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Profits up for Thames Water owner

10/08/2006

RWE, the German utilities group which owns Thames Water, announced today that its profits had increased by 19 per cent in the second quarter of 2006.

Total net income grew by 16 per cent thanks to high global energy prices, pushing overall revenues during the first half of the year up to a total of €24,331 million (£16,450 million).

Although its British water subsidiary, Thames Water, recorded a 23.2 per cent annual improvement in operating profit in June, RWE's overall water division fell by ten per cent.

Despite blaming the loss on "consolidation and accounting effects", the group has said it plans to "disinvest" in Thames Water and American Water, its US-based equivalent, because it wants to concentrate on its extremely profitable gas and electricity markets in Europe.

RWE said that it planned "a significant increase in capital expenditure on property, plant and equipment", adding to the 19 per cent increase in capital expenditure achieved during the last three months.

It also stated expectations of "continued earnings growth" but warned that "the full scope of risk facing the group from German grid regulation cannot be quantified as yet".

It is widely believed following recent developments in the German market that the regulatory body plans on tackling both pricing and access to German gas networks in ways likely to prevent RWE's profits from advancing as rapidly in the future.

RWE's shares fell by 3.56 per cent on the Frankfurt Stock Exchange in early morning trading.

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