Pennon sqeezes out rise in profit

25th Nov 2010 07:31

Water and waste group Pennon managed a small increase in half-year profit as a big jump at recycling business Viridor offset a decline at South West Water.Profit before tax for the six months ended 30 September grew 0.7% to £96.2m, with Viridor contributing £28.6m, up 29%, and South West Water £70.2m, down 0.6%.Again, it was Viridor that did most to get revenue up nearly 11% to £593.2m. It added 17% to £363.1m, almost £18m of which was down to the acquisitions of London Recycling, Intercontinental Recycling and Reconomy.South West managed an extra 1.9% of revenue at £230.9m, though benefits of tariff increases, new connections and higher demand were mostly offset by customers switching to a metered tariff - 70% are now on meters - and lower other sales.Customer demand increased by 3.1% due to the dry weather in the early part of the year.Chairman Ken Harvey was quick to point out that the benefits of increased demand from summer usage and asset sales in South West Water are not expected to be repeated in the second half. Viridor's growth also reflects the recovery of recyclate prices compared with the low levels in the first half of 2009/10. "However, looking forward, South West Water is well placed to outperform the assumptions for the K5 period and Viridor expects to continue to deliver strong long-term growth," Harvey said.The interim dividend rises 7.9% to 7.5p a share.