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SOURCE Suez Environment
PARIS, February 20, 2014 /PRNewswire/ --
Growth of 2013 operating performance
Positive outlook for 2014
The Board of Directors, which met on 19 February 2014, approved the 2013 financial statements of SUEZ ENVIRONNEMENT which will be submitted for the approval of the Shareholders General Meeting on 22 May 2014. The consolidated financial statements were audited and certified by the Statutory Auditors.
Commenting on these results, Jean-Louis Chaussade, CEO, stated:
"SUEZ ENVIRONNEMENT has reported higher results, and is once again demonstrating the relevance and the soundness of its industrial model. The Group achieved all its targets despite adverse economic and climate environment in Europe.
SUEZ ENVIRONNEMENT remained highly proactive, and improved its operating margin. The Group focuses on innovation in its strategy, and relies on its strong positions in both businesses. It is successfully developing new services in the water market, and is strengthening its position in the waste recovery sector, through becoming a major producer of renewable energy and secondary raw materials. Internationally, the Group is opening up new markets, as shown by the new water service contracts signed in India, or the industrial facility management contracts gained in Brazil; it is continuing to expand its water and waste business in Mainland China, through the reinforcement of its partnerships.
Buoyed by its balanced positioning on profitable markets and businesses, and thanks to its strong balance sheet, SUEZ ENVIRONNEMENT is confident in the future and is ready to seize new development opportunities."
Despite unfavourable economic context in Europe, SUEZ ENVIRONNEMENT posted solid results in line with its targets.
The Group generated revenues of €14,644m as at 31 December 2013, a gross decrease of -3.0%
(-€458m) compared with 31 December 2012, which breaks down as follows:
EBITDA amounted to €2,520m in 2013, a gross increase of +2.9% (+€70m). The organic increase was +5.0% (+€122m), primarily due to the growth of the International division of +31.4% (+€146m), which benefited from the dynamism of its business activities and from the end of the construction of the Melbourne desalination plant, which was completed in December 2012. The Water Europe division also contributed to growth with an organic EBITDA increase of +1.7% (+€20m), despite unfavourable climate conditions in France and Spain. The performance of the Waste Europe division, which was affected by an economic environment that remained difficult and by lower volumes, registered a -4.5% (-€38m) decrease.
The Compass Program enabled cost savings of €180m in 2013. The program was initially expected to generate cost savings of €150m, but was accelerated mid-year via additional measures aiming at offsetting a downturn in waste and water volumes in Europe.
The EBITDA margin improved sharply, from 16.2% in 2012 to 17.2% in 2013.
Current Operating Income (COI) amounted to €1,184m, a gross increase of +3.3% and +5.8% organically. In addition to the improvement in EBITDA, this increase was also the result of the positive resolution of the disagreement linked to the Melbourne plant, which resulted in the reversal of the provisions at the end of the year (€58m).
There was a sharp increase in Income from Operating Activities, which rose by +12.0% to €1,179m. As a reminder, the Group had recorded in 2012 an impairment charge of its interest in ACEA following the reevaluation at market value (-€60m), with no equivalent in 2013. The improvement of the income from Operating Activities is also due to lower restructuring expenses.
Net financial expense amounted to -€402m in 2013 compared with -€419m in 2012. The cost of net debt fell to 4.88% compared with 5.08% in 2012, thanks to optimised financial management and to the decline in interest rates.
Tax amounted to -€205m in 2013 compared with -€186m in 2012. This increase was primarily due to higher tax expenses in France and Spain. However, the effective tax rate decreased, falling from 29.3% in 2012 to 26.5% in 2013.
Net result amounted to €602m, an increase of +28.2% compared with 2012.
Minority interests amounted to €250m, an increase of +€32m.
Net Income, Group share therefore amounted to €352m, a significant +40.2% increase compared with 2012. Earnings per share increased sharply, rising from €0.45 to €0.65.
Following a first semester 2013 characterised by particularly adverse seasonal effects, SUEZ ENVIRONNEMENT made huge efforts during the 2nd half of the year to improve its working capital requirement and cash generation.
Free cash flow therefore amounted to €1,007m. Free cash flow for 2012, which reached €1,358m, included the positive effect of a securitisation programme, which resulted in the deconsolidation of €317m of receivables. Restated for this item, Free Cash Flow for 2013 was therefore stable compared with the previous year.
Net investments amounted to €1,012m. SUEZ ENVIRONNEMENT reinforced its selective investment process to adapt to unfavourable climate conditions and macroeconomic environment.
