Utilities group Pennon has reported a 88% drop in profit, before tax, in its annual report.
The Exeter firm recorded that its profits fell to £400,000 from £15.6m the previous year. It said extreme weather patterns and increased costs, at a time when customers are struggling with the cost-of-living and high energy bills contributed to the dip.
However, the firm, which operates South West Water, Bournemouth Water, and the recently acquired Bristol Water said underlying revenue increased by 4.1% to £825m over the last 12 months.
The company added that it had allocated £160m for investment in renewable energy generation.
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Susan Davy, group chief executive, commented: "This has been an extraordinary year for Pennon in which extreme weather patterns have tested our operational resilience. At the same time, inflationary pressures have proven our financial resilience. We have been able to respond to both, with agility and pace, focusing on the things that matter right now, and tackling the biggest challenges head on. Whether it's the use of storm overflows, water resilience, the cost of living crisis or climate change, we are investing more than ever before. We are also investing for the future.
"In a year in which the sector has been rightly challenged to clean up its act, we have delivered improvements in environmental performance, building on our sector leading 100% water quality for our 860 miles of coastline and on track to reduce our use of storm overflows by 50% by 2025. I am also clear that one pollution is one too many, and numbers are falling as we implement sustained change."
Addressing how the firm aims to help its customers going forward, Ms Davy detailed how Pennon was making steps towards easing water poverty.
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She added: "Water is essential for life. As one of only two regions officially in drought, and with the hottest, driest, weather on record, we are investing to break through the drought cycle, deploying innovative solutions such as desalination, repurposing ex quarries and mines into mini reservoirs to create more capacity in Cornwall and Devon as and when it's needed, and empowering customers to use less and save money.
"At Pennon, we believe that every customer should benefit from what we do especially in this cost of living crisis. With over £85 million customer benefits delivered, we have kept bills as low as possible, with below inflationary increases, considerably lower than the sector average of c.7%. We continue to focus on eradicating water poverty in our region, with many more customers benefiting from affordability and support tariffs. At the same time, more customers than ever before are shareholders in our Group, with our socially responsible business model, Watershare+, giving customers both a stake and a say in their local water company.
"And given the ongoing volatility of the energy markets, we have boosted the renewable energy pillar of our Net Zero strategy, with investments in energy generation well underway, and with more to come.
"We can do all this, because of our robust balance sheet and financial resilience, supported by year on year increases in outperformance. In summary, we are tackling the biggest challenges head on, focusing on the things that matter most, investing more, and in building the capabilities for the future."
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