Suez Environnement Profit Drops as Waste Treatment Falls
Suez Environnement, Europe’s second-biggest water company, said first-quarter earnings fell 4.5 percent as a sluggish economy and a cold spell in February hurt its waste treatment business.
Earnings before interest, taxes, depreciation and amortization, or Ebitda, dropped to 566 million euros ($744 million) from 592 million euros a year earlier, the Paris-based company said today in a statement. Sales increased 2.2 percent to 3.59 billion euros.
The French utility maintained full-year financial targets, which were to match or beat Ebitda, sales and dividends compared with 2011.
“The results for the first quarter have been impacted by the slowdown of treated waste volumes,” Chief Executive Officer Jean-Louis Chaussade said in the statement. The water business in Europe and abroad showed “good growth.”
Suez Environnement, which is 34 percent-owned by GDF Suez (GSZ) SA, took a charge for an Australian desalination project in October due to bad weather and strike action at the building site. The company lowered its 2012 earnings targets, blaming a “lackluster” outlook for economic growth, especially in Europe.
The utility is “slightly behind” expectations for performance after the first quarter due to lower volumes of waste treated, according to Chief Financial Officer Jean-Marc Boursier.
The shortfall amounts to about 200,000 tons of waste for treatment compared with expectations, Boursier said. About one third of the drop was due to unseasonably cold weather in February in France, which led to factory halts.
“Waste volumes have come back since mid-March,” he said. Prices for recycled commodities such as paper and scrap metal were lower in the first three months compared with the same period last year.
Development of the Melbourne plant is 92 percent complete and building is continuing, Chaussade said today on a conference call. Suez Environnment plans to start the plant in the middle of the year and achieve full operating capacity by the end of 2012.
Work on maintaining and developing waste and water installations had a “very severe decrease” in Spain at the Agbar unit and were also lower at France’s Lyonnaise des Eaux, Boursier said.
Net financial debt was stable compared with December 31 at 7.56 billion euros, the utility said today.
The company plans to save 360 million euros in costs from 2010 to 2012.
“We believe that their guidance is getting challenging,” Yohann Terry, an analyst at Exane BNP Paribas, wrote in a note today. The utility could boost 2012 cost cutting, the bank said.
To contact the reporter on this story: Tara Patel in Paris at email@example.com