September 13, 2001 — The French utilities services company Suez announced it had a 13 percent rise in the first half pre-exceptional net profit, saying it was a result of growth in its energy, water and waste management divisions.
Suez said the results indicate it should meet its medium-term target for double-digit growth.
Total group revenues rose to 20.6 billion euros in the first half of 2001, up 27% against the first half of 2000. The three global businesses (Energy, Water and Waste Services) represented more than 98% of the total. Revenues from outside France and Belgium (11.1 billion euros), grew 48%. These international revenues now represent 54% of the total, as compared to 46% in the first half of 2000.
This progress results mostly from organic growth. Excluding changes in the scope of consolidation and exchange rate fluctuations as well as energy trading, organic growth rose to 9.1%. Including energy trading, it reached 19.2%
External growth rose to 7.3%. Changes in the scope of consolidation (1,190 million euros) relate to the Group’s recent acquisitions, mainly in Energy with Electrabel Nederland (ex-EPON, Netherlands), Energie Saar Lor Lux (Germany), Tractebel LNG North America (ex Cabot LNG, United States) and the subsidiaries of Sithe Energies Inc. (Thailand), and in Waste Services with Sembsita Australia (ex. Pacific Waste Management, Australia) and Sellbergs (Sweden).
Group operating income rose to more that 2.1 billion euros. Growth was particulary strong in Energy and Water.
In Energy, the contribution of Electricitï¿½t Gaz Europe (EGE) was marked by rate reductions to residential clients in Belgium, as phased. Inversely, Electricitï¿½t Gaz International (EGI) registered strong progress in its contribution, stemming mainly from the expansion of its activities in South and North America. In South America, this growth came mainly from the improved results of Gerasul (Brazil), following an output increase, a rise in prices and the entry into service of the five units of the ITA power plant. Growth in North America came mainly from the improvement in energy trading activities and from the acquisition of Tractebel LNG North America (ex Cabot).
The contribution of Energy and Industrial Services likewise grew, notably Elyo thanks to sustained organic growth and the coming on stream of new cogeneration facilities.
In Water, each of the operating units (Ondeo Services, Ondeo Nalco, Ondeo Degrï¿½nt) showed growth.
At Ondeo Services (water management), the Group’s performance in France and South America largely outgrew the impact of the rate reduction imposed by OFWAT on 4/1/2000 in Great Britain.
Ondeo Nalco’s effective cost control program, the increase in its revenues as well as its acquisition of its partner’s interest in NEEC (Nalco/Exxon Energy Chemicals) contributed to the improvement in operating income of Ondeo Nalco while Ondeo Degrï¿½nt’s operating income is clearly on the increase.
In Waste Services, good business growth in France and Spain was in part counterbalanced by the price drop in landfilling tarifs implemented in the United Kingdom and a drop in paper prices in Germany.
Current Net Income of the 3 global businesses rose 13%
The three global businesses of the Group (Energy, Water and Waste Service) registered double-digit growth of their current net income which breaks down as follows :
Net income of the Energy Group by the end of June 2001 was 432.5 million euros, an improvement of 13.6% from the same time last year. The Water Group was also up, with net income of 107.4 million euros, an improvement of 11.9%. Waste Services reported net income of 34.5, up 13.1% from last year.
Net Income, Group Share, reached 1.4 billion euros, up 11% over the comparable period last year. The diluted income per share came to 1.41 euros, up 10 % compared to the first half of 2000 (1.28 euros).
Cash flow rose to 2.7 billion euros, up 15% as compared to the figure for the first half of 2000. This largely covers both maintenance and development capital expenditure (1.8 billion euros).
Net economic debt(6) rose to 23.9 billion euros at June 30, 2001, as compared to 22.5 billion euros at June 30, 2000.
Assets to be disposed of have a market value in excess of 10 billion euros.
First half 2001 was marked by the launch of a new organization dedicated to industrial clients, numerous commercial successes and the ongoing international growth of the Group.
In February, Suez launched an organization targeting the needs and expectations of industrial clients. The Group created a dedicated organization, Suez Industrial Solutions, and undertook external growth initiatives for each of its three global businesses – Energy, Water and Waste Services – with the goal of increasing critical mass and broadening capabilities in industrial services :
– in Energy, Tractebel made a friendly offer for GTI, leader in electrical installations in the Netherlands and made the acquisition of the Swiss group Sulzer Infra, a large European operator in technical and industrial services.
– In Water, Ondeo Nalco took control of NEEC (Nalco/Exxon Energy Chemical) its joint venture with Exxon Mobil. Now a 100% subsidiary of Ondeo Nalco and renamed Ondeo Nalco Energy Services (ONES), NEEC is the number one global specialist in on-site water treatment and chemical processes for the petroleum industry.
– In Waste Services, SITA has created a joint venture with its partner Rhodia Eco Services, Teris LLC, which is now the number 3 in Hazardous Industrial Waste Treatment in the United States.
– Suez’s operations in the industrial and commercial market places are growing rapidly. By the end of 2001, it will represent more than 50% of the Group revenue.
SUEZ won 30 major contracts in the first six months of 2001. Half of these contracts were with industrial clients : IBM, Airbus, PSA, Philips, General Motors, Solvay, International Paper, BOC, Danone, Petrol Development Oman, Ahold, The Athens Airport, Grenoble…The other half came mostly from municipalities : Pusan, New Dehli, Shanghaï¿½Sanya, Bristol, Schwerin, Brno, Valence…
International growth was marked by Suez’s expanded presence on the North American continent where the Group generated about 11% of its revenues from its 3 global businesses.
For the second half of 2001, the Group expects growth in revenues and its results. It reaffirms its growth and profit performance objectives for the medium-term.
The impact of the attacks on U.S. facilities which took place on September 11, 2001 is at this date unforeseeable.
The audiovisual presentation of half year results will be broadcast live and pre-recorded on the Internet site http://www.suez.com