Birmingham utility group Severn Trent has indicated its core water arm has performed ahead of hopes, but its services operation has not done as well as expected.
Ahead of its final year results to the end of March - due in June - the group said Severn Trent Water had outperformed its financial targets and managed its costs successfully.
It said the regulated division, which is making up to 350 staff redundant in the next two to three years, had good water resources for the time of year and was now focused on achieving further efficiencies.
But, it warned pretax profits before interest and goodwill in its services activities, which include its laboratory, water purification and operating services, would be ten per cent to 12 per cent down on last year due largely to the weakening US dollar.
It said its laboratories division had experienced challenging market conditions in the US, although water purification and operating services had continued to perform well.
Severn Trent added that it expected pretax profits before interest and goodwill in its commercial waste division, Biffa, to come in about four per cent to six per cent ahead of last year, including the benefits of a full year's contribution from the acquisition of rival Hales in June 2003.
In a statement the group said: "The board considers that, overall, the group has delivered a satisfactory performance for the full year."
In November, Severn blamed higher pension charges and the weak US dollar for a fall in half-year profits to £141.3 million.