Profits jump at Pennon

Water companies provided some shelter from market turbulence today after better-than-expected annual results from South West Water's owner Pennon.

Profits from the regulated utility rose 8.7 per cent to £132.5m, while its waste-management arm Viridor jumped 34.8 per cent to £55.4m and overall group profits improved 14.2 per cent to £189.1m for the year to 31 March.

Pennon shares rose xx per cent to xxp in a weak market as other players in the industry also benefitted from a note by Royal London Asset Management highlighting the utility sector as a potential haven for investors in the UK's age of austerity.

A pledge by Pennon to increase its dividend payment to shareholders by 4 per cent a year between 2010/11 and at least 2014/15 also lifted shares. The promise came despite the "very tough challenge" set by regulator Ofwat following its latest price determination earlier this year. Pennon wanted price hikes but will instead have to meet a real-terms 1 per cent cut in bills by 2015.