Pennon has announced that it has returned to an underlying profit before tax of £135.1m in the year to 31 March, after posting a loss of £35.1m in the previous year.

The FTSE 250 utilities firm, which owns South West Water, posted a 23% revenue increase, which totalled just over £1.29bn, while its earnings jumped 54% to £519.2m, which was driven by a “focus on cost management”.

It added that its regulated water revenue increased by 25% year-on-year as a result of increased regulatory revenue allowances and higher consumption.

The firm has also continued with its pollution incident reduction plan, which continues to deliver improvements, as pollutions reduced by 34%.

Furthermore, its investment in Pennon Power has continued with two of its four sites being fully energised and generating revenues.

The results come as Pennon recorded £643.6m of capital investment across the group in the year as part of its AMP8 programme, reflecting £588.5m of investment in its water businesses as it focuses on delivering on its programme commitments.

Group CEO at Pennon, Keith Haslett, stated: "I am delighted to have started my tenure as chief executive at Pennon, at what is an important moment both for the Group and for the wider UK water sector.

"As Pennon enters a new era under my leadership, it does so on the back of a return to profitability and the mobilisation of our AMP8 investment plan. However, it is clear that there is more work to do, and improving operational discipline and capital delivery will be important to meet the commitments we have made and the standards we aspire to achieve in the future.

"Focusing on operational excellence, driving a performance culture and delivering through technology and innovation will be my key priorities, to improve performance for our customers and the communities we serve."

In its outlook, Pennon said that it is “well positioned to deliver” for customers, communities and the environment in the years ahead.

It added that its financial performance will continue to improve through increased revenues and ongoing focus on cost management.

The utilities firm stated that it will continue to drive efficiency and innovation in its approach as its focuses on its priorities of building resilience, fixing storm overflows, powering net zero ambitions and delivering improved services for customers.

It has also committed a £250m case submission to the regulator, Ofwat, for further investment in asset health, "providing further growth opportunity whilst supporting resilience".

Investment director at AJ Bell, Russ Mould, concluded: "The company has had to deal with its own challenges – notably the parasite outbreak in its supply in Devon in 2024 for which it was recently fined – but a return to profitability underlines the company’s progress.

"Pennon has largely kept a lid on costs and has benefited from higher customer bills under the new regulatory settlement and increased consumption, allowing for a decent bump in the dividend.

"However, mixed operational performance and material penalties for failing to hit environmental and service targets agreed with Ofwat show there is work for Haslett to do. A strategic update promised before the end of September will be closely scrutinised."

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