Suez Environnement - 3rd Quarter 2010 Results

    PARIS, October 28, 2010 /PRNewswire-FirstCall/ --
    - Acceleration of Growth and Reduced Net Debt

    - Strong growth in revenue: EUR10,135m, +11.8% at constant forex,
      up in all divisions

    - EBITDA: EUR1,690m, +9.9% at constant forex, an EBITDA margin of
      16.7%

    - Net financial debt down to EUR7,319m, a net financial
      debt/EBITDA ratio of 3.25x[1]

    In EUR million    September 30, September 30, Total  Variation  Organic
                             2009           2010 change  at constant change
                                                         forex
    Revenues                8,923         10,135  +13.6%     +11.8%    +9.6%
    EBITDA                  1,498          1,690  +12.8%      +9.9%    +2.9%
    EBITDA / Revenues       16.8%              16.7%

At 30 September 2010, SUEZ ENVIRONNEMENT's revenue was EUR10,135m, up +11.8% at constant forex compared to 30 September 2009 (vs. +10.8% for H1 2010). All three divisions generate growth, particularly sustained for the international activities and in sorting & recycling in Europe. In Q3 2010, SUEZ ENVIRONNEMENT confirmed its commercial dynamics, winning contracts such as the Suffolk and South Tyne and Wear[2] waste PFIs[3] in the United Kingdom and the Strasbourg and Acheres wastewater contracts in France.

- EBITDA at end September 2010 was EUR1,690m, up +9.9% at constant forex compared to +7.2% for the first semester. EBTIDA margin was 16.7%, stable compared to 30 September 2009 but up sharply versus 30 June 2010, with an EBITDA margin of 18.3% in the third quarter compared to 17.9% over the same period last year. Margins were up notably for the Water Europe division and due to cost savings achieved.

- The Group's net financial debt was EUR7,319m. It was down EUR1bn (-12%) compared to 30 June 2010 thanks to strong Free Cash Flow generation, a least unfavourable forex impact, and a financing structure strengthened by the issue of hybrid securities made at good market conditions. At 30 September 2010, SUEZ ENVIRONNEMENT had a net financial debt/EBITDA ratio of 3.25x1.

- Commenting on Q3 2010 performance, Jean-Louis Chaussade, CEO of SUEZ ENVIRONNEMENT, stated: "At 30 September 2010, SUEZ ENVIRONNEMENT posted a strong growth of its operating performance. The Group's positions outside Europe allows us to benefit from a faster growth internationally, especially in Asia and Australia. In Europe, where industrial activity is still low, we continue to grow in water by consolidating Agbar's activities, and our sorting & recycling activities are growing strongly. We met major commercial successes and improved our financial profile. We are very confident about achieving our 2010 targets."

    BREAKDOWN OF ACTIVITY AT END-SEPTEMBER 2010

    In EUR million    September 30, September 30, Total  Variation  Organic
                             2009           2010 change  at constant change
                                                         forex
    REVENUES
    In EUR million
    Water Europe             2,894        3,085   +6.6%    +6.4%    +1.4%
    Waste Europe             3,957        4,363  +10.3%    +9.4%    +8.6%
    International            2,061        2,675  +29.8%   +22.7%   +21.0%
    Other[4]                    11           12   +7.7%       -        -
    TOTAL                    8,923       10,135  +13.6%   +11.8%    +9.6%

At 30 September 2010, SUEZ ENVIRONNEMENT posted EUR10,135m revenues, a +13.6% gross variation (+EUR1,212m) compared to 30 September 2009. This change breaks down as follows:

    - +11.8% growth at constant forex (+EUR1,032m), i.e.:

    - +9.6% organic growth (+EUR834m) coming from all three divisions:

    - A +EUR37m (+1.4%) increase in the Water Europe division revenue, up for
      both Lyonnaise des Eaux and Agbar, despite declining volumes for the
      3rd quarter in France and Spain. Commercial activity and indexation
      formulas have a favourable impact.

    - Growth of +EUR340m (+8.6%) in the Waste Europe division, from the
      progression of Sorting & Recycling activities, with an increase in
      prices for secondary raw materials, and improved volumes.

    - A +EUR457m (+21.0%) increase in the International division, where
      activity is sustained in all geographic segments.

    - Scope impact of +2.2% (+EUR198m):

    - Water Europe: +EUR129m, with the net impact of the friendly takeover of
      Agbar's water activities and to a lesser extent, the impact of the
      unbundling of joint companies in water in France.

    - Waste Europe: +EUR32m from the consolidation of Boone Comenor in Turkey
      and Slovakia, and the disposal of the Group's stake in the London Waste
      incinerator.

    - International: +EUR37m with the increased stake in SITA Waste Services
      in Hong Kong.

