March 10 (Reuters) - British water utility Pennon Group said on Tuesday that it expects underlying profitability for the full year ending March 2025 to be at the lower end of market expectations as a
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)
