SUEZ ENVIRONNEMENT (EPA:SEV) SUEZ Financial Results Q3 2020

Transparency directive : regulatory news

28/10/2020 17:45

press release

Paris, October 28th 2020 - 5:45 pm

      Rigorous execution of SUEZ 2030 translates into strong Q3 results
                   Revenue and EBIT guidance for H2 confirmed
               Board of Directors reinforced with two new members

* Q3 2020 results ahead of expectations
o Revenue up +0.4% organically in Q3, notably driven by Environmental Tech &
   Solutions, to EUR4,396m in Q3 and totaling EUR12,562m year-to-date
o EBIT at EUR336m in Q3, totaling EUR413m year-to-date

* H2 2020 revenue and EBIT guidance confirmed(1):
o H2 2020 Revenue to be down organically -4% to -2% versus last year
o H2 2020 EBIT estimated around EUR600m to EUR650m

* Net debt in sharp decline at EUR10,291m compared to September 30th, 2019 and
  June 30th, 2020

* Solid commercial momentum: numerous contracts won in Asia and in the US;
  strengthened pipeline of opportunities

* Board of Directors reinforced with two new members: Mr. Bertrand Meunier,
  Chairman of the Board of Directors of Atos, and Jacques Richier, Chairman and
  CEO of Allianz France. Both qualify as independent Directors.

Commenting the strengthening in the board, Philippe Varin, Chairman of the
Board of Directors of SUEZ, declared:

"On behalf of the Board of Directors, I am delighted to welcome Mr. Bertrand
Meunier and Mr. Jacques Richier to the Board as independent directors. Both
have exceptional international experience in financial investments, technology
and risk management. The Board is strengthened by these new skills serving the
defence of SUEZ's corporate interest and strategy. I would also like to thank
Isidro Fainé Casas et Francesco Caltagirone for their involvement in the
implementation of SUEZ 2030 and I am pleased with the continued support of
Criteria Caixa as a major shareholder of SUEZ. "

Commenting the performance of the Group, Bertrand Camus, CEO of SUEZ, added:

" The rigorous execution of SUEZ 2030 strategic plan translates into Q3 results
ahead of our initial expectations - both in terms of revenue organic growth and
profitability. We are therefore in a position to confirm our H2 2020 revenue
and EBIT guidance.

(1) H2 2020 guidance assuming no return to a generalized, region-wide
confinement situation, and constant FX and commodity prices

The implementation of SUEZ 2030 is a success in all its dimensions: our
performance plan increases our profitability and cash generation, which reduces
our debt; our asset rotation plan is progressing rapidly and allows
reinvestment to fuel our growth; lastly and above all, our sales teams have
recorded numerous successes that bring innovative solutions to the service of
our customers.

Our responsibility is to enhance the value of SUEZ for all our stakeholders. As
such, our main objective is to continue to execute this strategy which is
positioning the Group to seize the opportunities of the next decade, while
delivering tangible results and creating value today for all our shareholders -
as evidenced by our third quarter results.

I want to take this opportunity to thank again our employees who are committed
to delivering our essential services during this sanitary crisis while
relentlessly driving a transformation that aims at developing our industrial
project for the benefit of all stakeholders. "

                       KEY FIGURES AT END SEPTEMBER 2020

The Board of Directors of SUEZ examined the consolidated financial statements
at September 30th, 2020 at its meeting held on October 27th, 2020. They were
subject to review by the Audit Committee at its meeting of October 26th, 2020.

* Q3 performance

In millions of euros    Q3 2019  Q3 2020   Gross      Organic    Variation
                                         Variation   Variation  at constant FX

Revenue                4,471     4,396     -1.7%       +0.4%       +0.4%
EBITDA                   809       795     -1.8%       +0.9%       +0.6%
EBITDA / CA            18.1%     18,1%
EBIT                     371       336     -9.4%       -6.0%       -6.6%
EBIT / CA               8.3%      7.7%

* YTD performance

In millions of euros    YTD 2019  YTD 2020  Gross      Organic    Variation
                                         Variation   Variation  at constant FX

Revenue                 13,127    12,562    -4.3%       -2.9%        -3.0%
EBITDA                   2,330     1,991   -14.6%      -11.7%       -12.1%
EBITDA / CA              17.8%     15.8%
EBIT                     1,016       413   -59.4%      -54.7%       -55.5%
EBIT / CA                 7.7%      3.3%

Concerning EBITDA and EBIT, it is reminded that the Group accounted for
respectively EUR61m and EUR281m estimated costs and provisions associated with
the business conditions in the first half. These are mainly linked to the
additional costs of doing business during the pandemic, risks linked to
business interruption in for example construction activities and the potential
impacts of increased payment defaults.

