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Enterprise

Pennon water company owner posts huge loss after parasite outbreak led to diarrhoea

Pennon, the owner of South West Water, said profits fell after it was forced to clean and flush its water network 27 times after a parasite was found in a reservoir

Pennon reported an 拢18.6m underlying loss before tax, after having to navigate a parasite outbreak.(Image: Rui Vieira/PA Wire)

Pennon, the water company, has reported a significant increase in losses as it grapples with the financial fallout from a parasite outbreak that caused diarrhoea.

The South West Water owner revealed that its underlying pre-tax profit had plummeted from a £19.1m profit in the first half of last year to an £18.6m loss, as reported by .

Pennon attributed the escalating losses to a £16m expense incurred to restore quality water supplies to Brixham following the parasite outbreak, and £4m in restructuring costs.

The diarrhoea-inducing cryptosporidium was discovered in a reservoir in May, prompting 17,000 households to boil their drinking water for eight weeks. The company was compelled to clean and flush its water network 27 times, in addition to replacing sections of its grid.

Despite these challenges, revenue at the water company surged significantly to £527m, largely due to the acquisition of Sutton and East Surrey Group, which was finalised earlier this year. However, despite the revenue boost from the acquisition, the new business also posted losses, with Pennon stating it was concentrating "on reducing interest costs and right sizing the cost base to improve profitability".

The group has also increased its capital expenditure, rising from £266m last year to £332m. Nevertheless, its capitalise expenditure run rate was slightly lower in the second half than last year.

"Water companies are rightly being challenged to do more for customers today and invest more for the future," said Pennon chief executive Susan Davy.

"We continue to lead the way in helping customers to use less and save more with a range of money saving campaigns and pilots. Whilst that’s led to lower wholesale water business revenues, it’s the right thing to do."