UNITED Utilities said today it was on track to deliver good profit growth during the first half of the financial year despite suffering cost pressures such as rising power costs and bad debts.

UU, which supplies water and wastewater services to around seven million people in the north west and distributes electricity, said in a trading statement it was planning to invest £4bn to improve its regulated water business between 2010 and 2015.

Credit Suisse said it expects UU's year-on-year profits growth to be in high single figures, adding that warning about bad debts and cost hikes mirrored a statement by Severn Trent on Tuesday.

Broker UBS said UU was trading in line with expectations and its performance highlighted the defensive nature of water stocks.

Shares in UU dipped 0.6 per cent, or 4p, to 675.5p.

The company, which returned £1.5bn to shareholders last month following the sale of United Utilities Electricity, repeated earlier guidance that it would increase average bills by 2.7 per cent to fund its investment programme.