Pennon's full-year results came in slightly ahead of expectations, but the real surprise is that water utility South West Water outshone the recycling unit, Viridor. South West Water delivered a 9.8 per cent increase in pre-tax profits to £141.5m by cutting cost ahead of schedule while pushing through regulatory price rises in line with inflation. This was achieved despite falling water usage, as 73.4 per cent of households are now metered.
Viridor, on the other hand, reported pre-tax profits down 8.4 per cent to £57.6m, as landfill volumes fell and prices for recovered recycled material fell from £125 per tonne to £111 per tonne. Colin Drummond, chief executive of Viridor, said that recyclate prices had stabilised in the year to date, but they remain cautious about the prospect for any recovery. Viridor increased capital investment from £86.2m to £140m, with £93m being in growth projects. The first phase of a major plant at Runcorn is due to be completed by March 2013, and management expect energy from waste will double Viridor's cash profits in the next five years.
Analysts at Deutsche forecast adjusted pre-tax profits of £220m, giving EPS of 48.5p (£201m and 47.3p in 2012).
PENNON (PNN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 727p | MARKET VALUE: | £2.6bn | |
| TOUCH: | 726-727p | 12-MONTH HIGH: | 752p | LOW: 610p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 227p* | NET DEBT: | £2.1bn | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 0.88 | 150 | 38.2 | 19.8 |
| 2009 | 0.96 | 159 | 25.8 | 21.0 |
| 2010 | 1.07 | 186 | 40.4 | 22.6 |
| 2011 | 1.16 | 189 | 48.4 | 24.7 |
| 2012 | 1.23 | 201 | 48.1 | 26.5 |
| % change | +6 | +6 | -1 | +7 |
Ex-div: 8 Aug Payment: 5 Oct *Includes intangible assets of £345m, or 95p a share. | ||||
