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Suez Environnement Sees Trend for Lower French Water Tariffs

Aug. 1 (Bloomberg) -- Suez Environnement, Europe’s second-biggest waste and water utility, said French municipal water contracts are being signed at lower rates.

“Are we expecting a trend for lower prices during renegotiations in France? The answer is yes,” Chief Financial Officer Jean-Marc Boursier said today on a conference call, referring to accords due for renewal. “We remain more or less in line with what we published at the start of the year which is 10 to 12 percent lower at the moment of renegotiation.”

Competitor Veolia Environnement SA’s margins are shrinking on the French market due to “contractual erosion,” it said May 4. Veolia has 34.5 percent of the French drinking-water market and 22 percent of the treatment industry while Suez Environnement, through its Lyonnaise des Eaux unit, has 20 percent of the markets for both water distribution and treatment, according to 2010 figures from industry group FP2E.

“In France we win more sales than we lose,” Boursier said. “Sometimes we are forced to lower prices,” which can be due to less investment or services included in the contracts, he said.

“For the first half of 2012 we have renewed all our big contracts,” Chief Executive Officer Jean-Louis Chaussade said.

Last month, Suez Environnement signed a preliminary agreement to renew a water-treatment contract in Bordeaux that will lower rates for households.

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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