SUEZ ENVIRONNEMENT (EPA:SEV) FIRST-QUARTER 2017 RESULTS

Transparency directive : regulatory news

10/05/2017 07:15

Press release

Paris, 05/10/2017

FIRST-QUARTER 2017

ENCOURAGING OPERATING TRENDS GROWING EARNINGS ACQUISITION OF GE WATER, A MAJOR
                          DEVELOPMENT STEP FOR SUEZ

Q1 2017 results(1):
- Revenue: EUR3,721m, up +4.7%
- EBIT: EUR281m, up +10.8%
- Net financial debt: EUR8,125m, net financial debt / EBITDA(2) ratio of 3.0x

In EURm
             March 31,   March 31,  Organic   Gross   Change at   Exchange
               2016        2017      change   change   constant  rate change
                                                       exchange
                                                         rates

Revenue        3,555      3,721       +3.8%    +4.7%     +3.9%      +0.8%
EBITDA           574        614       +2.1%    +7.1%     +4.2%      +2.9%
EBITDA/Rev.     16.1%      16.5%
EBIT             253        281       +2.6%   +10.8%     +5.7%      +5.1%
EBIT/Rev.        7.1%       7.5%

* In first-quarter 2017, SUEZ increased revenue by +4.7% to EUR3,721m, out of
which +3.8% on an organic basis. The Recycling and Recovery Europe division
posted substantial organic growth in revenue of +7.4%, mainly attributable to
the increase in commodity prices and higher treated waste volumes. The
International division continued to increase revenue with +3.3% organic growth.
In the Water Europe division, organic growth was up +1.1%, with the dynamism in
Latin America offsetting Europe's deflationary effect.

* EBITDA at end-March stood at EUR614m, up +7.1%, and +2.1% on an organic
basis. EBIT rose +10.8%, and +2.6% on an organic basis, and reached EUR281m.
The EBITDA and EBIT to revenue margins improved year-on-year.

* Group net financial debt was EUR8.1bn compared with EUR8.0bn at end-2016, or
3.0 times EBITDA.

(1) Excluding IFRIC 21
(2) The ratio of net financial debt/EBITDA calculated over a rolling 12 month
period

SUEZ
Siège social - Tour CB21 - 16 place de l'iris, 92040 Paris La Défense Cedex,
France - Tel : +33 (0)1 58 81 20 00 - www.suez.com
SA au capital de 2 263 664 780 euros - Siren 433 466 570 RCS NANTERRE -
TVA FR 68433 466 570

Commenting on the first-quarter 2017 results, Chief Executive Officer
Jean-Louis Chaussade said: "Our business in the first quarter is encouraging.
Revenue growth posted by the Recycling & Recovery Europe division was
particularly strong, fueled by the rebound in raw materials prices and the
increase in treated volumes. The International division continued to show
growth after a satisfactory year in 2016. Revenue in the Water Europe division
edged up slightly, helped by resilient volumes sold in all regions, despite
flat inflation rates in both France and Spain. Hence, organic growth of
earnings was solid. In this context, we are confident that we will achieve our
2017 targets.
At the same time, Q1 2017 saw a major milestone for the Group with the
signature of an agreement with GE to acquire the US company, GE Water. This
deal strengthens SUEZ's global leadership in industrial water services, a
growing and strategically important market for the Group. Moreover, it will
also strengthen the Group's international footprint, especially in the United
States. The transaction is expected to be closed as planned during
third-quarter 2017."

