Shares in Pennon nosed-up over one per cent this morning after growing earnings over the first half its financial year.
Revenues actually fell in the six months to 30 September from £689m to £686m.
But earnings jumped by 5.9 per cent to £245m and profit before tax leapt 19.9 per cent to £128m.
Utility firms, an important defensive sector for fund managers, often pay out decent dividends. Pennon announced a dividend of 11.09p per share, up 6.0 per cent, delivering on its promise to increase shareholder pay-outs ahead of inflation.
Why it's interesting
The FTSE 250 owner of South West Water wasn't getting carried away with the results. Echoing Ryder Cup rhetoric Pennon said it was "building momentum, driving growth".
25 November 2016 @ 8:15amPennon Group (PNN)
Efficiency was another buzzword referenced. This was slightly more tangible: Pennon said it has now delivered £80m of total expenditure savings within South West Water since 2015.
Pennon describes itself as an "environmental utility infrastructure company" but its bottom line is still heavily dependent on water operations.
South West Water only represents 42 per cent of revenues but nearly three-quarters of earnings and 82 per cent of operating profit.
Nevertheless, the group took the chance to talk of ERFs – energy recovery facilities – and its subsidiary that owns them, Viridor. Despite the comparatively lower contribution to the bottom line, Pennon is planning to commit to £252m to its ERF at Avonmouth.
What the company said
Chief exec Chris Loughlin said that South West Water remain "sector leading" and added:
Pennon has delivered a good performance in the first half of 2016/17 across its water and waste businesses
We believe Pennon is well positioned for the future and is on track to meet management expectations for the full year 2016/17. Our performance underpins our sector-leading dividend policy of four per cent growth per annum above inflation to 2020.