Sector movers: Utility stocks sink as water group Pennon underwhelms

3rd Jun 2014 14:28

The gas, water and the multi-utilities sector was under the weather on Tuesday on the back of a poor reaction to the latest results from water utility and waste management group Pennon.Shares in Exeter-based Pennon, which owns South West Water (SWW), were down 3% at 760p in afternoon trade despite the company beating forecasts with its annual profits, as the performance at its Viridor landfill and waste recycling business disappointed.Pre-tax profits rose 9.1% to £207.3m in the year ended March 31st, helped by a 10.8% rise in profits at regulated water business SWW on the back of increases to household bills and new connections.But Pennon said profits in Viridor's landfill business, down 19.5%, had fallen faster than expected due to aggressive pricing by rivals facing local council cuts and increasing landfill taxes. As a result, Pennon has recognised a net pre-tax exceptional impairment charge of £42.9m to write down the carrying value of landfill property, plant and equipment, although the charge has no immediate cash impact.Other stocks in the sector such as Centrica, National Grid and Severn Trent were also trading lower today.Bottom performing sectors so far todayGas, Water & Multiutilities 6,146.65 -1.67%Industrial Metals & Mining 1,196.64 -1.58%Real Estate Investment & Services 2,719.33 -1.50%Mobile Telecommunications 4,649.97 -1.24%Food & Drug Retailers 3,846.61 -1.23%BC