Southwest water supplier Pennon Group PLC (LSE:PNN, OTC:PEGRY) has raised its dividend by an inflation-busting 8.3% despite reporting lower interim profits.
Inflation was blamed for a drop of 60% in profits to £9.1 million even though revenue rose by 5% to £448 million.
Pennon‘s stretch of coast contains some of the UK’s best beaches and it has been blasted by swimmers and surfers for the levels of sewage it has dumped into the sea over recent years.
A £2.15 million fine was levied by the Environment Agency in April for illegal sewage dumping off the Cornwall and Devon coast.
In October, Pennon said it would spend £2.8 billion over the five years from 2025 to 2030 as its share of a countrywide drive by regulator Ofwat to cut the level of waste being discharged by the water sector.
Broker Jefferies said the update was a small positive, with £850 million of capex slated for the next two years to 2025, against previous guidance of £750 million.
Results for the remainder of this year will be boosted by falling opex due to a drop in power prices/water usage, said the broker, while for the following year, revenues will grow in line with inflation.
The interim dividend rose to 14.04p from 12.96p, while the shares dropped 2.7% to 726.5p.