* Net Debt

In millions of euros    Sept. 30th,    Sept 30th,    Gross
                           2019          2020       Variation
Net Debt                 10,600        10,291       -2.9%
Net Debt / EBITDA          3.4x          3.6x       +0.2x

                            PERFORMANCE BY SEGMENT

WATER

In millions of euros     2019   2020     Gross      Organic    Variation
                                       Variation   Variation  at constant FX

Revenue - Q3           1,804   1,735       -3.9%       -1.7%       -1.3%
Revenue - YTD          5,178   4,956       -4.3%       -2.7%       -2.5%

* WATER
segment reported revenue of EUR1,735m in Q3 2020, down -1.7% (-EUR30m) vs. Q3
2019 in organic terms.

Performance per region in Q3 was the following:

* In Europe revenue was down -2.1% (-EUR21m) organically. Compared to Q3 last
  year, volumes of water sold were flat in France and -3.5% in Spain. The
  positive impact from hot and dry weather this summer was more than offset by
  sluggish tourist activity in both countries. Tariffs were up +1.8% in France,
  and down -0.9% in Spain, factoring in the 4.95% decrease established by the
  metropolitan region of Barcelona effective since January 2020.

* Americas revenue declined by -5.6% (-EUR27m) on an organic basis. Performance
  in Latin-America continued to be affected negatively by the continuation in
  Q3 of the containment measures in most of the continent. In Chile, the
  positive effects of tariffs, up +1.9%, was more than offset by the effects
  of the -5.9% decrease in volumes. In the US, the favourable weather
  conditions drove volumes of water sold up +2.3% in Q3 and tariffs were up
  +1.9%, supporting revenue growth as regulated water business continued to
  see little impact from Covid-19.

* Asia-Pacific revenue was up +14.4% (+EUR20m) in organic terms notably driven
  by better water volumes in China, except in Macao where low tourist activity
  is still impactful.

* Revenue in AMECA recorded an organic decline of -1.2% (-EUR3m).

RECYCLING & RECOVERY

In millions of euros   Q3 2019  Q3 2020   Gross      Organic    Variation
                                         Variation   Variation  at constant FX


Revenue - Q3            1,864    1,859     -0.3%       +0.6%       +0.3%
Revenue - YTD           5,605    5,311     -5.2%       -4.2%       -4.6%

* RECYCLING & RECOVERY reported revenue of EUR1,859m in Q3, up +0.6% (+EUR11m)
  on an organic basis.

Performance per region in Q3 was the following:

- Europe revenue was up +0.5% (+EUR8m) organically, reflecting both the effects
  of continuing pricing momentum and improvement in processed waste volumes:
  after historical lows in Q2, they were overall down only 1.0% in Q3 vs. same
  period last year.

- Asia Pacific revenue was slightly up +0.3% (+EUR1m) on an organic basis, as a
  result of continued improvement in processed waste volumes partly offset by
  sluggish pricing dynamics.

ENVIRONMENTAL TECH & SOLUTIONS

In millions of euros     2019   2020     Gross      Organic    Variation
                                       Variation   Variation  at constant FX

Revenue - Q3             900     878       -2.5%       +1.6%       +1.6%
Revenue - YTD          2,608   2,521       -3.4%       -1.6%       -1.7%

* ENVIRONMENTAL TECH & SOLUTIONS reported revenue of EUR878m in Q3, up +1.6%
(+EUR14m) on an organic basis. It reflects a resilient performance of WTS
(+1.8% organically to EUR616m) and a solid performance Hazardous Waste with an
organic increase of +4.6% to EUR150m. Smart Environmental Solutions business
has recorded an organic decline of -3.2% to EUR113m, notably impacted by delay
on performance contracts in Latin America where containment measures were
maintained in Q3.

Performance per region in Q3 was the following:

- Americas revenue was up +1.0% (+EUR4m) organically, notably thanks to the
  resilient performance of WTS.

- Europe revenue was down -1.6% (-EUR6m) in organic terms, reflecting an
  improved performance of Hazardous Waste, driven by better though volatile
  evolution of treated volumes, a solid WTS performance and a weaken SES due to
  the slow recovery of works in France.

- Asia Pacific revenue was up +8.6% (+EUR11m) organically, mainly reflecting
  the better development of Hazardous Waste activity.

- AMECA revenue was up +18.5% (+EUR6m) organically.

                               GROUP PERFORMANCE

* The gross revenue change of -1.7% (-EUR75m) in Q3, breaks down as follows:

- An organic change of +0.4% (+EUR16m).

