Finance
UK's Pennon Group eyes profitability in 2025-26 despite cost pressures
Published by Global Banking & Finance Review®
Posted on September 26, 2025
2 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on September 26, 2025
2 min readLast updated: January 21, 2026
Pennon Group aims for profitability by 2025-26 despite cost pressures, focusing on environmental improvements and operational efficiency.
(Reuters) -British water utility Pennon Group said on Friday it remains on course to return to profitability in fiscal 2025-26, despite higher operational costs from surging demand for clean water amid hot weather.
Revenues were supported by increased metering and adjusted pricing, though some income was deferred into 2026-27 to smooth customer bills.
The trading update comes as Britain's water companies face intense scrutiny over sewage spills and environmental performance.
In its Water Services division, Pennon reported that pollution incidents halved in the eight months to August 2025, while storm overflow spills dropped nearly 50% year-on-year.
"We're driving real improvements for our customers and communities whilst delivering a return to strong profitability," Chief Executive (CEO) Susan Davy said, highlighting that pollution reduction plans were "delivering tangible benefits."
South West Water's owner expects earnings before interest, taxes, depreciation, and amortisation (EBITDA) to rise about 60% year-on-year in 2025–26, while maintaining its 7% return on regulated equity (RORE) target despite elevated costs from increased water demand in the hot summer months.
The board also continues its search for a new CEO following Davy's retirement announcement earlier this year.
(Reporting by Ankita Bora in Bengaluru; Editing by Sumana Nandy)
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure used to evaluate a company's operating performance.
RORE stands for Return on Regulated Equity. It is a financial metric used to assess the profitability of regulated companies, particularly in the utility sector.
Pollution incidents refer to events where harmful substances are released into the environment, often leading to environmental damage and regulatory scrutiny.
Operational costs are the expenses associated with the day-to-day functioning of a business, including costs for materials, labor, and overhead.
Metering in water services involves measuring the amount of water consumed by customers, which helps in billing and managing water resources effectively.
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