Utilities group Pennon has seen its profits fall 90% in its half year results.
The parent firm of South West Water and Bristol Water reported profit after tax dropped from £18.5m to £1.8m in the first half of the year. Pennon blamed the drop on higher inflation driving costs.
The Exeter-based group did however, see its revenues increase by 5.4% to £448.6m. This was driven by inflationary tariff increases which are moderated through regulatory adjustments, minimising the impact on customer bills. Pennon added that its rise in revenues was contributed to by growth in contract wins outside of its wholesale supply regions.
Like this story? Why not sign up to get the latest South West business news straight to your inbox.
The group reported non-underlying cost items before tax of £5.9m, including one-off costs of business transformation, drought and renewable energy acquisitions.
Susan Davy, chief executive said: "Pennon has continued to make progress in the last six months on delivering for customers and shareholders, improving operational resilience across the group through an 87% step up in investment, supported by a healthy balance sheet. We are executing on our twin track strategy of organic and acquisitive growth in UK water, creating long term value and making progress on what matters most to those across our regions.
"I am very clear that if we serve our customers well, we serve our shareholders well, which is why we are focused on improving environmental performance, keeping bills as low as possible, developing new water resources, and investing in renewable energy generation. This has helped us deliver a 100% bathing water quality assessment for the third year running and reduce serious pollution incidents this year, but we know there is more to do."
Ms Davy said the group's focus remains on delivering its strategy of growth in environmental infrastructure through organic investment and acquisitions, efficient delivery of its services and leadership in UK water. By 2025 Pennon hopes to see a 60% growth in RCV, including 20% delivered through its acquisition of Bristol Water and capital investment over the period 2020 to 2050 of £1.6bn. Plus 135 GWh of renewable energy generation, through £145m announced to date is to be invested in four acquired projects and continued double digit growth in the profitability of its B2B water retail businesses.
Ms Davy added: "Our twin track strategy of both organic and acquisitive growth in UK water ensures we continue to drive long term value, with the Bristol acquisition benefits on track, alongside a growing portfolio of complementary services delivered through our business to business retailers and growing renewable energy business.
"Everyone at Pennon and in our wider supply chain works relentlessly to make change happen and I want to thank all my colleagues for their contribution to these results. I also want to thank them in advance for what they are about to do, as we look ahead to 2030, creating 2,000 new jobs in the region and delivering a sustainable future for all."
