Suez Environnement Slumps After Warning on Profit: Paris Mover
Suez Environnement, Europe’s second- biggest water utility, plunged to a record low after saying profit will be crimped by an “uncertain” economic outlook as an Australian contract faces delays and cost overruns.
Suez Environnement fell as much as 11 percent to 8.13 euros, the lowest since the shares first started trading in 2008. The shares were at 8.56 euros as of 11:30 a.m. in Paris. Veolia Environnement SA (VIE) slid as much as 4.7 percent.
Sales and earnings before interest, taxes, depreciation and amortization will be flat in 2012, the Paris-based utility said yesterday in a statement. That compared with a previous target that they would match or beat 2011 levels.
The utility also announced further provisions for the construction of a desalination plant in Melbourne and reduced the market value of its stake in Italian utility Acea SpA.
The warning was Suez Environnement’s second this year after the utility reduced its earnings target for 2012 in February amid “lackluster” economic growth and a 43 percent drop in full-year profit. The utility, which is 34 percent-owned by GDF Suez (GSZ) SA, will take a charge of 85 million euros ($107 million) for an Australian desalination plant, the second provision on the order since October.
Suez Environnement had anticipated this year and next would be growth years after struggling, like larger rival Veolia, to boost industrial waste sorting following the 2009 recession that shut factories.
The utility said it would raise a cost-savings target by 40 million euros this year and lower net investment by 100 million euros.
“The downward trend observed in waste activities in the first quarter in Europe has accelerated in the second,” Suez Environnement said. Waste volumes in Europe were down 4 percent at the end of May compared with last year, with a “stronger deterioration” in the U.K. and the Netherlands.
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