SUEZ ENVIRONNEMENT- 2011 First Quarter Results

PARIS, April 28, 2011 /PRNewswire-FirstCall/ --

- Strong Growth in Activity and Operating Margin Debt Ratio Close to Year-end Objective

- Revenue: Up Strongly to EUR3,514m, +13.5% at Constant Forex, Up Across All Divisions

- EBITDA: EUR592m, +25.6% at Constant Forex, EBITDA Margin 16.8%

- Net Financial Debt: Stable at EUR7,565m With NFD/EBITDA[1] Ratio Down at 3.06

    In EUR million  31 March 2010 31 March 2011  Total   Change at  Organic
                                                 change   constant   change
                                                           forex

    Revenue             3,075         3,514      +14.3%    +13.5%     +9.7%
    EBITDA                460           592      +28.6%    +25.6%    +10.5%
    EBITDA / Revenue     15.0%         16.8%

- SUEZ ENVIRONNEMENT first quarter 2011 revenue was up +14.3% at EUR3,514m. The three divisions experienced organic growth, still sustained internationally and for waste valorization activities in Europe. SUEZ ENVIRONNEMENT continued its commercial development winning contracts such as Adelaide (Australia), Gijon (Spain) or Shenzhen (China) in water, and for Plaine Centrale[2] (France) or with ARKEMA in waste. The Group also benefited from the impact of the acquisitions of Agbar and WSN Environmental Solutions (Australia) closed respectively in June 2010 and January 2011.

- EBITDA at the end of March 2011 was up +28.6% at EUR592m, and up +10.5% organically faster than at revenue level (+9.7%). EBITDA margin is at 16.8%, a significant improvement compared to Q1 2010. It benefited from better activity levels, the effect of Agbar takeover, and cost savings realised under the COMPASS 2 plan which is progressing in line with the objective of EUR300 million for the 2010-2012 period.

- The Group's net financial debt is stable compared to 31 December 2010 at EUR7,565m. SUEZ ENVIRONNEMENT continued its selective investment programme and at 31 March 2011 posted a decreasing NFD/EBITDA1 ratio at 3.06, close to 2011-end objective of about 3. The Group renegotiated its Club Deal financing line of EUR1.5bn on favourable terms, significantly improving its financial conditions while extending its maturity by a year.

- Commenting on the first quarter 2011 results, Jean-Louis Chaussade, Chief Executive Officer of SUEZ ENVIRONNEMENT, stated: "After a sharp rise in 2010, SUEZ ENVIRONNEMENT's performance is again improving significantly in early 2011. Activity continues to increase in our two businesses, especially in Waste and International, with an increase in margin level and a debt ratio close to our year-end objective. We are pursuing our balanced growth strategy, with commercial development focused on economic and environmental performance. In a context of progressive economic recovery, we are improving our profitability, as we had announced, and reaffirm our 2011-13 objectives."

    BREAKDOWN OF ACTIVITY AT END-MARCH 2011

                   31 March 2010 31 March 2011  Total    Change at   Organic
                                                change    constant    change
    Revenue                                                forex
    In EUR million
    Water Europe       939[3]          993       +5.8%      +6.5%      +1.6%
    Waste Europe       1,358         1,580      +16.4%     +15.3%     +12.9%
    International       7743           935      +20.9%     +16.6%     +11.4%
    Other[4]               4             6          -          -          -
    TOTAL              3,075         3,514      +14.3%     +13.5%     +9.7%

SUEZ ENVIRONNEMENT revenue at 31 March 2011 was EUR3,514m, up +14.3% gross (+EUR439m) compared to 31 March 2010. This breaks down as follows:

- Growth of +13.5% (+EUR393m) at constant forex:

- Organic growth of +9.7% (+EUR282m) arising from the three divisions:

- Revenue in the Water Europe division was up (+EUR12m, +1.6%) for both Lyonnaise des Eaux and Agbar, benefiting from tariffs increases, the development of new businesses and overall stable works activity.

- Revenue in the Waste Europe division was up strongly (+EUR177m, +12.9%), mainly in valorization activities and thanks to commercial development. In a context of progressive macroeconomic recovery, treated volumes rose in all regions.

- Revenue in the International division was up (+EUR91m, +11.4%) with very sustained activity at Degremont and in waste in Australia.

- External growth of +3.8% (+EUR111m):

- Water Europe +EUR36m with the impact of the Agbar takeover.

- Waste Europe +EUR33m, linked to Boone Comenor activities in Turkey and Slovakia.

- International +EUR42m, with the acquisition of WSN in Australia.

- Favourable forex impact +EUR46m due to the rise in the value of SUEZ ENVIRONNEMENT's main trading currencies against the euro, including the Australian dollar (+EUR17m), the pound sterling (+EUR8m) and the Chilean peso (+EUR6m).

- In the first quarter of 2011, SUEZ ENVIRONNEMENT achieved 72% of its revenue in Europe. The portion achieved internationally outside Europe was 28% versus 27% at 31 December 2010. It benefited from strong growth especially at Degremont and in the Asia-Pacific region.

