StockMarketWire.com - Water utility Pennon said it expected to deliver first-half results in line with expectations the as the pandemic drives greater demand for water.

In a trading update for the six months through September, the company said Covid-19 had led to a substantial population increase in the regions it served.

'Alongside this, as restrictions have eased businesses have ramped up demand, resulting in increased water usage and an increase in overall revenue,' it added.

Pennon said pressure on its operational network had remained high, given the higher demand.

Overall, however, it said its earnings before interest, tax, depreciation and amortisation remained in line with management expectations as increased costs have been offset by increased revenues.

On a more negative note, Pennon said a third-party utility company had in late August damaged main supply pipes at Carland Cross in Cornwall, causing a localised loss of supply.

'Any impact from this event in terms of ODI [outcome deliver incentive] mechanism is being evaluated,' it said.

Pennon said the high current inflationary environment was anticipated to increase certain costs during the 2022 financial, while finance costs also would rise.

It added, however, that it had relatively lower rates of index-linked debt in its debt portfolio.


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