Suez Environnement Advances in Paris on Europe Waste Revival
Suez Environnement (SEV) rose to a more than two-year high in Paris after the second-biggest European water company said its waste-handling business is recovering.
The company gained as much as 3.6 percent to 13.085 euros, the highest intraday price since Aug. 1, 2011. French, U.K. and Scandinavian conditions improved, the Paris-based utility said.
“In a still-difficult macroeconomic context, the third quarter seems to show some early signs of stabilization,” Chief Financial Officer Jean-Marc Boursier told a conference call.
Suez reported nine-month earnings before interest, taxes, depreciation and amortization climbed 5 percent to 1.86 billion euros ($2.6 billion). Sales fell 3 percent to 10.8 billion euros and volumes of industrial waste handled slid less in the three months ended Sept. 30 compared with the previous two quarters.
The company rose 1.4 percent to 12.81 euros by 12:36 p.m. in Paris trading, bringing its gain for the year to 41 percent.
Suez Environnement and the bigger Veolia Environnement SA (VIE) have seen waste-treatment volumes drop as economic weakness in Europe hurts factory output. They compete to provide municipal and industrial waste and water services as well as for large treatment installations like desalination plants.
“We are continuing to close sites in Europe as a way of restructuring our waste division,” Boursier said. At the end of September, the utility had shut 42 sites compared with 29 at the end of the first half, in France, Germany and the Netherlands.
While Suez will maintain a forecast for waste volumes to drop 3 percent this year, they will stabilize in 2014, he said.
Local conditions haven’t yet improved in the Netherlands.
Like-for-like waste revenue rose 0.3 percent in the third quarter compared with a drop of 4.5 percent in the first half. Waste volumes slid 3.5 percent in the three months compared with 4.3 percent in the first quarter and 3.8 percent in the second.
Suez retained financial targets including cutting costs in 2013 by 180 million euros and paying a dividend equal to or more than 2012’s 65 euro cents a share. It said last week that a dispute over building delays at a Melbourne, Australia, seawater treatment plant was resolved and 58 million euros in provisions set aside last year would be reversed in the fourth quarter.
“We believe that consensus Ebitda expectations for the full year should be increased,” Emmanuel Retif, an analyst at Raymond James, said today in a note. He maintained an outperform rating on the company’s shares.
The utility, 36 percent held by GDF Suez SA (GSZ), has forecast 2013 Ebitda of at least 2.55 billion euros and debt-to-Ebitda of about 3 times for 2013. Suez sees free cash flow of at least 1 billion euros. Net financial debt was 7.82 billion euros at the end of September, compared with 7.83 billion euros in June.
To contact the reporter on this story: Tara Patel in Paris at firstname.lastname@example.org