Therefore, thanks to its tight financial discipline, SUEZ ENVIRONNEMENT managed to further strengthen its balance sheet. Net financial debt fell to €7,245m compared with €7,436m as of the end of December 2012. The net financial debt/EBITDA ratio improved and reached 2.9x. In May 2013, the financial rating agency Moody's reiterated the A3, stable outlook rating assigned to the Group.
The value created by the Group increased, with ROCE rising to 7.0% for a weighted average cost of capital of 6.3%.
As a result of this sound performance and of its confidence in its future outlook, SUEZ ENVIRONNEMENT will propose a cash dividend of €0.65 per share in respect of the 2013 financial year at the Annual General Meeting of Shareholders on 22 May 2014.
SUEZ ENVIRONNEMENT continued to strengthen its positions in its traditional businesses in 2013, and extended the scope of its activities in the water and waste divisions in accordance with its four strategic priorities.
NUMEROUS COMMERCIAL SUCCESSES ACHIEVED
This year was characterised by a high level of performance and successful commercial activity.
In the Water Europe division, the Group was awarded important contracts like the sanitation water contract of Marseille in France (€1.2bn, 15 years) or the water supply and sanitation contract for the Barcelona Metropolitan Area in Spain (additional revenues of €3.5bn, 35 years).
In the Waste Europe division, SUEZ ENVIRONNEMENT pursued its strategy of development in recovery and was awarded important PPP contracts in the UK, like Merseyside (€1.4bn, 30 years), West London (€1.7bn, 25 years) or in Poland with the Poznan contract (€850m, 25 years). In France, the Group also inaugurated the multi-process waste recovery facility in Clermont-Ferrand in January 2014; the facility includes a biological waste recovery unit, and a methanisation facility, as well as a waste-to-energy recovery unit (150,000 tonnes per year). The Group also signed a waste recovery contract for the Island of Mayotte (€65m, 12 years), and was awarded the waste collection and recycling contract for the District of Norrköping in Sweden (€33m, 5 years).
In the International division, 2013 was characterized by numerous commercial successes in all geographies: in the United States, with the contract of Bayonne (€195m, 40 years) ; in Asia, with the contract of collection of Macau (€200m, 10 years) or the management of waste water of Shuangliu County in China (€156m, 25 years); in Morocco, with the waste treatment contract in Meknes (€90m, 20 years); and in Degrémont with the start of the Prague contract (€62m), contracts of rehabilitation of the water treatment plant of Luanda (Angola, €28m) or the one aiming at improving water services in Bangalore and Pinpri-Chinwad (India, €20m, 8 years).
INNOVATE AND INVEST FOR THE FUTURE
Within a context of economic downturn and increasing scarcity of resources, SUEZ ENVIRONNEMENT's traditional markets are evolving. Its businesses have adjusted to customers' expectations, which are increasingly focused on technology, service optimisation, and performance. To make its customers leaders in the environmental performance, the Group has invested heavily in research and innovation. It enabled the Group to design a large number of technological solutions protecting water resources, managing and treating waste, as well as reducing the environmental footprint.
SUEZ ENVIRONNEMENT has also developed new services in water. The City of Mulhouse has selected the Group's remote metering offer as part of its "smart city" project, which aims to develop innovations that improve the living conditions of its residents and its drinking water network. Globally, one million eight hundred thousand smart water meters have been sold by the Group, reinforcing its leadership on the European market.
While maintaining a strong presence in its traditional waste disposal and collection activities, SUEZ ENVIRONNEMENT has been developing its waste activities towards recovery, and specifically energy production. The Group has positioned itself as a major producer of renewable energy and secondary raw materials. Via a first Public-Private Partnership in the waste management, SUEZ ENVIRONNEMENT has provided its expertise and know-how to polish local authorities, in order to produce around 2 million tons of alternative fuel from non-hazardous waste. In Sweden, the Group's cooperation with the City of Stockholm was renewed and expanded, so as to include the collection of food waste: 900 tons of food waste are turned into biogas and organic fertiliser every month.
TAILOR-MADE SERVICES FOR INDUSTRIAL WATER
SUEZ EVIRONNEMENT has made industrial water one of its strategic development priorities. It has been awarded new contracts, like in Chengdu in China, where it will build, manage and operate the Shuangliu Maojiawan waste water treatment plant. The Group also designed new service offers in 2013, which primarily focus on engineering, equipment, operation and maintenance, in order to expand its activities. This is how SUEZ ENVIRONNEMENT was awarded the engineering and supply contract for five water treatment units for Petrobras oil platforms, thereby reinforcing its presence in Brazil.
