Pennon Group rises due to improved wastewater treatment performance

Investing.com – Pennon Group PLC (LSE:PNN) stock rose 3.5% on Monday. Earlier, the company released a trading update showing EBITDA increased by approximately 55% year-over-year, but due to weather-related cost pressures, the company expects full-year underlying profit to be at the lower end of market expectations.

The water utility reported that its underlying profit for fiscal year 2025/26 is within market expectations, albeit at the lower end, with analyst consensus on net profit around £111 million.

The company mentioned that the second half of the fiscal year was affected by unusual storms and rainfall, with rainfall in southwest England in November and December about 150% above average, causing operational pressures and expected to result in net ODI (Output Delivery Incentive) fines for the year.

Despite weather challenges, Pennon’s operational performance continues to show significant improvement.

Pollution incidents decreased by about 40% year-over-year, with standardized pollution down approximately 55%. Rainwater overflow usage decreased by 17% over the past year, and overflow duration dropped about 25%, reflecting substantial infrastructure investments.

“Although the second half of the fiscal year experienced unusual storms and rainfall, our wastewater treatment performance continues to improve year by year, indicating potential progress,” the company stated in its trading update.

The company aims to achieve a 7% regulatory equity return during the K8 regulatory period, with financing and capital expenditure efficiency in 2026 partially offset by net ODI fines.

Price control deliverables for 2025/26 remain on track, with project efficiency being maintained as delivery progresses.

Pennon Power is the company’s renewable energy division, having launched two power plants in Dunfermline and Cullerlie. When all four sites are fully operational by the end of fiscal year 2027, the portfolio will generate electricity equivalent to 40% of the group’s total consumption.

Keith Haslett will assume the role of CEO starting April 1, 2026.

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