- Currency effect of -2.1% (-EUR93m), resulting mainly from the appreciation of
  the euro against the Chilean peso (-EUR22m) and against the US Dollar
  (-EUR26m).

- A very limited scope effect of +EUR2m.

* EBITDA amounted to EUR795m in Q3, up +0.9% on an organic basis and +0.6% on a
  constant FX basis. Currency effects were unfavourable, at -EUR19m.

* EBIT amounted to EUR336m in Q3, down -6.0% on an organic basis and -6.6% on a
  constant FX basis. Currency impacts amounted to -EUR10m.

* Net debt stood at EUR10,291m at end September 2020, a decrease of EUR310m vs.
  last year, of which EUR133m due to currency effects. Net debt ratio amounted
  to 3.6x EBITDA over 12 sliding months.

* Fewer of our geographies were significantly impacted by COVID in Q3

     BERTRAND AND JACQUES RICHIER STRENGHTEN SUEZ'S BOARD OF DIRECTORS

At its meeting on October 27th, the Board of Directors, on the recommendation
of the Appointment, Compensation and Governance Committee, co-opted unanimously
as Directors Mr. Bertrand Meunier, Chairman of the Board of Directors of Atos,
and Jacques Richier, Chairman and CEO of Allianz France. Both qualify as
independent Directors.

Bertrand Meunier has been Chairman of Atos since November 2019. He has been a
member of the Board of Directors of the international leader in secure and
carbon-free digital technologies for businesses since 2008. Franco-British,
Bertrand Meunier has a long career in private equity. He began his career at
Paribas Industrial Business where he spent nearly 30 years, holding several
positions, including ten years as head of investments in the information
technology sector. He then created the M&M Capital fund before joining CVC
Capital Partners in London. He is an alumnus of the Ecole Polytechnique.

Jacques Richier has been Chairman and CEO of Allianz France since 2010. He
leads the French subsidiary of the European insurance leader after having
managed the integration of AGF. Previously, he was CEO of Swiss Life France
following a long career with the mutual insurance company AZUR, where he held
various responsibilities, particularly in the field of IT and management
systems, before becoming Chief Executive Officer and then Chairman and Chief
Executive Officer.
Jacques Richier holds an engineering degree from the National Institute of
Applied Sciences (INSA) in Lyon, a MBA from HEC and a postgraduate degree in
materials physics. He began his career as a researcher at Berkeley and then in
the oil industry.

These co-optations follow the previous resignations of Mr. Francesco
Caltagirone and Mr. Isidro Fainé Casas.

Mr. Francesco Caltagirone is leaving the Board of Directors following the exit
of Caltagirone Group from SUEZ share capital at the end of the period of
non-transferability of their shareholding.

Mr. Isidro Fainé Casas is leaving the Board of Directors for personal reasons.
Criteria Caixa, S.A.U. maintains its investment in 5,9% of SUEZ issued share
capital and has confirmed its support to the Shaping SUEZ 2030 plan.

Following these changes, the SUEZ Board of Directors is composed as follows:
- 67% independent Directors(2)
- 58% of women(2)
- 5 Directors of foreign nationality.

    REMINDER ON THE PRESERVATION OF THE FRENCH WATER ACTIVITY THROUGH THE
                                FOUNDATION

The Group is currently conducting a shareholders dialogue on the Dutch
independent foundation - whose sole purpose is to ensure the
non-transferability of the French Water business and thus to avoid the
dismantling of Suez in France.

Suez has decided to implement this non-transferability mechanism in order to
preserve the integrity of the French Water business within the Suez group in
accordance with Suez's corporate interest and in response to Veolia's announced
intention to sell all of Suez's French Water activities, as well as the
engineering and R&D teams related to this business, in the context of its
hostile project announced on August 30, 2020.

(2) Excluding Directors representing employees

Suez aims at maintaining it for as long as necessary, and until September 2024
at the latest, in order to protect the interests of its shareholders,
employees, customers and other stakeholders. In addition, Suez is pursuing the
previously announced analysis of the conditions, which have not yet been
determined, for opening the share capital of Suez Eau France to the employees
of the French Water division.

This non-profit foundation was established on September 23, 2020, and there has
been no change in the mechanism since then.

As Suez has already confirmed, its French Water business and public-service
missions remain effectively located in France. Its control, management and
accounting consolidation remain unchanged, under Suez Group's management.

The board of directors of Suez has considered that the proposed transaction
announced by Veolia on August 30, 2020 is against the interests of the company,
its shareholders and all stakeholders, from an industrial, social and
shareholding standpoint.

