Pennon profit slumps 60% as costs bite, shares dip

Shares in water utility Pennon Group (LSE: PNN) fell 3% on Wednesday after the company reported a 60% drop in first-half profit to £9.1 million, hurt by an 11% rise in operating costs. However, the FTSE 250 firm raised its dividend by 8.3% on the back of a 5.4% increase in revenue.

Pennon said it is focused on initiatives to reduce its impact on coastal and river water quality through its £WaterFit programme. This includes projects to improve groundwater ingress at 30 key wastewater plants and deliver 43 bathing and shellfish water schemes.

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“Ensuring quality and compliance is a key underpin, and we have consolidated our top quartile water quality position,” Pennon stated. It has resumed enhanced flushing activity on its network after the lifting of drought status in October.

The company expects a second-half weighted performance in fiscal 2024, with lower revenue but easing cost pressures. Pennon shares are down 20% year-to-date and marginally lower at 23% year-over-year.