    - Favourable forex impact of +1.8% (+EUR180m), due to the appreciation of
      SUEZ ENVIRONNEMENT's main trading currencies, including the Australian
      dollar (+EUR55m), the Chilean peso (+EUR24m), the British pound
      (+EUR22m), the US dollar, and the Swedish krona.

    - At 30 September 2010, SUEZ ENVIRONNEMENT generated 75% of its revenues
      in Europe and 25% internationally, with growth in activity in Asia-
      Pacific, and notably in Australia with the progress of the Melbourne
      contract and growth in SITA Australia's activity.


    PERFORMANCE BY DIVISION
    WATER EUROPE

    In EUR million    September 30, September 30, Total  Variation  Organic
                             2009           2010 change  at constant change
                                                         forex
    Revenues                 2,894         3,085   +6.6%      +6.4%   +1.4%

    The Water Europe division posted organic growth of +1.4% (+EUR37m).
    - Lyonnaise des Eaux posted organic growth of +1% (+EUR12m).

In France, activity is growing due to the application of indexation formulas that are still positive, though increasing less than last year, and thanks to commercial development, service activities, and the construction of wastewater treatment plants in Cannes, Dignes, and Port-Saint-Louis-du-Rhone. On the other hand, the change in revenues is negatively impacted by the end of the Paris contract and by water volume sold down -1% compared to 30 September 2009, given the third-quarter climatology. The contribution of works, which represent less than 10% of revenue, is stable. The commercial dynamism brought in contracts such as: Strasbourg (8 years, EUR98m), the aquatic centre of Sartrouville (DBO, 20 years, EUR50m), and the renewal of Blaye contract (17.5 years, EUR18m). Ondeo IS' activity is decreasing, while the development of Safege, Eurawasser, and Italy continues.

- Agbar posted +2% (+EUR25m) organic growth.

The water and wastewater activities posted price increases in Spain and the UK, but were globally down, due to the decline in works resulting from the economic downturn and from the finalization of large-scale projects in 2009 (Barcelona, San Joan Despi). Volumes are down slightly in Spain but sharply up internationally. In 2010, Agbar won many contracts, such as Calvia (50 years, EUR980m), Ponferrada (25 years, EUR137m) and in Q3, Saragossa (4 years, EUR18m). Health Insurance activities, disposed in June 2010, posted an increase in activity over the five consolidated months.

    WASTE EUROPE

    In EUR million    September 30, September 30, Total  Variation  Organic
                             2009           2010 change  at constant change
                                                             forex
    Revenues                 3,957         4,363  +10.3%      +9.4%   +8.6%

The Waste Europe division posted organic growth of +8.6% (+EUR340m). Sorting & Recycling activities benefited from the return to sustained secondary raw materials prices and an increase in volumes. Other activities in the Waste Europe division have a comparable evolution to that of 30 June 2010, up for large industrial clients and with an increase in valorized volumes.

    - Revenue in France grew organically by +11% (+EUR237m) at 30 September
      2010, driven almost exclusively by Sorting & Recycling activities;
      waste volumes in other activities remaining low, in line with moderate
      economic growth. SITA France continues to grow with new municipal
      contracts, such as the City of Orleans collection (5 years, EUR14m),
      industrial & commercial contracts with Exxon Mobil and Renault, and
      new offers such as the establishment of a "mobile drop-off facility" in
      the Port of Paris to allow waste to be evacuated to sorting centers by
      waterways.

    - Revenue in the UK-Scandinavia region was up +2% organically at end
      September 2010 (+EUR16m). The price effect is favorable in the UK
      thanks to price increase in Sorting & Recycling. Landfilled volumes
      were down, with weak industrial activity. The third quarter for SITA
      UK was marked by the signature of the PFI contract with Suffolk (25
      years, GBP1 billion), and the qualification as preferred bidder for the
      South Tyne and Wear PFI (30 years, GBP1 billion). In Scandinavia,
      activity is stable in Finland, and remains sustained in Sweden.

    - The Benelux-Germany region posted organic growth of +9% (+EUR87m) at 30
      September 2010, thanks to Sorting & Recycling activity, both in prices
      and volumes. Collection prices were down in Belgium and the Netherlands.
      SITA News[5] continues its commercial development by winning municipal
      and industrial & commercial contracts such as waste management for
      Marburg-Bidenkopf (Germany, 6 years, EUR11m), and the renewal of the
      contracts for organic waste treatment with Minet Kompost (Luxembourg,
      5.5 years, EUR11m) and for paper recycling with IMOG (Belgium, 5 years,
      EUR10m).

    INTERNATIONAL

    In EUR million    September 30, September 30, Total  Variation  Organic
                             2009           2010 change  at constant change
                                                         forex
    Revenues                2,061          2,675  +29.8%      +22.7%  +21.0%

The International division had very high organic growth of +21.0% with dynamic activities in all regions.