By reaffirming its intention to take control on October 5, 2020, following the
acquisition of part of Engie's stake, and after obtaining the antitrust
authorizations, in 12 to 18 months, Veolia has not remedied any of these
deficiencies. In particular, the transaction structure proposed by Veolia does
not provide any guarantee in terms of certainty of the offer, its form, its
price (It being specified that Suez' shareholders would not receive EUR 18 per
share - but a value adjusted, for example, to reflect any dividend, including
ordinary dividends, paid over the period, in a remote schedule, and without
discounting) and its timing.

In this context, it is worth mentioning the following elements:

* Suez has only transferred to an independent Dutch foundation (which by-laws
are publicly available) one ordinary share of each of the two main subsidiaries
involved in the French Water business of Suez, namely Suez Eau France and - in
order to avoid a disposal of Suez Eau France through a transfer of its parent
company - Suez Groupe.

* The foundation is managed by three people who compose its board of directors:
a former employee of Suez, an employee member of Suez's employee representative
bodies and a Dutch lawyer. Their decisions are taken by simple majority. The
powers of the board of directors of the foundation are limited to preventing
the sale of the French Water division.

* The bylaws of the two companies concerned by the transfer of a share to the
foundation (Suez Eau France and Suez Groupe), which have been made public, have
been amended to provide for the need to obtain the unanimous approval of the
shareholders (namely, to date, the Suez group and the foundation) for any
contemplated transfer of the French Water business outside the Suez group for a
period of four years, as well as for any decision that would have the effect of
circumventing this obligation and result in the loss by Suez of control over
its French Water business.

* The mechanism in place does not prevent the filing of a tender offer on Suez'
shares. It simply aims at ensuring that the said tender offer cannot jeopardize
the integrity of the French Water business within the Suez group.

* According to the rules applicable to the foundation, which is today
activated, the board of directors of Suez keeps the possibility, at a simple
majority vote and at any time, to deactivate the mechanism or instead to make
it irreversible until September 2024. As of September 23, 2020, and subject to
any future evolution, the Board of directors of Suez has decided that it will
be able to make the mechanism irreversible only in case of change of control of
Suez SA. As the concept of change of control is subject to its assessment, the
board of directors of Suez may consider the provisions of article L.233-3 of
the French Commercial Code, but may also act in accordance with the objective,
repeatedly reiterated on several occasions, in order to avoid a creeping
takeover or de facto control.

Any decision of the board of directors relating to this mechanism (and in
particular its irrevocable or non-irrevocable nature) will be made with a view
to preserving the corporate interest of Suez.

* In any case, at the end of the aforementioned four-year period, the
foundation will be wound up.

Any significant change in this mechanism will be made public in accordance
with applicable laws.

FINANCIAL CALENDAR

FY 2020 Feb 25th, 2021

Disclaimer
This press release contains unaudited financial data. The aggregates presented
are those normally used and communicated on markets by SUEZ. This press release
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. No 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),
the French Financial Markets Authority. 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 document. More comprehensive information about SUEZ may be
obtained on its Internet 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.

About SUEZ
Since the end of the 19th century, SUEZ has built expertise aimed at helping
people to constantly improve their quality of life by protecting their health
and supporting economic growth. With an active presence on five continents,
SUEZ and its 90,000 employees strive to preserve our environment's natural
capital: water, soil, and air. SUEZ provides innovative and resilient solutions
in water management, waste recovery, site remediation and air treatment,
optimizing municipalities' and industries' resource management through "smart"
cities and improving their environmental and economic performance. The Group
delivers sanitation services to 64 million people and produces 7.1 billion m3
of drinking water. SUEZ is also a contributor to economic growth, with more
than 200,000 jobs created directly and indirectly on an annual basis, and a
provider of new resources, with 4.2 million tons of secondary raw materials
produced. By 2030, the Group is targeting 100% sustainable solutions, with a
positive impact on our environment, health and climate. SUEZ generated total
revenue of EUR18.0 billion in 2019.

SUEZ contacts

Press                                  Analysts/Investors
Isabelle Herrier Naufle                Mathilde Rodié/Cécile Combeau
isabelle.herrier.naufle@suez.com       +33 6 32 13 70 17/ +33 6 32 35 01 46
+33 6 83 54 89 62

Find out more about SUEZ Group on the website & on social media
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Head Office: Tour CB21 - 16, Place de l'Iris, 92040 Paris La Défense Cedex,
France - Tel: +33 (0)1 58 81 20 00 - www.suez.com
Limited Liability Company with a share capital of EUR2,513,450,316 - Siren
(French business administration number) 433 466 570 RCS Nanterre - VAT FR
76433 466 570

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SUEZ ENVIRONNEMENT (EPA:SEV) SUEZ Financial Results Q3 2020

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