Tariff freeze hits profit at British water utility Pennon

LONDON, Nov 28 (Reuters) - British water supplier Pennon Group reported a 7 percent drop in first-half profit but the company said its strong business outlook allowed it to pay shareholders an interim dividend of 9.98 pence, up 6.3 percent year on year.

The utility said core earnings fell to 200 million pounds ($314 million) over the first half of its financial year to Sept. 30, with group revenue up 3.8 percent at 692 million pounds.

Pennon Group (Other OTC: PEGRF - news) said revenue at its main South West Water subsidiary was hit by a decision to freeze customer prices and dropped to 268.3 million pounds. (1 US dollar = 0.6363 British pound) (Reporting by Karolin Schaps; Editing by David Goodman)