SUEZ ENVIRONNEMENT (EPA:SEV) SUEZ: 3rd Quarter 2017 results

Transparency directive : regulatory news

27/10/2017 07:30

Press release

Paris, October 27, 2017

SEPTEMBER 30, 2017 RESULTS THIRD-QUARTER IMPROVEMENT IN ORGANIC REVENUE GROWTH
   BUSINESS ACTIVITY AND PERFORMANCE IN LINE WITH FULL-YEAR TARGETS GE WATER
                              ACQUISITION CLOSED

Q3 2017 results(1):
- Revenue EUR11,301m, organic growth of +1.3%
- EBIT: EUR926m, organic growth of +1.4%
- Net financial debt: EUR9,013m; net financial debt/EBITDA(2) ratio of 3.4x

                                                      Change at
                                                      constant
                September  September  Organic  Gross  exchange
In EURm         30, 2016   30, 2017   change   change   rates  FX change

Revenue           11,225     11,301    +1.3%    +0.7%   +0.8%    -0.2%
EBITDA             1,957(3)   1,924    -1.0%    -1.7%   -2.1%    +0.4%
EBITDA/Revenue     17.4%      17.0%
EBIT                 932(3)     926    +1.4%    -0.6%   -1.2%    +0.6%
EBIT/Revenue        8.3%       8.2%

- In third-quarter 2017 SUEZ reported a 0.7% increase in revenue to EUR11,301m,
and +1.3% growth on an organic basis. The Recycling & Recovery Europe division
posted dynamic 2.9% organic revenue growth, benefiting primarily from higher
commodity prices. The International division satisfyingly showed an inflection
with 4.3% organic growth in the third quarter, after the construction
activities reached a low point in first-half 2017. Lastly, the Water Europe
division was stable (+0.2%), mainly due to a decline in the works activities,
which offset the momentum in Latin America.

(1) Excluding IFRIC 21
(2) The ratio of net financial debt/EBITDA calculated over a rolling 12-month
    period
(3) EBITDA and EBIT for the International division had benefited in Q2 2016
    from the EUR36m impact of the completion of the acquisition of Derun
    Environment

SUEZ - Group
Tel: +33 (0)1 58 81 20 00 - www.suez.com
Head office - Tour CB21 - 16 place de liris, 92040 Paris La Défense Cedex,
France

- EBITDA at end-September 2017 stood at EUR1,924m, down 1.7% or -1.0% on an
organic basis. EBIT rose by 1.4% on an organic basis to EUR926m.

In second-quarter 2016, EBITDA and EBIT had benefited from the EUR36m reversal
of a provision for risk relating to the 2015 revaluation of the Chongqing Water
Group stake, in connection with the creation of Derun Environment; this
provision reversal has been treated as a scope effect.

- Group net financial debt was EUR9.0bn compared with EUR8.0bn at end-2016, or
3.4 times EBITDA. It notably includes an impact of EUR856m related to the
finalization of the acquisition of GE Water and a forex impact of -EUR346m.

Commenting on the third-quarter 2017 results, Jean-Louis Chaussade, Chief
Executive Officer, stated: "The growth of the results over the period is
in-line with our 2017 targets. Hence, we are fully confident in their
fulfillment. Revenue at the Recycling & Recovery Europe division continued to
rise, fueled by the recovery in commodity prices and the improvement in volumes
during the last quarter. The International division grew by 4.3% in Q3 and won
several major long-term contracts, including one to build a waste-to-energy
plant in Belgrade, Serbia, and another for a new wastewater recycling plant in
Perth, Australia. Finally, revenue in the Water Europe division edged up
slightly, helped by relatively satisfactory volumes sold across all regions,
despite flat inflation rates in both France and Spain.
SUEZ is therefore on its trajectory, carrying out the acquisition of GE Water
and launching the integration of the industrial water activities and all the
synergies work."

