Severn Trent full-year profit rises as dry spring lifts demand

LONDON (Reuters) - British water supplier Severn Trent reported a 3.2 percent rise in full-year profit thanks to higher demand due to a dry spring, allowing it to fulfill a pledge to pay shareholders a dividend of 84.90 pence per share. The utility, one of the London Stock Exchange's top FTSE 100 companies, made underlying group profit before exceptional items of 540.3 million pounds, while turnover increased 2.5 percent from a year earlier to 1.8 billion pounds. "We've still got the lowest bills in the land which we know is one of the key things for our customers," said Severn Trent Chief Executive Liv Garfield, who took the helm in April 2014 and is one of a handful of female CEOs at FTSE 100 companies. Shares in Severn Trent were trading down 0.2 percent shortly after market open. In January Britain's water regulator Ofwat told Severn Trent, which supplies water in the Midlands and Wales, to reduce costs by around 370 million pounds by 2020 as part of the authority's five-year tariff-setting role. The utility said on Friday it had already locked in 300 million pounds of those cost cuts, including signing more efficient agreements with suppliers, such as chemicals producers. Severn Trent had already announced in January it would cut its 2015-16 dividend by 5 percent to comply with tighter profit rules imposed by Britain's water regulator. It renewed its target on Friday to increase annual dividend payments thereafter by no less than inflation until 2020. (Reporting by Karolin Schaps; editing by David Clarke and Susan Thomas)