The Birmingham-based group, which supplies Gloucestershire, has found it hard to make money out of the price-regulated water market.
It said in a statement: "Shareholders should not assume that the inherent profit reduction for Severn Trent Water in 2002/3, which reflects its broadly unchanged prices, can be made up by the performance of the rest of the group."
Shares in the group fell 5.6 percent to 621.5p following the statement.
A spokesman said the company's performance would "depend on the speed and timing of the economic recovery" in the UK and US.
The comments come a month after the group announced its full-year results, showing a rise in profits, buoyed by strong results from its waste management business Biffa.
The group reported turnover up 6.7 percent to just under GBP1.8billion and profits before exceptional costs up 4.6 percent at GBP418.8million.
The firm aims to find growth from activities such as waste management that are not subject to price controls.
Chief executive Robert Walker told the group's annual general meeting in Nottingham: "We aim to grow shareholder value by establishing Severn Trent as the UK's leading supplier of environmental services."
He said Biffa was now the UK's largest supplier of integrated waste management, while the group was aiming to build on its leading position in the analytical services market in the US.
Source: Financial Times