- Degremont's revenue recorded organic growth of +52% (+EUR354m), driven both by the progress in the construction of Melbourne desalination plant and by the contributions of contracts in France (Bordeaux), Latin America (Replan and Rlam in Brazil, Mapocho in Chile, Panama, Ciudad Juarez in Mexico), Asia (Chengdu in China), and Australia (Pimpama). Its engineering backlog is still at a historic level of EUR1.9bn, with new contracts such as Acheres (EUR110m) awarded in July 2010.

    - North America posted +6% (+EUR25m) organic growth resulting from the
      strong growth in United Water's regulated activity, thanks to
      improvement in volumes sold and higher prices as a result of the
      different rate cases obtained, including the last one in August 2010,
      New Jersey with a tariff increase of +8%.

    - Asia-Pacific recorded +9% (+EUR44m) organic growth, supported by waste
      activities in Australia and by prices and volumes increases in water in
      China. Activity for SITA Waste Services in Hong Kong is up thanks to
      the increase in treated volumes.

    - The CEMME zone[6] posted +6% (+EUR34m) organic growth, benefiting from
      a high level of activity in water in Morocco with an increase in prices
      and volumes. In Central European waste, activity is also up, with
      improved industrial & commercial volumes.

CONFIRMATION OF OBJECTIVES

SUEZ ENVIRONNEMENT confirms all its objectives as updated in the publication of the half-year results on 4 August 2010.

    NEXT COMMUNICATIONS

    - 09 February 2011: Publication of 2010 Annual Results

    - 19 May 2011: Annual Shareholders' Meeting


                                    APPENDIX

                        Geographic breakdown of revenues



    Revenues           September 30, 2009   September 30, 2010   Total change
                        EUR m   % of total   EUR m   % of total EUR m     %
    Europe              7,044     78.9%      7,633     75.3%     589     8.4%
    France              3,587     40.2%      3,748     37.0%     161     4.5%
    Spain               1,180     13.2%      1,401     13.8%     221    18.7%
    UK                    674      7.6%        638      6.3%     -36    -5.4%
    Other Europe        1,602     18.0%      1,845     18.2%     243    15.2%
    North America         570      6.4%        620      6.1%      50     8.8%
    Australia             223      2.5%        560      5.5%     337   150.9%
    Sub-total           7,837     87.8%      8,813     86.9%     976    12.4%
    Rest of the world   1,086     12.2%      1,323     13.1%     237    21.8%
    TOTAL               8,923     100.0%    10,135     100.0%   1,212   13.6%

Natural resources are not infinite. Each day, SUEZ ENVIRONNEMENT (Paris: SEV, Brussels: SEVB) and its subsidiaries deal with the challenge to protect resources by providing innovative solutions to industries and to millions of people. SUEZ ENVIRONNEMENT supplies drinking water to 90 million people, provides wastewater treatment services for 58 million people and collects the waste produced by 46 million people. SUEZ ENVIRONNEMENT has 78,700 employees and, with its presence on a global scale, is a world leader exclusively dedicated to environmental services. SUEZ ENVIRONNEMENT, a 35.4% GDF SUEZ affiliate, reported sales turnover of 12.3 billion euros at the end of financial year 2009.

Disclaimer

This document includes non audited financial data. The aggregates shown are those customarily used and communicated to the markets by SUEZ ENVIRONNEMENT.

"The actual communication includes forward looking information and statements. Those prospective elements are based upon hypothesis, financial projections, estimations and statements regarding projects, objectives and expectations concerning operations, future products or services or future performances. No guarantee can be given on the realization of those prospective elements. Investors and shareholders of SUEZ ENVIRONNEMENT Company shares are informed that those forward looking information and statements are subject to a number of risks and uncertainties, hardly predictable and generally outside SUEZ ENVIRONNEMENT Company control and that could cause actual results to differ materially from those expressed, suggested or forecasted by any such forward looking information and statements. Those risks include, but are not limited to, those developed or identified in public documents filed with the Autorite des Marches Financiers (AMF). The attention of investors and shareholders of SUEZ ENVIRONNEMENT Company shares is drawn on the fact that the realization of all or part of those risks is susceptible to have a significant unfavourable effect on SUEZ ENVIRONNEMENT Company. Suez Environnement Company disclaims any obligation or undertaking to release publicly any updates or revisions to any of those forward-looking statements."

[1] Rolling 12-month EBITDA Pro forma, with Agbar fully consolidated over 12 months, net financial debt/EBITDA would be at 3.1x

    [2] Preferred bidder for the South Tyne and Wear PFI
    [3] Private Finance Initiative
    [4] R+I Alliance, HQ
    [5] SITA News : Waste activities in Benelux & Germany
    [6] Central Europe, Mediterranean, Middle East.

                     This press release is also available on
                      http://www.suez-environnement.com

SOURCE Suez Environment