Pennon set to return to profitability despite higher costs

Pennon Group said on Friday that it remained on track to return to profitability, despite the hot summer weather ramping up costs.

Updating on trading, the owner of South West Water said there had been particularly high demand for clean water during the hotter-than-usual summer months.

That had been more than offset in revenues, however, by increased meter optants and the profiling of tariffs to smooth customer bills, deferring revenue into 2026/27.

Operating costs also rose, due to the increased demand and operational pressure on networks.

However, the FYSE 250 utility continued: "Despite this, we have made a strong return to profitability, with earnings before interest, tax, depreciation and amortisation anticipated to increase by around 60% year-on-year."

It also reiterated guidance for return on retained earnings of 7%.

Susan Davy, Pennon's outgoing chief executive, said: "We’re driving real improvements for our customers and communities while delivering a return to strong profitability.

"Despite the pressures of a hot summer, we’ve maintained resilient water supplies and continued to improve services for our customers."

Pollution incidents halved in the eight months to August, Pennon noted, with storm overflow spills down nearly 50% year-on-year.

Davy announced she was retiring after five years as chief executive in July. Pennon said a "rigorous" search process to find her replacement was now underway.

Pennon supplies around 1.8m customers in Devon, Cornwall, the Isles of Scilly and parts of Dorset and Somerset with water and sewerage services.

It is due to publish half-year figures on 27 November.