SOUTH West Water parent group Pennon issued a warning about trading at its waste division as recycling prices continue to slide.

Pennon said the first half performance so far at Viridor, which provides recycling and waste collection services, was “significantly” below a year earlier, when recycling prices peaked.

The waste business – seen as the group’s growth engine less than a year ago – has suffered from tumbling prices for waste paper and recovered metals in recent months as wider economic woes take their toll.

Pennon, which has been slashing costs at Viridor and renegotiating customer contracts to offset the division’s trading troubles, said: “Viridor is not immune to the difficult conditions in the world economy”.