Pennon PLC (LON:PNN) posted a rise in full-year profit and hiked its dividend as it sounded a positive note on the outlook for water and waste.
For the year ended March 31, the FTSE 250-listed firm saw its pre-tax profit increase by 3.5% to £258.8mln as its revenue rose 2.9% to £1.39bn.
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The company said earnings growth was driven by net tariff increases and higher demand at South West Water, energy recovery facilities growth and a strong focus on cost savings.
The cost savings and synergy targets of around £17m a year from 2019, identified by the shared services review, is on track, the group said, with approximately £13m a year delivered to date.
Pennon’s chief executive Chris Loughlin said: "The expansion of Viridor's portfolio will support Pennon's earnings growth to 2020 and beyond.”
He added: “Looking ahead, Pennon continues to expect UK residual waste market dynamics to be favourable, with demand for energy recovery facilities exceeding capacity into the long term.”
The group raised its total dividend by 7.3% to 38.59p per share.
In early trading, Pennon shares were 7% higher at 781.4p.