Pennon Group Revenue Impacted By Lower Demand

Pennon Group (LON: PNN), the parent company of South West Water and SES Water, announced a trading update for the period to 26 September 2024 on Thursday, saying revenue, on a like-for-like basis, has been impacted by lower customer demand.

The demand decline follows the company's ‘Water is Precious' water efficiency campaigns. 

Meanwhile, the company said that operating costs during the period are broadly flat, with continuing elevated power costs offset by efficiency savings.

Elsewhere, other key highlights include the successful integration of Sutton and East Surrey Group (SES) following CMA approval, progress on the WaterFit storm overflow investment program, and the completion of the Rialton abstraction and new water treatment works.

Pennon also said it had secured a strong investment grade credit rating and launched a £2.5 billion EMTN programme during the period.

The company has recognised non-underlying costs of around £32 million, including those related to the Brixham water quality incident and restructuring efforts.

Looking ahead, Pennon believes it is well-positioned to deliver on its K8 investment program. The company is driving operational transformation and restructuring to achieve approximately £86 million in savings into K8.

Capital expenditure is expected to continue at a high level, reflecting investments in storm overflows, operational incidents, and renewable energy. However,  the outlook for South West Water is expected to see a continuation of lower customer demand, offsetting tariff increases and new customer numbers. 

Despite the elevated power costs and the costs associated with the company's new digital customer services platform, it says operating costs in the second half of the year are expected to be lower, benefitting from targeted efficiency savings.