Pennon sees lower customer demand as consumption falls

26th Sep 2024 07:28

(Sharecast News) - FTSE 250-listed water and sewerage group Pennon said like-for-like revenues in the first half were impacted by lower customer demand, which is expected to continue through to the end of the financial year.

Pennon, whose main asset is South West Water but acquired Sutton and East Surrey (SES) Group this summer, said customer demand over the year to 31 March 2025 will be lower, offsetting increases in tariffs and customer numbers.

The company said decreased demand was a result of its 'Water is Precious' campaign, in which it urged customers to use water more efficiently and reduce overall consumption. As part of the campaign, Pennon paid customers with credits to their bill if they reduced consumption.

Pennon said its transformation programme to restructure the business continued in the first half, as its "put[s] in place the building blocks" for K8 regulatory period covering 2025 to 2030.

The company, which is targeting £86m in savings in K8, recognised £16m of one-off restructuring costs in the first half.

In addition to targeted incident responses in the first half - such as a water quality event in Brixham, Devon, where cryptosporidium was able to enter the clean water network - total capital expenditure came to £300m.

Full-year capex is expected to continue at the first-half run rate, reflecting preparation works for AMP8, including £75m of investment in storm overflows agreed with Ofwat, as well as investment in response to operational incidents such as Exmouth and Brixham, Pennon Power development costs and the full-year impact of SES investment.