Finance
UK's pennon forecasts 2025 profit at lower end of market view
Published by Global Banking & Finance Review®
Posted on March 10, 2026
2 min readLast updated: March 10, 2026
Quick Summary
Pennon Group sees its full-year underlying profitability for the year ending March 31, 2025 notably below market expectations, attributed to elevated operational and infrastructure costs alongside heavy investment in acquisitions and capital projects. Group reported an underlying loss before tax of
UK's Pennon Group sees annual profit at low end of forecasts as costs rise
Pennon Group's Financial Performance and Market Outlook
Profitability Outlook for Full Year Ending March 2026
March 10 (Reuters) - British water utility Pennon Group said on Tuesday that it expects underlying profitability for the full year ending March 2026 to be at the lower end of market expectations as a result of higher costs experienced in the year.
Operational Costs and Contributing Factors
Exceptional storms and heightened rainfall in the second half of the year drove the water utility's operational costs, which has been facing penalties and regulatory pressures in the recent years.
Outcome Delivery Incentives (ODI) and Regulatory Impact
Pennon added that its Outcome Delivery Incentives (ODI) performance — the metric that ties operational results to financial rewards or penalties — is expected to result in a net penalty position across its water and wastewater operations for the full year.
Profit Growth Amid Industry Scrutiny
Still, the company's core profit increased 55% year-on-year for the period between September 30, 2025 to March 9, 2026.
Industry Context: Environmental and Regulatory Challenges
The company's trading update comes at a time when water companies in the UK are facing increased scrutiny over sewage spills and environmental performance.
(Reporting by Rishab Shaju in Bengaluru; Editing by Nivedita Bhattacharjee)
Key Takeaways
- •Underlying loss before tax of £35.1 million in FY 2024/25, down from a £16.8 million profit a year earlier, reflecting cost pressures and a full-year contribution of SES Water acquisition (research-tree.com).
- •Revenue rose ~15% to £1,047.8 million, boosted by SES Water, but underlying EBITDA stayed largely flat (~£335.6 million), pointing to squeezed margins (research-tree.com).
- •Despite current cost pressures, Pennon expects a return to profitability in FY 2025/26, with underlying EBITDA projected to rise by around two‑thirds supported by tariff increases, efficiencies and regulatory mechanisms (research-tree.com).
References
Frequently Asked Questions about UK's Pennon forecasts 2025 profit at lower end of market view
1Why is Pennon Group anticipating lower profit for 2025?
The company cites higher costs experienced during the year as the main reason for expecting lower profits.
2Which sector does Pennon Group operate in?
Pennon Group is a British water utility company.
3When was Pennon Group's profit outlook announced?
The profit outlook was announced on March 10.