    - PERFORMANCE BY DIVISION
    WATER EUROPE

                                                   Change at
                    31 March   31 March    Total    constant     Organic
                       2010       2011     change   forex        change
    In EUR million

    Revenue           939[5]      993      +5.8%    +6.5%         +1.6%


    The Water Europe division posted organic growth of +1.6% (+EUR12m).
    - Lyonnaise des Eaux grew organically by +1.4% (+EUR7m).

Activity in France was up with the commencement of contracts won in 2010 such as Strasbourg (EUR98m, 8 years), the development of new commercial offers (Dolce O), a rise in tariffs indices and growth in works activities. Volumes of potable water sold declined -1.3%, in line with the historical trend. La Vaunage (EUR28m, 18 years), Nimes metropolis (EUR16m, 9 years) and Cuers (EUR12m, 10 years) were the main contracts signed in the quarter.

- Agbar posted organic growth of +2.1% (+EUR5m).

Activity was up in Spain with a favourable price impact and despite a slight decline in volumes of potable water sold. Internationally, volumes and prices moved upwards. Works were stable compared to the first quarter 2010, and the extension of the Mapocho (Chile) wastewater treatment plant continued. During the quarter Agbar won contracts for Santonia (Cantabria, EUR32m, 25 years), Canyelles (Catalonia, EUR10m, 20 years) and Cangas De Onis (Asturias, EUR10m, 20 years).

    WASTE EUROPE

                                                   Change at
                    31 March   31 March    Total    constant     Organic
                       2010       2011     change    forex        change
    In EUR million

    Revenue            1,358     1,580     +16.4%    +15.3%       +12.9%

The Waste Europe division posted organic growth of +12.9% (+EUR177m). This growth was due mainly to Sorting & Recycling activities which benefited from a sharp rise in secondary raw materials prices against the same period in 2010, along with higher volumes. This improvement reflects the growing trend in waste valorization and consolidates SUEZ ENVIRONNEMENT's strategic positioning. The other activities in the Waste Europe division also rose with increasing volumes in the context of a gradual economic recovery and with a favourable comparison basis versus the first quarter of 2010. The division also benefited this quarter from the commencement of new contracts (Ivry in France) and the commissioning of new treatment facilities (Baviro, in test phase, in the Netherlands).

- SITA France posted organic growth of +13.3% (+EUR101m) due mainly to Sorting & Recycling activities thanks to positive price and volume effects. Other activities also improved, both in services and treatment. SITA France won a number of municipal contracts including Plaine Centrale (EUR25m, 5 years), Aulnay (EUR15m, 5 years) or Clichy (EUR15m, 6 years), and industrial contracts with ARKEMA (>EUR20m, 2 years).

- The United Kingdom / Scandinavia region posted organic growth of +10.8% at the end of March 2011 (+EUR28m). Growth was driven, as in France, by Sorting & Recycling. Sales were up in the United Kingdom with overall positive price and volume effects. In Scandinavia, revenue was up in both Sweden and Finland. The quarter was marked by the signing of industrial and commercial contracts with RBS, Newcastle NHS and Stagecoach (EUR6m, 3 years), the Walsall municipal contract (EUR5m, 5 years), the opening of two new recycling centres in Hayes and North Tyneside and the finalisation of the closing of the South Tyne and Wear PFI (EUR1.2bn[6], 25 years).

- The NEWS[7] region posted organic growth of +13.6% (+EUR47m) at 31 March 2011. In addition to the positive price and volume effects in Sorting and Recycling, collection is also growing due to an increase in industrial and commercial volumes, as well as other treatment activities. SITA NEWS continued its commercial development, winning municipal, industrial and commercial contracts with Scania, Bionerga and at Igean (EUR15m, 2-3 years). The Baviro incinerator (Netherlands, 290,000 t/yr) is operating in test phase since January 2011.

    INTERNATIONAL

                                                   Change at
                    31 March   31 March    Total    constant     Organic
                       2010       2011     change    forex        change
    In EUR million

    Revenue           774[8]      935     +20.9%     +16.6%       +11.4%

The International division posted organic growth of +11.4% (+EUR91m).

- Degremont showed organic growth of +20.9% (EUR62m) linked mainly to progress on the construction of the Melbourne desalination plant scheduled for delivery mid-2012 and the contribution of contracts in France (Cannes, Bordeaux, Rennes) and in the Middle East (Rusafa). The engineering backlog remains high at EUR1.6bn. During the quarter, Degremont signed numerous contracts, in operation in Adelaide (Australia, EUR420m) or Nice (EUR100m, 10 years) and in construction at Montes del Plata (Uruguay, EUR43m), Doha West (Qatar, EUR27m), Shenzhen (China, EUR19m), Gijon (Spain, EUR15m), Horno Galindo (Spain, EUR15m) and Dar Es Salam (Tanzania, EUR14m).

