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Tuesday, December 1, 2020

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  • Pennon Group says its performance in the fiscal H1 matches its internal expectations.
  • The UK waste management firm expects a £10 million hit due to COVID-19.
  • The water utility company says its £4.2 billion Viridor sale resulted in £3.7 billion of cash.

In an announcement on Friday, Pennon Group plc (LON: PNN) said its fiscal first-half performance continued to match its internal expectations.

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Shares of the company jumped about 2% in the morning session. Including the price action, Pennon Group is now trading at £10.45 per share versus £10.26 per share at the start of the year. At the time of writing, the British company has a market cap of £4.40 billion and has a price to earnings ratio of 37.78.

Pennon Group expects a £10 million hit due to COVID-19

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For the year that will conclude on 31st March, Pennon Group said it expects to take a £10 million hit to its annual revenue due to the Coronavirus pandemic that has so far infected more than 400,000 people in the United Kingdom and caused a little under 42 thousand deaths.

The Exeter-based company said that the virus outbreak weighed heavily on water usage across both commercial and business customers. In separate news from the UK, Halma plc said earlier this week that its adjusted profit tanked 10% in fiscal 2021.

Pennon Group also highlighted in its trading statement on Friday that its £4.2 billion Viridor sale resulted in £3.7 billion of cash. The company also expressed commitment to exploring market opportunities and maximizing value for shareholders.

According to the water utility and waste management company:

“Any use of capital to pursue an investment opportunity will be compared with the alternative of returning that capital to shareholders, ensuring our strong focus on financial discipline is maintained.”

Pennon Group contributed £36 million to its pension schemes

Proceeds from Viridor, as per Pennon Group, have already been used partially to repay roughly 65% of its debt that is valued at £900 million. The company also highlighted to have contributed close to £36 million to its pension schemes.

By September 30th, Pennon Group forecasts its cash and committed facilities to be valued at £3 billion. According to Steve Clayton, manager of the HL Select UK Income Shares:

“The group are looking at acquisitions, but not saying what those might be. They will be returning some of the money back to shareholders, but we have to wait until November to learn how they plan to do this. November’s announcement of their future plans is critical. Given management’s success to date, investors will be inclined to sit tight and wait for the news.”

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