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Pennon launches strategy review, trading “on track”

The water sector has been under pressure following stricter financing requirements and proposals for renationalisation

Pennon Group PLC - Pennon launches strategy review, trading “on track”
Pennon operates water and waste management facilities in the UK

Pennon Group PLC (LON:PNN) said it is going to review its strategy and evaluate “growth options and capital allocation policy”, following a strong financial performance.

The Waste Management and water company said it is also monitoring developments with Brexit, which have affected the interest rates and bond yields that are so important for utility companies, and has plans in place to mitigate risks.

READ: London-listed water firms could be at risk of losing their dividend perk

The water sector has been under pressure following stricter financing requirements set by the UK water regulator, as well coming under extra focus from the Labour party’s proposal to renationalise the industry.

Pennon’s South West Water recorded a “normal” level of revenue in the past six months compared to H1 2018/19, when demand soared during an exceptionally hot summer.

Its Viridor arm, which operates ten non-recyclable waste disposal facilities in the UK, had a strong financial and operational performance in the period April-September.

A new £65mln plastic reprocessing plant under construction near Bristol is expected to deliver profits from 2020/21, and there are plans for two further facilities in Oxfordshire and near Edinburgh.

Pennon also announced a new agreement with Grundon Waste Management Limited to set up a recycling centre in West Sussex, located near two of their own facilities, creating potential for a so-called ‘energy park’.

Supported by confirmation that trading is “on track” for the full year and liquidity remains “good”, the shares were up 0.88% to 799.20p in early morning trading on Friday.

Quick facts: Pennon Group PLC

Price: 918.4 GBX

LSE:PNN
Market: LSE
Market Cap: £3.87 billion
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