Suez Environnement Says Waste Handling May Improve This Year

Suez Environnement, Europe’s second-biggest water company, reported first-half profit more than tripled and said its waste-handling business may pick up.

Net income rose to 132 million euros ($175 million) from 40 million euros a year earlier after provisions for a desalination project in Australia weren’t repeated, Chief Executive Officer Jean-Louis Chaussade said today on a conference call.

The utility raised a cost-cutting target for the year and said an expected drop in waste handling may be smaller than in the first six months. The shares rose 4 percent to 10.85 euros as of 9:03 a.m. in Paris trading.

Suez Environnement and Veolia Environnement SA are seeing waste-treatment volumes decline as economic weakness in Europe hurts factory output. The utilities compete in France to provide municipal waste and water services as well as internationally for big treatment installations like desalination plants. Suez recorded provisions on a plant in Melbourne last year on delays and costs.

“There could be a slight rebound in economic activity in the second half that could translate into a little less of a drop in volumes in the second half compared to the first,” Chaussade said. The drop in waste volumes could be 3 percent for the year compared with 3.8 percent in the first six months.

The utility raised its 2013 goal for cost cuts to 180 million euros from the 150 million euros announced in February.

Separately, Suez Environnement signed a waste water deal with Barcelona that will generate 3.5 billion euros in revenues over 35 years, according to today’s statement.

Beat Estimates

Earnings before interest, taxes, depreciation and amortization at the Paris-based utility rose 7.2 percent to 1.21 billion euros, beating the 1.19 billion-euro average estimate of four analysts surveyed by Bloomberg.

The utility, 34 percent-owned by GDF Suez SA, the former French gas monopoly, reiterated its earnings targets for the year. The company in February forecast Ebitda of at least 2.55 billion euros, and a debt-to-Ebitda ratio of about 3 for 2013. The utility also pledged to keep its dividend payout this year equal to or higher than the 65 euro cents a share it paid in 2012.

Suez Environnement’s net debt was little changed at 7.83 billion euros compared with a year earlier.

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