Suez Net Falls in 'Uncertain' Environment; Shares Retreatby and
Suez CEO sees contrasts in Europe growth with France lagging
Suez sees a 'minimum' of EU300 million savings in 2016-17
Suez SA , the French waste and water-treatment company, reported a decline in 2015 earnings and said the economic environment in Europe remains uncertain. The shares retreated.
Net income fell 2.2 percent in 2015 to EU408 million ($449.2 million), the company said Wednesday in a statement. That matched an average analyst forecast of 405 million euros compiled by Bloomberg. The shares fell 1.6 percent to 16.62 euros at 09:16 a.m. in Paris.
"In what remains an uncertain environment, we are redoubling our commercial development efforts and maintaining a strong focus on cost control and continued efficiency and competitiveness improvement,” Chief Executive Officer Jean-Louis Chaussade said in the statement.
The company, based in La Defense near Paris, has expanded to Spain and Italy as well as Africa and the Middle East to boost profitability amid pricing pressures at home and a slower European industrial-waste business, which as weighed on the cost of recycled materials such as metals. It will pay a dividend of 0.65 euro cents a share.
For 2016, Suez said it targets an increase of at least 2% in organic revenue growth and expects a rise in earnings before interest and taxes exceeding that rate. It also expects to propose a dividend at least equivalent to that of 2015.
“We look with confidence to 2016,” Chaussade said during a call with journalists. There will be contrasts in growth in different parts of Europe, with operations in the U.K., Spain and the Netherlands seen dynamic, while France is expected to lag behind, he said.
The company reiterated a target of 3 billion euros of Ebitda in 2017.
In 2015, the group’s revenue benefited from a positive currency impact of EU354 million, mainly due to the depreciation of the euro compared with the US dollar and the pound. The first-time consolidation of Process Group, B&V and Poseidon contributed EU69 million to revenue.
The Compass cost-saving program amounted to EU160 million last year, from an initial objective of EU150 million, as the group accelerated it to offset the impact of the lackluster environment in Europe in 2015, Suez said. For 2016-17, the group targets a ’minimum’ of EU300 million of cost savings, the CEO said during an analyst presentation.
Asked during the call about a potential increase of Engie SA ’s stake in Suez, Chaussade declined to comment. Engie holds almost 34% in Suez and has been reported since the end of last year as seeking to regain control of the waste and water utility.