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LONDON (Reuters) - British water supplier Pennon Group reported a 7 percent drop in first-half core profits on Friday, hit by a price freeze in its regulated business, but said it was still on track to increase the dividend this year by well above inflation.
The utility said earnings before interest, tax, depreciation and amortisation fell to 200 million pounds in the six months to Sept. 30, on group revenue up 3.8 percent at 692 million pounds. Underlying profits before tax were down 9.8 percent at 100 million pounds before booking in an exceptional credit from pension scheme changes of 14.9 million pounds.
Shareholders will receive an interim dividend payment of 9.98 pence, up 6.3 percent, Pennon said, adding that it was on track to also deliver a full-year dividend increase of 4 percent above inflation.
Shares in Pennon were trading 1 percent higher at 849.50 pence by 0820 GMT.
Britain's water suppliers are awaiting a decision by regulator Ofwat due on Dec. 12 that will determine the prices the companies are allowed to charge their customers until 2020.
Pennon's regional South West Water business was given an early approval of its business plan to 2020, placing it at an advantage over its peers as it can already estimate its likely revenue flows until the end of the decade.
Revenue at South West Water in the first half of its financial year ending next March was hit by a decision to freeze customer prices, dropping to 268.3 million pounds.
Its Viridor subsidiary, focused on waste and recycling services, is expected to deliver full-year core earnings exceeding those made last year due to returns on investments in several projects turning waste into energy.
The core earnings contribution from those projects is expected to reach 100 million pounds in 2016/17, Finance Director David Dupont told Reuters.
(Reporting by Karolin Schaps; Editing by David Goodman, Greg Mahlich)