Pennon Group (LSE:PNN) returned to profitability in the 2025/26 financial year, reporting statutory pre-tax profit of £114.4 million compared with a loss in the previous year. Revenue increased to £1.29 billion, while underlying EBITDA rose 55%, supported by higher regulated water revenues and continued focus on cost efficiency.
The company continued to invest heavily across its network and infrastructure, with capital expenditure reaching £643.6 million as it advanced preparations for its record AMP8 investment programme. Pennon also maintained its commitment to shareholder returns, increasing the total dividend payout to £138.2 million despite a modest reduction in the dividend per share.
Operational performance improved during the year, with pollution incidents reduced by around 34% and storm overflow usage declining 17%, despite exceptionally wet weather conditions. However, more demanding regulatory requirements and the impact of severe storms contributed to approximately £42 million of net Outcome Delivery Incentive (ODI) penalties.
With a new chief executive and an enhanced leadership team now in place, the group is navigating a period of significant regulatory change across the UK water sector. Management believes the business is well positioned to benefit from an expected 34% increase in Regulatory Capital Value (RCV) during AMP8, alongside additional Ofwat-supported investment aimed at improving asset health and network resilience.
Pennon’s outlook reflects both opportunities and challenges. Revenue growth, operational improvements and strategic investment initiatives provide a positive backdrop, while leverage levels and profitability metrics remain areas of investor focus. The company also points to ongoing efficiency measures, innovation programmes and customer service enhancements as key drivers of future performance.
More about Pennon Group plc
Pennon Group plc is a UK water and wastewater utility company operating regulated water businesses across South West England and other regions through South West Water, Bristol Water and SES Water. The group provides drinking water, wastewater treatment and related infrastructure services, while also expanding its renewable energy activities through its Pennon Power division.
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