Trading Statement

RNS Number : 2545R

Pennon Group PLC

15 November 2012

 

PENNON GROUP TRADING STATEMENT

Pennon is today providing an update on trading performance ahead of the Half Year Results announcement on 29 November 2012. 

As flagged in the Interim Management Statement of 17 August 2012, Viridor's performance has been impacted by recyclate prices which have remained under pressure reflecting world economic conditions.  Overall average price per tonne for the half year fell to £103, 17.6% lower than for H1 2011/12. However prices were significantly lower than this by the end of the second quarter.  Recycling revenues for H1 2012/13 are expected to be £18.8m lower than the same period last year. While we have taken action to reduce our cost base and have recovered about half of the impact of the reduction in recyclate prices through the terms of customer supply contracts and cost reductions, PBIT plus joint ventures is expected to be £27.8m in H1 2012/13, down 30.5% on H1 2011/12.  Analyst forecasts for the full year currently assume a recovery in recyclates prices in the second half of the year.  However, we have not seen an improvement in prices to date in the third quarter and are therefore cautious on the prospects for recyclate prices.  Accordingly we expect Viridor's PBIT plus joint ventures for the full year to be somewhat below the bottom of the current range of market expectations.

However, Viridor continues to make strong progress on its growing pipeline of PPP/EfW projects which underpins its long term profit momentum.  Since March it has reached financial close on both the Glasgow DBFO and the South London PPP, become preferred bidder on the Peterborough PPP and achieved a planning relaxation for its proposed Dunbar EfW enabling it to serve the whole of Scotland.

South West Water is continuing its strong operational performance against the 2010/15 regulatory contract with further advances in operating efficiency and customer service. Rigorous cost control, efficiency delivery and stable interest costs are expected to deliver profit before tax for the half year for South West Water up 10% to more than £83m.

We expect to report Pennon Group profit before tax for the half year up over 3% to £111m and to announce an interim dividend up 6.6% to 8.76p per share.

A conference call will be held this afternoon (Thursday 15 November) at 3:30pm.

Dial in details are as follows:

Telephone number: [phone]

Password: Pennon

Further information on Pennon, South West Water and Viridor can be found on the Group's website, www.pennon-group.co.uk

Cautionary statement in respect of forward-looking statements

This Statement contains forward-looking statements relating to Pennon Group's operations, performance and financial position based on current expectations of, and assumptions and forecasts made by, Pennon Group management.  Words such as "aims", "anticipates", "believes", "continue", "could", "due", "estimates", "expects", "goal", "intends", "may", "plans", "projects", "remains", "seeks", "should", "targets", "will" and related and similar expressions as well as statements in the future tense identify forward-looking statements.  By their very nature forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will or will not occur in the future.  Various known and unknown risks, uncertainties and other factors could lead to substantial differences between the actual future results, financial situation, development or performance of the Group and those expressed or implied in this statement.  These risks, uncertainties and factors include, but are not limited to, changes in the economies and markets in which Pennon Group operates; changes in the regulatory and competition frameworks in which Pennon Group operates; the impact of legal or other proceedings against or which affect Pennon Group; and changes in interest and exchange rates.  Further details of Pennon Group's principal risks and uncertainties are set out in Pennon Group's 2012 Annual Report which can be viewed online at http://www.pennonannualreport2012.co.uk/   Undue reliance should not be placed on forward-looking statements which are made only as of the date of this Statement.  Nothing in this Statement should be construed as a profit forecast.  The Group accepts no obligation publicly to revise or update these forward-looking statements or adjust them as a result of new information or for future events or developments, except to the extent legally required.

 

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