Despite water demand having fallen in the south west as homes and businesses there struggle with tough times, water and waste management group Pennon still grew earnings and revenue. That reflects inflationary price increases - and a growing recycling industry.
The utility company is actually split into two. There's the traditional South West Water unit which, despite customer demand falling 2.3 per cent, reported that revenue rose 5.8 per cent in the period to £244.3m - as management pushed through price increases in line with inflation. And there's Viridor, the recycling and energy-from-waste business, which - helped by recent acquisitions - grew revenue 9.9 per cent to £399.2m. The recycling industry continues to grow and now generates 51 per cent of Viridor's profits with both tonnage and revenue per tonne rising.
The statutory gearing - or group net debt as a proportion of regulatory capital value - was stable at 58 per cent, and well within regulator Ofwat's 55-65 per cent range. The utility group increased its spending on its capital investment by 41 per cent to £99.9m in the period, too.
Deutsche Bank forecasts adjusted full-year EPS of 44.59p (2011: 42.34p).
PENNON (PNN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 676p | MARKET VALUE: | £2.4bn | |
| TOUCH: | 675.5-677p | 12-MONTH HIGH: | 750p | LOW: 585p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 210p* | NET DEBT: | 255% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 593 | 96 | 24.7 | 7.50 |
| 2011 | 643 | 107 | 26.1 | 8.22 |
| % change | +8 | +11 | +6 | +10 |
Ex-div: 1 Feb Payment: 3 Apr *Includes intangible assets of £306m, or 85p per share | ||||
