Pennon trading in line, but bad weather impacts waste-water operations
By Benjamin Chiou
Date: Monday 25 Mar 2024
(Sharecast News) - Water group Pennon said it expects to report full-year results in line with expectations as it makes record levels of investment in the current pricing cycle, though challenging weather conditions have impacted its waste-water operational performance.
In a pre-closing trading update, the company said it expects to record £850m of capital expenditure through to 2025 in the K7 cycle, which covers 2020-25, and is set to deliver on its ambitious business plan for K8 (2025-30).
Pennon, which provides water and waste-water services to both retail and business customers across the South West, reported it is "well positioned with liquidity" for the K7 period, having secured more than £700m through its sustainable finance framework since March 2023.
"New debt will be raised through the SFF through access to public and private markets, whilst maintaining the Group's diverse portfolio of debt," it said.
During the second half of the year, Pennon has had to contend with a 50% increase in rainfall in the South West, compared with long-term averages, in addition to 10 named storms since September 2023 and 12 yellow weather warnings for rain in the region.
"The significantly increased wastewater flows have impacted our headline performance for wastewater pollutions and use of storm overflows."
Meanwhile, its acquisition of SES Water - which supplies water around 750,000 customers in Sutton and East Surrey - is said to be progressing well following its completion in January, with the customary Competition and Markets Authority review process now underway. Pennon expects phase one of the process to conclude in the summer.
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