(Reuters) - Pennon (LON:PNN) pushed back its expectation of getting an industry-leading environmental rating by a year to 2025, the British water firm said on Monday, as heavier rainfall and stormy weather weighed on the company's performance.
The company said its annual financial performance was in line with its own expectations, and expects to retain a 2 star Environmental Performance Assessment (EPA) status for 2023.
WHY IT'S IMPORTANT
The water industry in England and Wales has come under pressure over the condition of infrastructure and dumping of raw sewage that has dirtied rivers and beaches, with the UK expected to hold a general election this year.
Storm overflow discharges are also under significant scrutiny. The Environment Agency had said all water companies would be required to monitor 100% of storm overflows by the end of 2023.
CONTEXT
Pennon's South West Water underperformed on several metrics in the government's 2022 EPA.
EPA measures a water company's performance on a rating of 1 to 4, with 1 indicating underperformance and 4 industry leading, based on various metrics related to sewerage and pollution.
BY THE NUMBERS
Pennon said a 50% increase in rainfall over the long-term average has impacted headline levels for storm overflows and wastewater pollution.
For 2024, six of the seven EPA metrics are tracking positively towards a 4 star performance, but current conditions have pushed benefits from its Pollution Incident Reduction Plan until 2025, the company said.
KEY QUOTES
"The significantly increased wastewater flows have led to increased use of storm overflows to help relieve the pressure, and that's impacted some headline numbers. But on the whole, profit pipelines appear to be in robust shape," analysts at Hargreaves Lansdown (LON:HRGV) said in a note.
WHAT'S NEXT
Pennon will report its results for the year ended March 2024 on May 21.