BREAKDOWN OF ACTIVITY AT END-MARCH 2017

Revenue
In EUR million
             March 31,   March 31,  Organic   Gross   Change at   Exchange
             2016(3)       2017      change   change   constant  rate change
                                                       exchange
                                                         rates

TOTAL         3,555        3,721     +3.8%    +4.7%      +3.9%      +0.8%
Of which:
Water Europe  1,109        1,131     +1.1%    +2.0%      +0.2%      +1.8%
Recycling &
Recovery
Europe        1,456        1,530     +7.4%    +5.1%      +6.9%      -1.9%
International   859          931     +3.3%    +8.5%      +4.7%      +3.7%
Other           132          129    -10.0%    -2.1%      -3.3%      +1.2%

Gross revenue change amounted to positive 4.7% (+EUR166m) from March 31, 2016,
broken down as:

* +3.8% organic change (+EUR135m):
- Water Europe revenue rose +1.1% (+EUR12m), benefiting from tariff increases
in Chile and higher volumes in Chile and Spain.
- Revenues for the Recycling and Recovery Europe division were up sharply at
+7.4% (+EUR108m). This performance primarily reflected the marked increase in
the prices of secondary raw materials. Adjusted for this impact, revenue would
have risen +2.6%.
- International division revenue improved compared to H2 2016 (+EUR29m, +3.3%),
with performance hampered by the end of two wastewater contracts in North
America.

* A forex effect of +0.8% (+EUR27m), mainly due to a stronger Chilean peso
(+EUR21m), Australian dollar (+EUR20m), and US dollar (+EUR8m). Conversely, the
depreciation of the Pound sterling against the euro had a negative impact on
revenue (-EUR27m).

* A scope effect of +0.1% (+EUR4m).

(3) Adjusted figure following intra-group reclassification

PERFORMANCE BY DIVISION

WATER EUROPE

In EUR million

             March 31,   March 31,  Organic   Gross   Change at   Exchange
             2016(3)       2017      change   change   constant  rate change
                                                       exchange
                                                         rates

Revenue        1,109      1,131      +1.1%     +2.0%     +0.2%      +1.8%

The Water Europe division recorded organic growth of +1.1% (+EUR12 m).

* Revenue in France was down 1.3% (-EUR7m) on an organic basis.
Water volumes sold declined 0.5% relative to end-March 2016, which is better
than the medium-term trend, while slightly negative tariff indexations (-0.1%)
reflect the absence of inflation. The lower contribution from construction
activities also weighed on revenue for the quarter.

* Revenue in Spain dipped 0.4% (-EUR1m) on an organic basis.
The impact from the implementation at the end of last year of the new tariff in
Barcelona was nearly offset by the increase in water volumes sold (+1.6%),
owing to favorable climate conditions and a more buoyant economic environment,
and to a lower extend, to positive tariff increases of +1.0%.

* Revenue in Latin America grew +10.0% (+EUR20m) on an organic basis.
Growth in the segment was fueled by a significant volume increase (+3.3%) in
Chile, more moderate price hikes (+1.7%) reflecting lower inflation, and the
increase in construction activities.

RECYCLING & RECOVERY EUROPE

In EUR million

             March 31,   March 31,  Organic   Gross   Change at   Exchange
             2016(3)       2017      change   change   constant  rate change
                                                       exchange
                                                        rates

Revenue       1,456       1,530       +7.4%   +5.1%      +6.9%      -1.9%

The Recycling & Recovery Europe division posted robust 7.4% (+EUR108m) organic
growth in revenue in first- quarter 2017. Performance was notably driven by a
substantial positive price effect on secondary raw materials, particularly
scrap metals and paper, up 64% and 22% respectively, compared with 2016.
Volumes processed were up +1.9%, notably due to the commissioning of new energy
recovery plants in the United Kingdom.

* Revenue in France was up 10.1% (+EUR72m) on an organic basis.
This growth was not only attributable to higher secondary raw materials prices,
but also increased volumes across all processing methods, as well as positive
commercial developments in industrial waste collection.

* The United Kingdom/Scandinavia region posted organic growth of +1.9%
(+EUR6m).
Processing activities recorded growth in the United Kingdom, with the recent
commissioning of three new energy recovery plants. Performance in Scandinavia
remains dynamic, especially in the services and recycling segments. Completion
of the construction of the energy recovery plants in the UK had a negative
impact on revenue for the region.

