Pennon Group on track to meet full-year expectations

Water utility Pennon Group said in an update on Tuesday that it was on track to deliver results in line with management expectations.

The FTSE 250 company noted the successful completion of the Bristol Water licence merger in February.

It also announced that it was reinvesting outperformance in South West Water to increase “water resilience” and enhance its environmental outcomes.

Pennon said it was on track to continue delivering double-base returns on regulated equity in the 2023 fiscal period, driven by its “strategically-positioned” financing portfolio.

The firm said it had also accelerated environmental capital expenditure, with a record 40% increase year-on-year.

It said it was driving improvements in underlying EPA performance, with a 30% reduction in pollution incidents in 2022.

The company delivered 100% coverage monitoring storm overflows one year ahead of plan, and reduced releases from storm overflows by 30% in 2022.

Water resilience initiatives were also progressing well, the board said, with its 'Stop The Drop' campaign said to have been successful, and delivering a £30 benefit per household.

In addition, Pennon announced below-inflation bill increases for the 2024 financial year, with the WaterShare+ second £20m issue now completed, including Bristol Water customers, with more households now shareholders than ever.

More than 100,000 customers were said to be benefitting from one or more of the firm’s affordability initiatives.

“The investments we outlined at our half year results in November are now well underway,” the board said in its statement.

“We anticipate the first of our innovative desalination facilities will be operational later this year, significantly boosting our water resource capacity.”

In addition, Pennon said Hawkstor reservoir, purchased in March last year, was fully operational and supporting Cornwall's supplies.

“Our dedicated teams continue to work around the clock to ensure clean, safe and reliable supplies for customers, supporting the 24/7 recharging of our strategic reservoirs in readiness for the summer period.”

Pennon said it would announce full-year results for the 12 months ended 31 March on 1 June.

At 0927 GMT, shares in Pennon Group were up 0.17% at 864p.

Reporting by Josh White for Sharecast.com.