Pennon Group Shares Fall as Results Reveal Dividend Cut Despite Return to Profit

Shares in Pennon Group (LON: PNN) fell on Wednesday after the FTSE-listed water company published its full-year results for the year ended 31 March 2026, with investors appearing to focus on a cut in the dividend per share and ongoing regulatory penalties despite a headline return to profitability.

PNN shares were trading down around 1.8% at approximately 498p in Wednesday afternoon trade, having touched an intraday low of 483p, as the market digested the mixed set of numbers.

On the face of it, the figures showed a significant turnaround. Pennon swung to a statutory profit before tax of £114.4 million from a loss of £72.7 million in the prior year, while revenue climbed 23% to £1.29 billion and underlying EBITDA surged 55% to £519.2 million, driven by higher regulatory revenue allowances, improved cost management and stronger water consumption.

However, investors appeared unsettled by a reduction in the dividend per share to 29.29p from 31.57p the prior year, despite total dividends paid rising to £138.2 million. A net operational ODI penalty of approximately £42 million — stemming from exceptional storms, higher rainfall and a step-up in regulatory targets — also weighed on sentiment, as did the company’s own forecast that operational performance will “remain in net ODI penalties” in the near term.

New Chief Executive Keith Haslett, who acknowledged “more work to do” to improve operational discipline, struck a cautiously optimistic tone, pointing to a 34% reduction in pollution incidents and a £643.6 million capital investment programme as evidence of early progress under his leadership. A strategic update is expected before the end of September 2026.