £170 million, up from £140 million in 2019.
Challenging Economic Environment
The economic environment in the UK has been challenging in recent years. The country has been hit hard by the COVID-19 pandemic, and the economy has been struggling to recover. This has had a negative impact on Southern Water’s financial performance, as the company has seen a decline in revenue and profits.
Suspension of Dividend Payments
In light of these challenges, Southern Water has decided to suspend its dividend payments until 2025. The company had previously paid out a dividend of £0.30 per share in 2020, but this will no longer be paid out until at least 2025.
Impact on Shareholders
The suspension of dividend payments will have a negative impact on shareholders. Many investors rely on dividend payments as a source of income, and the suspension of payments will reduce their returns.
Future Outlook
Southern Water is hoping that the suspension of dividend payments will help the company to reduce its debt costs and improve its financial performance. The company is also hoping that the economic environment in the UK will improve in the coming years, which will help to boost its revenues and profits.
Conclusion
Southern Water has decided to suspend its dividend payments until 2025 due to increasing debt costs and a challenging economic environment. This decision will have a negative impact on shareholders, but the company is hoping that it will help to improve its financial performance in the future.