China will remain a source of growth for Europe’s second-biggest water and waste company despite a slowdown, Suez Chief Executive Officer Jean-Louis Chaussade said.
“Environmental problems are still the main concern for the Chinese government and they have taken a lot of steps in order to improve their environment,” Chaussade said in a Bloomberg TV interview. “I see development in China more than recession, we will continue to grow.”
The Shanghai Composite Index has plunged more than 40 percent from its peak amid concerns over the Chinese economy. In response, Chinese authorities have taken steps to stimulate the economy including cutting interest rates to record lows, encouraging banks to lend and plans for new infrastructure spending.
“China is slowing down in terms of economic growth but it’s still growing quite fast,” Chaussade said Wednesday. There will be more and more demand for services like hazardous waste management, incineration and waste-to-energy projects, he said. The utility also has no plans to change its strategy on China amid the current stock market volatility, he said.
Suez has made China a priority in part through a waste and water partnership with Chongqing Water Group Co. It’s counting on the government’s continued focus on environmental improvements amid rising public discontent with air and water pollution.
In July, Suez reported first-half profit fell 45 percent as asset-sale proceeds from 2014 weren’t repeated and the waste-treatment business remained sluggish in Europe.
At home in France, where Suez competes with Veolia Environnement SA for municipal waste and water contracts, Chaussade urged President Francois Hollande’s government to move more aggressively with economic reforms. Suez shares have risen 9 percent this year compared with 28 percent for Veolia.
“The government is going in the right direction but has to speed up if it wants to see results in terms of investment and growth,” the CEO said.