Performance by division
Gross Organic Scope in EUR m 31/12/2012 31/12/2013 change change change Revenues 4,379 4,437 +1.3% +2.0% +0.2% EBITDA 1,189 1,185 -0.4% +1.7% -0.5%
Gross Organic Scope in EUR m 31/12/2012 31/12/2013 change change change Revenues 6,752 6,551 -3.0% -1.2% -1.1% EBITDA 834 797 -4.5% -4.5% +0.4%
Gross Organic Scope in EUR m 31/12/2012 31/12/2013 change change change Revenues 3,957 3,652 -7.7% -2.7% -0.3% EBITDA 463 581 +25.3% +31.4% -1.3%
Application of the New IFRS 10 & 11 Guidelines and Change of Definition
SUEZ ENVIRONNEMENT will apply the new IFRS 10 and 11 guidelines related to consolidated financial statements and partnerships as from 1 January 2014. In addition, the Group has decided to change the definition of EBITDA, which will, from now on, include income from equity affiliates considered as core business. Moreover, the income from equity affiliates considered as core business will be added to the COI resulting in a new indicator named EBIT.
The impact on the Group's indicators of the application of these two standards and of the change in definition is not material; 2013 restated amounts are set out below:
Positive outlook for 2014
Assuming a GDP growth of 1% for the euro zone in 2014, SUEZ ENVIRONNEMENT's targets are as follows:
Natural resources are not infinite. Every day, SUEZ ENVIRONNEMENT (Paris: SEV, Brussels: SEVB) and its subsidiaries deal with the challenge of protecting resources by providing innovative solutions to industries and to millions of people. SUEZ ENVIRONNEMENT supplies drinking water to 97 m people, provides waste water treatment services for 66 m people and collects the waste produced by 50 m people. SUEZ ENVIRONNEMENT has 79,549 employees and, with its presence on five continents, is a world leader exclusively dedicated to water and waste management services. SUEZ ENVIRONNEMENT generated total revenues of EUR 14.6 billion in 2013.
"This communication includes forward-looking information and statements. This forward-looking data is based on assumptions, financial forecasts, estimates and statements regarding projects, targets and expectations for transactions, future products and services, or future performances. No guarantee can be given that these forecasts will be met. Investors and holder of SUEZ Environnement Company securities are informed that these forward-looking information items and statements are subject to a number of risks and uncertainties, which are hard to predict and are generally beyond SUEZ Environnement Company's control, and which could cause the results and outcomes expected to differ materially from those expressed, suggested or predicted in forward-looking statements and information. Such risks include, but are not limited to, those developed or identified in public documents filed with the French Financial Markets Authority (AMF). The attention of investors and holders of SUEZ Environnement Company securities is drawn to the fact that the materialisation of all or a portion of these risks is likely to have a material unfavourable impact on SUEZ Environnement Company. SUEZ Environnement Company is not under any obligation, and does not commit to publishing changes or updates on these information items and forward-looking statements under any circumstances. Additional detailed information on SUEZ Environnement Company is available on the website (http://www.suez-environnement.com). This document does not amount to an offer to sell or to a solicitation to buy SUEZ Environnement Company securities in any jurisdiction".
1. Subject to the approval of the Annual General Meeting.
2. Assuming a GDP growth of 1% for the euro zone in 2014, at unchanged accounting and tax norms as of Jan. 1st 2014 and at constant forex.
3. Objective estimated from restated 2013 EBITDA taking into account the change in EBITDA definition as defined by the Group and the application of the new IFRS 10 and 11 norms as defined in page 6 of this press release.
4. If market conditions allow it.
5. Public Private Partnerships
6. As a result of the new organisational structure, the Central European Waste and Water activities included in the International division have been reclassified under the Water Europe and Waste Europe divisions.
7. Excluding local tax increases and revenues gathered on behalf of third parties. The total tariff increase amounted to 11.5%.
8. At unchanged accounting and tax norms as of Jan. 1st 2014 and at constant forex.
9. Objective estimated from restated 2013 EBITDA taking into account the change in EBITDA definition as defined by the Group and the application of the new IFRS 10 and 11 norms.
10. If market conditions allow it
11. Subject to the approval of the 2015 annual General Meeting
This press release is available at http://www.suez-environnement.com.
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