Pennon Group Share Price Fell on Declining H1 FY’24 Profitability

The Pennon Group plc (LON: PNN) share price fell 4.12% at 11:05 GMT after releasing its H1 fiscal 2023/24 earnings results and operational update. The company revealed that its statutory revenues grew 5.4% to £448.6 million from the £425.5 million reported in H1 fiscal 2022/23. 

However, the company’s underlying profits before tax fell by 59.6% to £9.1 million from £22.5 million. The firm noted that despite its underlying PBT falling as compared to H1 2023, it had actually improved when compared to H2 fiscal 2022/23. 

The firm’s non-underlying cost items before tax amounted to £5.9 million, including one-off costs associated with business transformation, drought-related expenditures, and acquisitions in renewable energy.

Pennon’s statutory profit after tax for the period stood at £1.8 million, a decrease compared to the profit after tax of £18.5 million reported in H1 2022/23. Adjusted earnings per share fell to 3.6 pence, down from 7.9 pence in H1 2022/23. Statutory earnings per share, after factoring in net non-underlying costs, stands at 0.5 pence.

The company’s growth strategy, encompassing both organic and acquisitive approaches, remains on track. It is progressing toward achieving a 60% Regulatory Capital Value (RCV) growth by 2025 and a substantial c.100% RCV by 2030.

Pennon has invested approximately £1.6 billion as part of its K7 (2020-25) investment plan, which is well underway. The company also achieved a 100% bathing water quality rating for the third consecutive year.

Susan Davy, Pennon Group’s Chief Executive, commented: “Pennon has continued to make progress in the last six months on delivering for customers and shareholders, improving operational resilience across the group through an 87% step up in investment, supported by a healthy balance sheet. We are executing our twin-track strategy of organic and acquisitive growth in UK water, creating long-term value and making progress on what matters most to those across our regions. I am very clear that if we serve our customers well, we serve our shareholders well, which is why we are focused on improving environmental performance, keeping bills as low as possible, developing new water resources, and investing in renewable energy generation.”

Pennon share price. 

The Pennon share price fell 4.12% to trade at 718.65p from Tuesday’s closing price of 749.50p.