Utilities firms may be considered relatively anodyne and bland especially in the face of far more interesting big tech firms that have dominated the investment arena for years now, but this week the good old-fashioned water and power companies are among the biggest risers on the London Stock Exchange. Severn Trent, which is one of the UK's largest water supply companies, has been going from strength to strength today, up 41 points over close of business on Friday, equating to a 1.49% increase in share prices.
The sudden increase this morning is a return to an even keel for Severn Trent, whose shares went down in value significantly during the course of last week but is now one of the big movers today on London's market. Perhaps rather oddly, there is no significant news that has caused the attitude of investors to change toward a more positive outlook, and it was three weeks ago since the firm confirmed that it is on track to meet existing guidance after a strong start to the year.
Severn Trent PLC confirmed back in mid-July that it was confident of achieving at least £40 million in customer outcome delivery incentives and plans to invest between £550 million and £650 million this year. It appears that although Severn Trent stands out as a big riser today, the FTSE 100 index has been host to some degree of interest in the utilities sector as a whole, this meaning that when the top three FTSE 100 blue-chip risers are utility firms it can be considered a day during which investors are not taking risks.
Severn Trent’s results for the year to end-March 2021 showed a 17% fall in underlying profits due to new tariffs, the net impact of the pandemic on consumption and investment in its services. Lower water demand from businesses was partially offset by an increase in demand from households last year, resulting in a £50 million reduction in revenue.
A day of playing it safe has been very much the case on London's most prestigious market today.