Pennon Full-Year Profit Rises 9 Percent, Beating Estimates

Pennon Group Plc (PNN), a U.K. water and waste company, said fiscal full-year profit climbed 9.1 percent, beating analyst estimates, as earnings from its South West Water unit gained.

Pretax profit for the year through March rose to 207.3 million pounds ($347.2 million) from 198.2 million pounds a year earlier, the Exeter, England-based company said today in a statement. That beat the 198.75 million-pound median estimate of 12 analysts surveyed by Bloomberg. Sales increased 10 percent to 1.3 billion pounds.

Operating profit for Pennon’s South West Water unit rose 5.7 percent to 227 million pounds. It spent 141.6 million pounds in the fiscal year, compared with 116.5 million a year earlier, in upgrading treatment plants, expanding capacity and improving infrastructure.

Pretax profit for Pennon’s Viridor waste management unit dropped as much as 20 percent to 27.6 million pounds partly due to lower prices for the recyclate it produces. It spent about 254 million pounds on energy-from-waste facilities and expects five plants to start working this year.

The company is aiming for a 15 percent market share of energy-from-waste by 2020 to drive long-term profit growth. The sector accounted for 8 percent of total U.K. renewable energy generated in 2012 and that may reach 12 percent by 2020, it said. This will be spurred by the U.K. government’s landfill tax that currently charges 80 pounds a ton for waste to be buried underground.

Ofwat, the U.K. water regulator, is reviewing the prices utilities can charge customers for the five-year period starting 2015 with a decision for most companies expected in December. Due to the “high quality” of its business plan Pennon’s water unit will receive Ofwat’s determination early.

Pennon expects to pay a total dividend for the year of 30.31 pence, an increase of 6.5 percent from a year earlier.

To contact the reporter on this story: Louise Downing in London at ldowning4@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Will Kennedy, Indranil Ghosh

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