Water Firm Takes £25m Hit Over Bug Outbreak

The water company at the centre of a recent water safety scare has warned investors of a £25m hit from compensation payments and costs.

United Utilities (LSE: UU.L - news) urged 300,000 customers across much of Lancashire to boil water before drinking it in August, after tests at a treatment plant uncovered traces of the microscopic cryptosporidium bug, which can cause sickness and diarrhoea.

Some shops and supermarkets reported running out of bottled water as homes and businesses adapted over the following weeks.

Contained in the alert was advice to run dishwashers on hot settings and only drink coffee from machines which served water at a temperature of least 80C (176F).

The company said it took a month to eradicate the problem completely because it had to flush out 2,500 miles of pipework.

In its trading update, United said: "We were very disappointed that a significant water quality incident occurred this summer in parts of the Lancashire region, and we are continuing to investigate the cause."

"We recognise the inconvenience this placed on many of our customers and are very grateful for their patience and understanding.

"We are in the process of paying compensation."

Customers are receiving between £50 and £60 each and the company could yet face a penalty from the industry watchdog.

United Utilities said it was booking a charge of £25m which would be reflected in its first-half profits.