A water company has reported an £8m loss for the past financial year, despite a £46m profit the year before.
Dwr Cymru Welsh Water said it had invested a record £629m in its water and wastewater network in 2024-25.
It claimed this was a 31% year-on-year increase to maintain and improve its assets.
Its annual report said there was "no quick fix" to getting back on track financially due to ageing infrastructure, extreme weather events and more scrutiny.
Gail Davies-Walsh, chief executive of Afonydd Cymru, the rivers trust in Wales, said the company was being honest that improvements were needed but added "environmental performance on the ground needs to improve significantly".
In April, water bills for households rose by 27% for Welsh Water customers, meaning an average annual bill increased from £503 to £639.
The company said that increase would help fund future investment.
There are expected to be annual increases for the next five years.
Welsh Water said last year a record 153,000 customers were given financial help with their bills.
The company is one of only three water companies in Wales and England to be placed in regulator Ofwat's "lagging" category.
Ofwat said investments and plans will need to be maintained and accelerated in order to move out of this category.
Ms Davies-Walsh said Welsh Water was "not being shy about admitting their performance is not where it needs to be" but "the real proof will be in the performance report next month".
"It is currently a two star company and we need a four star company for Wales," she said, referring to the Ofwat categories.
