Pennon reports results Wednesday as Barclays sees upside

Investing.com -- Pennon Group will report its fiscal year 2025/26 results on Wednesday, June 10, marking the first results presentation under new CEO Keith Haslett, according to Barclays analysts.

Barclays maintains an overweight rating on the UK water utility and expects the results to provide visibility on first-year delivery under the AMP8 regulatory period. The bank's estimates exceed Bloomberg consensus, with underlying group EBITDA forecast at £561 million compared to consensus of £532 million, and underlying group operating profit at £361 million versus consensus of £333 million.

The bank sees potential upside pressure on return on regulated equity, driven by inflation-related financing benefits. Severn Trent's financing outperformance reached 4.8% in fiscal 2025/26, while United Utilities achieved 3.1%. Barclays expects a similar inflation tailwind for Pennon's RORE and suggests the company's current 7% real RORE guidance for AMP8 may be revised.

Following United Utilities' £2.5 billion re-opener and Severn Trent's approximately £600 million re-opener, market attention will focus on Pennon's potential re-opener amount and related funding plans. United Utilities subsequently announced an £800 million equity raise.

Pennon postponed its results from June 2 to June 10 due to the Brixham court case, which resulted in a £1.9 million fine for a Cryptosporidium outbreak. An Environment Agency hearing originally scheduled for June 4 has been rescheduled to July 30. In 2024, Pennon reduced its final dividend by £2.4 million after receiving a £2.2 million environmental fine.

Barclays estimates Pennon trades at a 1.7% premium to March 2027 regulatory asset base, compared to Severn Trent at 15.9% and United Utilities at 13.3%.

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