              BREAKDOWN OF ACTIVITY AT END-SEPTEMBER 2017

                                                      Change at
                                                      constant
                September  September  Organic  Gross  exchange
In EURm       30, 2016 (4)  30, 2017  change   change   rates  FX change

TOTAL            11,225     11,301     +1.3%   +0.7%    +0.8%    -0.2%
Of which:
Water Europe      3,405      3,408     +0.2%   +0.1%    -0.5%    +0.6%
Recycling &
Recovery Europe   4,527      4,565     +2.9%   +0.8%    +2.4%    -1.5%
International     2,864      2,938     +1.3%   +2.6%    +1.6%    +1.0%
Other              429        390      -7.9%   -9.2%    -9.7%    +0.5%

The gross revenue change of +0.7% (+EUR76m) versus September 30, 2016 breaks
down as follows:

* Organic change of +1.3% (+EUR142m):
  - Water Europe revenue was stable at +0.2% (+EUR7m); volume growth across all
    regions and tariff increases in Chile were offset by the decline in the
    works activities.
  - Revenue for the Recycling & Recovery Europe division rose by 2.9%
    (+EUR131m). This performance primarily reflected the increase in secondary
    raw materials prices (particularly scrap metals) but the processed volumes
    overall trend also remained encouraging.
  - Revenue for the International division improved by 4.3% relative to
    third-quarter 2016. Over the first nine months of 2017, it rose by a slight
    1.3%; performance was impacted by our activities in the USA, due to the
    sharp drop in water volumes sold, linked to very unfavorable summer weather
    conditions as well as the impact of the loss of two contracts, already
    mentioned at the half-year closing.

* Forex effect of -0.2% (-EUR17m), mainly due to a stronger Chilean peso
(+EUR21m) and Australian dollar (+EUR26m) and a weaker pound sterling against
the euro (-EUR65m).

* Scope effect of -0.4% (-EUR49m).

(4) Adjusted figure following intra-group reclassification (details in
appendices)

                          PERFORMANCE BY DIVISION

WATER EUROPE

                                                      Change at
                                                      constant
                September  September  Organic  Gross  exchange
In EURm       30, 2016 (4)  30, 2017  change   change   rates  FX change

Revenue           3,405      3,408     +0.2%   +0.1%    -0.5%    +0.6%

- Revenue in France was down 1.1% (-EUR19m) on an organic basis.
Water volumes sold rose by 0.5% relative to end-September 2016, despite a less
favorable summer season than last year while the slight tariff increases
(+0.3%) reflected the absence of inflation. The lower contribution from
construction activities also weighed on revenue growth during the period.

- Revenue in Spain slightly decreased by 0.5% (-EUR6m) on an organic basis.
The new tariff implementation at the end of 2016 in Barcelona was partially
offset by the increase in water volumes sold (+1.3%), owing to favorable
climate conditions and a more buoyant economic environment.

- Revenue in Latin America grew +5.7% (+EUR32m) on an organic basis.
Growth in the segment was again fueled by a volume increase (+2.2%) in Chile,
more moderate price hikes (+1.4%) reflecting lower inflation, and the increase
in construction activities.

RECYCLING & RECOVERY EUROPE

                                                      Change at
                                                      constant
                September  September  Organic  Gross  exchange
In EURm       30, 2016 (4)  30, 2017  change   change   rates  FX change

Revenue           4,527      4,565     +2.9%    +0.8%   +2.4%    -1.5%

The Recycling & Recovery Europe division posted +2.9% (+EUR131m) organic growth
in revenue at end- September 2017. Performance was notably driven by a
substantial positive price effect on secondary raw materials, particularly
scrap metals and paper, up 42% and 15%, respectively, compared with 2016.
Volumes treated increased by +0.4%, which is a marked improvement over the
first half of the year.

* Revenue in France was up +4.6% (+EUR100m) on an organic basis.
This growth mainly reflects the increase in secondary raw materials prices.
Processed volumes rose by +0.4% after being down 0.7% at end of June 2017.

* The United Kingdom/Scandinavia region was down 2.0% (-EUR20m) on an organic
basis.
This performance was due to the completion of the construction of the
energy-from-waste (EfW) plants in the United Kingdom, which affected revenue in
the region, as well as to the planned downturn in landfill activity. These
impacts were only partially offset by the commissioning of new EfW plants.

