Suez Environnement Maintains Dividend Even as Profit Slides

Suez Environnement (SEV), the world’s second-biggest water company, maintained its full-year dividend even after reporting a 4 percent decline in nine-month profit.

The payout will be 65 euro cents (85 U.S. cents) a share for 2012, the same as last year, Chief Financial Officer Jean- Marc Boursier said today on a conference call. The shares rose the most in a year.

Suez Environnement’s decision to keep the dividend unchanged contrasts with larger competitor Veolia Environnement, which plans to trim its payout to 70 euro cents a share this year and next, from 1.21 euros. Both utilities have seen demand for industrial waste collection slump after manufacturers shuttered factories to survive the economic slowdown.

Suez Environnement’s earnings before interest, tax, depreciation and amortization dropped to 1.77 billion euros in the first nine months of the year from 1.85 billion euros a year earlier, the Paris-based company said today in a statement. Sales rose 1.3 percent to 11.1 billion euros.

“Waste activity Europe is still being affected by a difficult economic environment,” Chief Executive Officer Jean- Louis Chaussade said in the statement. Waste-handling volumes dropped about 3 percent in the third quarter, a similar decline as in the previous three months.

Australia Plant

Suez Environnement, which is 34 percent-owned by utility GDF Suez (GSZ) SA, said earlier this year that impairment on an Australian desalination plant, combined with an “uncertain” economic environment, would leave Ebitda and sales unchanged in 2012. It maintained that target today.

The Melbourne plant is expected to be running at full capacity at the end of the year and is no longer “burning cash,” Boursier said. The “cash-neutral” project will underpin Ebitda of more than 700 million euros in the final three months of the year, he said.

Suez Environnement rose as much as 6.9 percent in Paris trading, the biggest intraday gain since Oct. 12, 2011. The stock was up 4.6 percent at 8.546 euros as of 11:15 a.m. local time, trimming its decline this year to 3.9 percent.

Suez Environnement and Veolia denied this month that there is a plan for a tie-up. “We are not working on this merger with Veolia -- there is no such project,” Boursier said today.

Suez Environnement said a plan to close 15 waste-handling sites in Europe is half complete. The utility may cut costs by more than the 150 million euros targeted for 2012 and won’t spend more than 1.2 billion euros this year, Boursier said.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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