New Severn Trent boss warms shareholders of lower dividends
The new boss of Severn Trent Liv Garfield has warned shareholders to expect lower pay-outs as she prepares to present her first set of annual results since taking the helm.
The 38-year-old became the youngest woman to run a FTSE 100 company when she took charge in February.
She is one of only four female chief executives in top blue-chip firms - and today she showed that she is prepared to get tough for the good of the company, which provides Shropshire's water.
Her appointment was warmly welcomed by campaigners who have lobbied for more women in the boardroom.
But analysts believe the high-flying mother of two could be about to make herself unpopular with shareholders by breaking a pledge to increase the dividend by six per cent.
The firm is expected on Thursday to announce a 0.5 per cent fall in pre-tax profits to £265m.
It comes as Severn Trent faces the challenge of dealing with a tough five-year regulatory plan by Ofwat, which experts fear will prompt Severn to announce a lower-than expected dividend.
Last year Severn hiked its full-year dividend by 8.2 per cent, despite a 3.3 per cent fall in profits to £266.3m. It said dividends would grow six per cent in 2013/14.
Ofwat is pressing the industry to ease the pressure on households from bills and is urging firms to accept that its profits will be hit for the next five-year period.
Severn Trent supplies 4.2 million households and businesses across the Midlands and parts of Wales.
In its submission to Ofwat, the business had pledged to spend £3.2bn on improving infrastructure between 2015 and 2020, some £600m more than it spent over the last five years.
It also said it will keep its price rises at an average of 1.2 per cent below inflation over the period, which means its bills will be £12 lower in real terms in 2020.
Ms Garfield, a former senior BT executive and Cambridge graduate, was named as the new chief executive of Severn Trent in November and joined an exclusive club of female FTSE 100 bosses.
The others are Alison Cooper of Imperial Tobacco, Moya Greene of Royal Mail and Carolyn McCall of EasyJet.
In September Ms Garfield was ranked at number 10 in Fortune Magazine's hottest rising business stars, putting her alongside success stories such as Facebook boss Mark Zuckerberg and Twitter founder Jack Dorsey. She was also the highest-ranked Briton.
