Pennon expects 3% rise in interim profits
By BFN News | 03:14 PM | Thursday 15 November, 2012
Pennon Group expects first half pre-tax profits to be up over 3% to £111m and to announce an interim dividend of 8.76p per share - up 6.6%.
The group said that as flagged in its interim management statement in August, 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.
It says: "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."
At 3:14pm: (LON:PNN) Pennon Group share price was -25.75p at 644.25p
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