* Revenue in the Benelux and Germany region rose +3.4% (+EUR36m) on an organic
basis.
The services business grew, mainly due to higher volumes and prices in
collection activities; business and competitiveness improvement is particularly
noticeable in the Netherlands.

* The "Industrial Waste Specialties" segment grew at a rapid pace of 5.6%
(+EUR15m) on an organic basis. This performance was driven primarily by the
soil remediation activity dynamics.

INTERNATIONAL

                                                      Change at
                                                      constant
                September  September  Organic  Gross  exchange
In EURm       30, 2016 (4)  30, 2017  change   change   rates  FX change

Revenue           2,864      2,938     +1.3%   +2.6%    +1.6%    +1.0%

Revenue in the International division improved by +4.3% compared with
third-quarter 2016.

- The Africa/Middle East/India region achieved strong organic growth of +5.3%
(+EUR42m).
This increase was largely attributable to growth in the Middle East activities,
which benefited in particular from the contribution of the Barka contract.

- Revenue in Italy/Central and Eastern Europe was up 12.4% (+EUR33m) on an
organic basis. This performance comes from the commissioning of the
waste-to-energy plant in Poznan in Poland and from the positive contribution
from the recycling and recovery activities.

- Australia posted organic growth of +2.7% (+EUR19m) largely owing to the +8.0%
increase in the volume of collected waste.

- Asia was down slightly 3.0% on an organic basis (-EUR10m). The positive
impact of bringing new hazardous waste treatment capacities on stream in China
was partially offset by the termination of major engineering and equipment
supply contracts last year. The recycling & recovery activities in China and
the water activities in Macau continued to grow steadily.

- North America was down 6.3% on an organic basis (-EUR47m), due mainly to the
termination of the Indianapolis and Jacksonville contracts in the United States
and lower water volumes sold (-5.8%) as a result of extremely unfavorable
summer weather conditions.

The construction activities backlog stood at EUR1.4bn, up 13% year-on-year.

SUEZ ACQUIRES GE WATER AND BECOMES A MAJOR PLAYER IN THE INDUSTRIAL WATER
MARKET

SUEZ announces that, together with Caisse de dépôt et placement du Québec
(CDPQ)(5), it has completed the acquisition of former GE Water & Process
Technologies (GE Water)(6) for EUR3.2Bn(7) enterprise value in an all-cash
transaction, effective as of September 30th, 2017.

In connection with completion, SUEZ sets up a Business Unit, "Water
Technologies & Solutions", placed under the leadership of Heiner Markhoff -
former President and CEO of GE Water. M. Markhoff joins SUEZ Group's Executive
Committee. This new BU combines both the acquired business and SUEZ own
industrial service activities. It will offer an unparalleled value proposition
to the shareholders, including the expected commercial, operational and
technical synergies(8).

This operation secures SUEZ's global leadership in industrial water services
and strengthens its positioning as an integrated group providing services,
addressing over 450,000 industrial and business customers worldwide. At the
same time, it builds on its international footprint, especially in the United
States.

(5) With a 30% stake
(6) GE Water & Process Technologies is a worldwide leading systems and services
provider for industrial clients, supplying state-of-the art water, waste-water
and process systems solutions to blue-chip customers. It generated ~$2.1Bn
revenues in 2016 with 7,500 highly-skilled salesmen and engineers with strong
digital capabilities.
(7) Or $3.4Bn hedged at EURUSD of 1.06
(8) Full benefit of cost and revenue synergies expected by year 5: (i) EUR65
million impact on EBITDA from identified annual run-rate cost synergies (of
which 80% achieved in year 3); and (ii) EUR200 million of revenue synergies.

