FTSE 250-listed water firm Pennon Group PLC (LSE:PNN, OTC:PEGRY), which owns Devon and Cornwall supplier South West Water, is up 4% despite detailing an £18.6 million underlying loss before tax in the six months to 30 September.
The loss is in sharp contrast to the £9.1 million underlying profit penned in last year’s interim.
Pennon attributed the loss to expenses tied to the cryptosporidium water quality incident that occurred in Brixham over the summer.
The company also incurred expenses tied to its acquisition of lossmaking Sutton and East Surrey Group (SES).
“We are focused on reducing interest costs and right-sizing the cost base to improve profitability (at SES),” said Pennon.
Pennon increased the interim dividend by 4.6% year on year to 14.69p nonetheless.
Pennon is currently negotiating with water regulator Ofwat for an increase to its consumer bills, which Pennon says is necessary to fund crucial infrastructure upgrades.
Ofwat is expected to make a decision on 19 December.
“A loss-making set of results underlines the need for change in the business and this is not going to happen overnight. Given the scale of negative publicity around the company, there is no more room for mistakes,” said Dan Coatsworth, investment analyst at AJ Bell, of the results.