Pennon Group Back into Profitability Amid Regulatory Shifts

Pennon Group, the water utility company, has announced a robust return to profitability in its half-year results for 2025/26.

The company reported a statutory profit before tax of £65.9 million, a significant turnaround from the £38.8 million loss in the same period last year.

This resurgence is attributed to disciplined cost management and savings realized from restructuring and efficiency programs.

Revenue climbed to £658.1 million, up from £527.2 million in H1 2024/25. Underlying EBITDA also experienced a substantial increase, reaching £254.4 million compared to £163.5 million.

Adjusted basic earnings per share (EPS) stood at 14.0p, a stark contrast to the (5.5p) loss per share in the previous year. The board has declared an interim dividend of 9.26p per share.

The strong financial performance is underpinned by a roughly 26% year-on-year increase in regulated water revenue, driven by tariff increases and heightened demand during the hot summer months.

Pennon Group also demonstrated efficient financing, with £300 million in new bond issuances in South West Water outperforming the allowed cost of debt. The company is on track for a Return on Regulated Equity (RORE) of 7%, supported by efficient financing and capital program efficiencies.

The company's commitment to shareholder value is evident in the increased dividend payout, reflecting confidence in its financial stability and future prospects. The interim dividend of £43.7 million surpasses the £42.0 million payout in the previous year.

Key Drivers:

• Tariff Increases & Demand: Regulated water revenue surged due to tariff adjustments and increased consumption during the summer.
• Cost Efficiencies: Restructuring and efficiency programs yielded significant cost savings, boosting profitability.
• Efficient Financing: Strategic bond issuances optimized financing costs, contributing to overall financial health.

According to Group Chief Executive Officer Susan Davy, “We have made a robust start to the first half of 2025/26 and the new K8 regulatory period. With a strong return to profitability and disciplined cost control, we are on track financially and growing sustainably.”

Pennon Group is actively engaged in Defra's Transition Planning process and anticipates the publication of the forthcoming White Paper. The company expects Group underlying EBITDA to increase by approximately 60% year-on-year in FY 2025/26, with first-year investment supporting a growth in Regulated Capital Value (RCV) of around 8% this year, rising by over a third by 2030.