Pennon Group expects lower annual profit on rising costs

Pennon Group Plc expects its underlying profitability for the full year ending March 2026 to reach the lower end of market expectations, citing a significant rise in operational costs. The utility provider reported that its financial performance was heavily influenced by exceptional storms and record rainfall during the second half of the year, which drove up expenses and compounded existing regulatory pressures.

The company also projected a net penalty position for its Outcome Delivery Incentives (ODI) across its water and wastewater operations. This metric, which ties financial results to operational performance, reflects the ongoing challenges faced by the utility. In the United Kingdom, the water sector is currently under intense scrutiny from both regulators and the public regarding environmental management and sewage overflow incidents.

Despite these headwinds, the group noted a 55% year-on-year increase in core profit for the period from September 30, 2025, to March 9, 2026. This update follows a period where Pennon has faced various penalties and heightened oversight concerning its operational standards.