                                  OUTLOOK

With the implementation of an ambitious transformation plan and excluding the
effects of the GE Water acquisition, we confirm our targets for 2017(9):

* Slight organic growth in revenue and EBIT
* Free cash flow of around EUR1 billion
* A net financial debt/EBITDA ratio of around 3.0x
* The pursuit of an attractive dividend policy:
  ≥ EUR0.65 per share in respect of 2017 results(10)

                     FORTHCOMING COMMUNICATIONS

- December 13, 2017: "Education Day" on the Water Technologies & Solutions
  business unit
- March 1, 2018: Publication of full-year 2017 results

(9) With an assumption of stable industrial production in Europe and stable
commodity prices
(10) Subject to approval by the 2018 Annual General Meeting

                                APPENDICES

                          REVENUE BY GEOGRAPHIES

                                                      % in 9M      Var.
In EURm                           9M 2016   9M 2017     2017      17/16

FRANCE                              3,709     3,718     32.9%     +0.2%
Spain                               1,296     1,315     11.6%     +1.5%
UK                                    821       726      6.4%    -11.6%
Others Europe                       1,799     1,874     16.6%     +4.1%
EUROPE (excluding France)           3,916     3,914     34.6%     -0.0%
North America                         875       841      7.4%     -3.9%
South America                         643       670      5.9%     +4.1%
Oceania                               792       854      7.6%     +7.8%
Asia                                  445       423      3.7%     -4.9%
Others International                  845       881      7.8%     +4.3%
INTERNATIONAL (excluding Europe)    3,600     3,669     32.5%     +1.9%
TOTAL                              11,225    11,301    100.0%     +0.7%

                            PRO FORMA Q3 2016(1)

                                    Water Italy
Revenue       Reported  R&R Central  & Central   Industrial  Others  Pro forma
in EURm       Q3 2016     Europe      Europe       Water       (2)    Q3 2016

Water
Europe         3,454                   (97)         (53)       101     3,405

R&R
Europe         4,671       (144)                                       4,527

International  3,029        144         97         (305)      (101)    2,864

Other
Division        71                                  358                 429

SUEZ          11,225         -          -            -          -     11,225

(1) Non-audited figures
(2) USG and Treatment Infrastructures in France, Spain, Latam

About SUEZ
With 90 000 people on the five continents, SUEZ is a world leader in smart and
sustainable resource management. We provide water and waste management
solutions that enable cities and indus tries optimize their resource management
and strengthen their environmental and economic performances, in line with
regulatory standards. To meet increasing demands to overcome resource quality
and scarcity challenges, SUEZ is fully engaged in the resource revolution. With
the full potential of digital technologies and innovative solutions, the Group
recovers 17 million tons of waste a year, produces 3.9 million tons of
secondary raw materials and 7 TWh of local renewable energy. It also secures
water resources, delivering wastewater treatment services to 58 million people
and reusing 882 million m3 of wastewater. SUEZ generated total revenues of 15.3
billion euros in 2016.

CONTACTS
Press                            Analysts & Investors
Ophélie Godard
Tel: +33 1 58 81 54 73           Tel: +33 1 58 81 24 05
ophelie.godard@suez.com

Disclaimer
This document contains unaudited financial data. The aggregates shown are those
customarily used and disclosed to the markets by SUEZ. This presentation
contains estimates and/or forward -looking statements and information. These
statements include financial projections, synergies, estimates and their
underlying assumptions, statements regarding plans, expectations and objectives
with respect to future operations, products and services, and statements
regarding future performance. Such statements do not constitute forecasts
regarding SUEZ's results or any other performance indicator, but rather trends
or targets, as the case may be. N o guarantee can be given as to the
achievement of such forward-looking statements and information. Investors and
holders of SUEZ securities are cautioned that forward-looking information and
statements are subject to various risks and uncertainties, which are difficult
to predict and generally beyond the control of SUEZ, and that such risks and
uncertainties may entail results and developments that differ materially from
those stated or implied in forward -looking information and statements. These
risks and uncertainties include, but are not limited to, those discussed or
identified in the public documents filed with the Autorité des marchés
financiers (AMF). Investors and holders of SUEZ securities should consider that
the occurrence of some or all of these risks may have a material adverse effect
on SUEZ. SUEZ 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 docu ment. More
comprehensive information about SUEZ may be obtained on its website
(www.suez.com). This document does not constitute an offer to sell, or a
solicitation of an offer to buy SUEZ securities in any jurisdiction.

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