Water firm Pennon sees profits hit by soaring power costs

Water firm Pennon said its half-year profits slumped by three quarters after it was hit by a doubling of power costs amid the energy crisis.

The company said first half pre-tax profits tumbled by 75.1% to £22.5 million in the six months to September 30, despite revenues rising by 9.3% to £425.5 million.

The group, which owns South West Water and Bristol Water, said its power costs jumped to around £49 million from £24 million a year ago, and shot up by around £23 million on a like-for-like basis.

Pennon recently said it expects full-year power costs to rise to around £106 million, up from £56 million the previous year.

It said the group’s strong balance sheet is helping to offset the surge in power bills, while it is offsetting wider cost pressures through savings across the business.

Pennon also said it is helping financially struggling customers, with more than 100,000 in its region being supported by affordability initiatives and around £78 million earmarked for these programmes.

The firm also announced on Wednesday it is doubling its apprenticeship and graduate schemes to 1,000 by 2030, while also offering 5,000 work placements to schoolchildren over the same period.

The initiative comes as firms launch innovative drives to boost recruitment in a difficult jobs market across the UK.

Pennon chief executive Susan Davy said: “We are delivering over £78 million of benefits to customers at a time when customers need it most.”

She said the apprenticeship and graduate scheme is designed to support “those in our region to live local and prosper”.

She also hailed record investment to help bolster Pennon’s environmental performance and build water supply resilience for the future, “having experienced the hottest, driest year since records began”.

She added: “We are announcing a further increase in investment in water resilience schemes of around £45 million to repurpose ex-quarries and mines and introduce de-salination units to ensure our resilience to 2050 is in place now.

“Together with the investment announced earlier this month, this brings the total reinvestment in these initiatives to around £75 million.”

But earlier this year, Pennon’s South West Water supplier came under the glare of regulator Ofwat over its environmental performance and sewage treatment works.

The watchdog opened an additional enforcement case at South West Water in June amid an industry-wide probe, as it said concerns were growing over the supplier’s operation of sewage works and environmental performance.

Pennon said on Wednesday it continues to “work openly, constructively and transparently with Ofwat
as part of this ongoing process”.