The water industry is seen as a solid investment by many analysts

Severn Trent said its pre-tax profit rose 9.5% to �252m in the 12 months to 31 March from a year earlier after it restructured its business.

Northumbrian Water said that its profits climbed by 13.4% to �147.8m during the same 12-month period.

Water companies are having to invest heavily to improve their infrastructure and cut leakages from their pipes.

Mixed records

Birmingham-based Severn Trent said on Wednesday that it had probably missed targets for stemming leaks from its pipeline network.

The company, which provides water to 3.7 million homes and businesses in England and Wales, is already facing a fine from regulator Ofwat for missing earlier customer service performance standards.

However, the company's chief executive, Colin Matthews, said that the firm was confident it would meet regulators' targets in 2007-2008.

Mr Mathews said that Severn Trent would focus on the "single minded pursuit of continuous improvement".

Northumbrian Water, which supplies 4.6 million people in England and Gibraltar, also said it was committed to cutting its leakage levels, and that it had met the targets imposed by Ofwat.

"The continuing impact and heightened risk of drought in the South, as a consequence of climate change, highlight the importance of our emphasis on leakage management, water efficiency and demand management," it said.

Severn Trent said it would pay an annual dividend of 61.45 pence, up 7.8% from its previous figure. Northumbrian Water said its total dividend payment would rise by 6.7% to 11.27p.