Pennon Group PLC on Tuesday posted a lower annual profit despite growing revenue as high interests and inflating power costs impacted the Exeter-based water utility firm.
In the year ended ended March 31, pretax profit dropped 3.3% to £127.7 million from £132.1 million a year ago, in line with internal expectations.
Underlying earnings before interest, tax, depreciation and amortisation however, rose to £383.9 million from £334.7 million, up 15%. Those earnings were ‘more than offset by increased interest charges on index-linked debt,’ it said.
Revenue climbed 23% to £792.3 million from £644.7 million. Revenue growth was driven by non-household demand and contract wins from Pennon Water Services Ltd, the company explained.
Pennon proposed a final dividend of 26.83 pence per share, up 9.6% from 24.46p a year ago. For the full financial year, it amounts to a dividend of 38.53p per share, up 8.2% from 35.61p a year ago.
For the new financial year, the outlook is volatile, citing the war in Ukraine, Covid-19, supply chain issues, and inflation. ‘The impacts on the supply chain, rising power prices and overall higher levels of inflation are impacting all businesses,’ Pennon explained. ‘In the near-term we expect our earnings to be impacted by the higher inflationary environment, in particular from higher interest and power costs,’ it added.
Despite the impacts on its business, it touted ‘performance across the group continues to be operationally resilient, delivering against South West Water Ltd and Bristol Water PLC’s business plan commitments, and driving growth at Pennon Water Services Ltd, realising benefits for all stakeholders.’
Noting the impact inflation has on its customers, it said ‘our broad range of affordability measures ensures we are able to support those in need of support, and we are pleased that for the coming year bills will continue to be lower than they were 10 years ago, driven by our continued focus on delivering improvements efficiently and effectively.’
Pennon shares were 1.6% lower at 1,013.00 pence each in London on Tuesday morning.
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