- North America posted organic growth of +7.7% (+EUR10m) resulting from the growth in the regulated activity of United Water, thanks to an improvement in volumes sold and higher prices following the various rate cases obtained, the latest of them in February 2011 in Idaho and Delaware.

- Asia-Pacific posted organic growth of +11.4% (+EUR20m) driven mainly by waste activities in Australia. The acquisition of WSN Environmental Solutions was finalized on 31 January 2011. In China, growth benefited from rising water prices and volumes and the strong level of activity at SITA Waste Services. In addition, the sludge dryer at the Suzhou industrial park (Jiangsu, China) was inaugurated on 15 April 2011 (EUR280m, 30 years).

- The CEMME[9] region experienced slightly negative growth of -0.8% (-EUR2m). Water activity grew in Morocco and Central Europe. Revenue from waste declined in Poland with lesser contribution from snow-removal activities. Contracts in Abu-Dhabi (United Arab Emirates, EUR200m, 15 years), Safi (Morocco, EUR20m, 7 years) and Warsaw (Poland, EUR12m, 3 years) were signed during the quarter.

CONFIRMATION OF OBJECTIVES

SUEZ ENVIRONNEMENT reaffirms its objectives as announced at the full year publication on 9 February 2011.

    NEXT COMMUNICATIONS
    - 19 May 2011: Annual General Meeting
    - 3 August 2011: Publication of 2011 half-year results

                                    APPENDIX

                        Geographical breakdown of revenue

    Revenue              31/03/10[10]        31/03/11         Total change
                       EURm  % of total   EURm  % of total  EURm  % of total
    Europe            2,355     76,6%    2,528     71,9%     173      7,3%
    France            1,189     38,7%    1,266     36,0%      77      6,5%
    Spain               390     12,7%      367     10,5%     -23     -5,9%
    UK                  199      6,5%      235      6,7%      35     17,7%
    Other Europe        576     18,7%      660     18,8%      84     14,5%
    North America       174      5,7%      187      5,3%      13      7,4%
    Australia           139      4,5%      249      7,1%     109     78,5%
    Sub-total         2,669     86,8%    2,964     84,3%     295     11,1%
    Rest of the world   406     13,2%      551     15,7%     145     35,6%
    TOTAL             3,075    100,0%    3,514    100,0%     440     14,3%

SUEZ ENVIRONNEMENT

Natural resources are not infinite. Each day, SUEZ ENVIRONNEMENT (Paris: SEV, Brussels: SEVB) and its subsidiaries deal with the challenge of protecting resources by providing innovative solutions to industry and to millions of people. SUEZ ENVIRONNEMENT supplies drinking water to 91 million people, provides wastewater treatment services for 61 million people and collects the waste produced by 50 million people. SUEZ ENVIRONNEMENT has 79,554 employees and, with its presence on five continents, is a world leader exclusively dedicated to water and waste management services. In 2010, SUEZ ENVIRONNEMENT, a subsidiary owned 35.4% by GDF SUEZ, achieved revenue of EUR 13.9 billion.

Disclaimer

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

"This communication contains estimates and/or forward-looking statements and information. These statements include financial projections, synergies, cost-savings and estimates and their underlying assumptions, statements regarding plans, objectives, savings, expectations and benefits from the transactions and expectations with respect to future operations, products and services, and statements regarding future performance. Such statements do not constitute forecasts regarding SUEZ ENVIRONNEMENT Company's results or any other performance indicator, but rather trends or targets, as the case may be. No guarantee can be given as to the achievement of such forward-looking statements and information. Investors and holders of SUEZ ENVIRONNEMENT Company securities are cautioned that forward-looking information and statements are not guarantees of future performances of SUEZ ENVIRONNEMENT Company which may materially differ and are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of SUEZ ENVIRONNEMENT Company. These risks and uncertainties include, but are not limited to, those discussed or identified in the public documents filed with the Autorite des marches financiers (AMF). Investors and holders of SUEZ ENVIRONNEMENT Company securities should consider that the occurrence of some or all of these risks may have a material adverse effect on SUEZ ENVIRONNEMENT Company. SUEZ ENVIRONNEMENT Company is under no obligation and does not undertake to provide updates of these forward-looking statements and information to reflect events that occur or circumstances that arise after the date of this document. More comprehensive information about SUEZ ENVIRONNEMENT Company may be obtained on its Internet website (http://www.suez-environnement.com). This document does not constitute an offer to sell, or a solicitation of an offer to buy SUEZ ENVIRONNEMENT Company securities in any jurisdiction."

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

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[1] Net Financial Debt (NDF)/ EBITDA, calculated over a rolling 12 month period

    [2] Community of towns in Val de Marne
    [3] OIS is included in the International division
    [4] R+I Alliance, HQ
    [5] OIS is included in the International division
    [6] EUR1.2bn includes third party revenue and electricity sale
    [7] Waste activities in Benelux and Germany
    [8] OIS is included in the International segment
    [9] Central Europe, Mediterranean and Middle East
    [10] Agbar revenue split by geographic region

SOURCE Suez Environment