Pennon makes steady progress, performance in line with expectations

Pennon released a trading statement for the year ending 31st March on Monday, pointing to steady progress as the group make acquisitions designed to accelerate its push towards net zero.

Reference to the water company’s financial performance was brief, with the group saying, “Financial performance for the full year 2023/24 remains in line with management expectations.”

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The focus of the release was the progress of its acquisition of SES Water and renewable energy sites. Pennon has acquired four renewable energy sites including one earmarked for solar power in Dunfermline.

The company said it has delivered £95m of customer support while keeping bills as low as possible.

“A short trading update revealed that everything’s flowing smoothly at Pennon. While no specific numbers were given today, management confirmed that the financial performance was in line with group expectations, with full-year results set to be released in May,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Pennon’s recent acquisition of Sutton and East Surrey Water (SES Water) is moving through the Competition & Markets Authority (CMA) review process as expected. The review is customary and there’s potential for it to clear phase 1 in summer 2024. The £89mn price tag looks attractive and helps Pennon increase its foothold across Southern England by bringing in more than 750,000 paying customers into the fold.

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“Annual rainfall across the South West was up 50% in the second half of the year compared to long-term averages. Alongside 10 named storms since September and 12 yellow weather warnings for the region, managing all this extra water has proved challenging for the group. The significantly increased wastewater flows have led to increased use of storm overflows to help relieve the pressure, and that’s impacted some headline numbers. But on the whole, profit pipelines appear to be in robust shape.”

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