Pennon Group has improved its H1 pretax profit to £128.1m, from £106.8m. Revenue was £685.5m, from £689.1m.
Dividend was 11.09p a share, from 10.46p.
"Pennon has delivered a good performance in the first half of 2016/17 across its water and waste businesses," said CEO Chris Loughlin.
"South West Water continues to achieve a sector-leading RORE() at 11.7% as it outperforms for its customers, and is expecting momentum and delivery to continue.
"Viridor is on track to contribute the targeted c.£100 million of EBITDA from its ERF() portfolio this year while self-help measures are driving improved EBITDA margins in recycling.
"We are continuing to invest for growth. Following a review, we have taken the decision to commit to a £252 million ERF at Avonmouth, expanding our portfolio to twelve plants.
"This is a significant investment in the UK's environmental infrastructure and will add to the already expected significant increase in EBITDA from our ERF portfolio once all facilities are fully operational. In water, we are announcing a new retail venture for business customers with South Staffs/Cambridge Water.
"We remain focused on driving value through efficiency. South West Water has delivered £80 million of Totex savings since the beginning of K6 (2015-2020), while our recently completed Shared Services Review will increase total Group cost savings from the c.£11 million previously announced to c.£17 million p.a from 2019.
"We believe Pennon is well positioned for the future and is on track to meet management expectations for the full year 2016/17. Our performance underpins our sector-leading dividend policy of 4% growth per annum above RPI inflation to 2020."