* Revenue in the Benelux and Germany region rose +5.9% (+EUR20m) on an organic
basis.
Our services business grew, mainly due to higher industrial and commercial
collection volumes and higher prices notably in the Netherlands; the growth in
recycling comes from higher volumes, especially plastics.

* The Industrial Waste Solutions segment grew at a rapid pace of +11.1%
(+EUR10m) on an organic basis, lifted by the increase in volumes eliminated,
thanks to commercial dynamism in the soil remediation segment.

INTERNATIONAL

In EUR million

             March 31,   March 31,  Organic   Gross   Change at   Exchange
             2016(3)       2017      change   change   constant  rate change
                                                       exchange
                                                         rates

Revenue        859          931       +3.3%    +8.5%     +4.7%      +3.7%

Organic growth in the International division was +3.3%, a sequential
improvement from the second half of 2016. The Design & Build backlog stood at
EUR1.2bn, stable year-on-year.

* The Africa/Middle East/India region achieved strong organic growth of +10.4%
(+EUR24m).
The increase was mainly driven by the development of activities in the Middle
East, where several construction contracts are generating additional revenue,
including Mirfa and Barka.

* Australia also posted organic growth of +4.8% (+EUR11m) largely owing to the
+5.7% increase in the volume of waste processed.

* A slight growth in Asia of +0.9% (+EUR1m). The positive impact of bringing
new hazardous waste treatment capacities on stream in China was partially
offset by the decline in the contribution of engineering activities. Our water
business in China and Macau continues to grow steadily.

* Revenue in Italy/Central and Eastern Europe was up +8.2% (+EUR7m) on an
organic basis. This strong performance comes from the commissioning of the
waste to energy plant in Poznan in Poland, and a positive contribution from
recycling and energy recovery following favorable winter weather conditions.

* North America reported a decline of 5.1% on an organic basis (-EUR11m).
Business was negatively impacted by the end of wastewater contracts in
Indianapolis and Jackson. Regulated water activities and new services delivered
a satisfactory performance.

SUEZ ACQUIRED GE WATER TO BECOME A MAJOR PLAYER IN THE INDUSTRIAL WATER
SERVICES MARKET

On March 8, 2017, SUEZ announced that, together with Canadian fund Caisse de
dépôt et placement du Québec ("CDPQ"), it had concluded an agreement to
acquire GE Water & Process Technologies ("GE Water"), the global leader in the
management and treatment of industrial water, from General Electric Company for
EUR3.2 billion in an all-cash transaction.

The transaction had already been partially funded under excellent conditions,
with:
- the issue of senior bonds in the amount of EUR1.2bn, including EUR500m
maturing in 2025 carrying an annual coupon of 1.00%, and EUR700m maturing in
2029 with an annual coupon of 1.50%;
- an undated deeply subordinated hybrid bond issue for EUR600m with an initial
coupon of 2.875%.

The funding will be completed by:
- CDPQ's investment of around EUR700m for a stake in GE Water's equity, and
- a capital increase of EUR750m which, subject to market conditions and
regularly approvals, should take the form of a capital increase without
preemptive subscription rights and with a priority period for the Company's
current shareholders. SUEZ's main shareholders, ENGIE, CriteriaCaixa and
Caltagirone Group, have confirmed their intent to participate in the capital
increase for their pro rata share.

This transaction is expected to close by mid-2017 and is subject to the
required regulatory approvals (merger control authorities), including in the
European Union and the United States, and other customary closing conditions.
The implementation of this project was previously submitted to the European
Works Council.

OUTLOOK

With the implementation of an ambitious transformation plan and excluding the
effects of the GE Water acquisition, we confirm our targets for 2017(4):

* 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(5)

FORTHCOMING COMMUNICATIONS

* May 15, 2017: Detachment of the coupon
* May 17, 2017: Payment of the dividend
* July 27, 2017: Publication of first-half 2017 results (conference call)

(4) With an assumption of stable industrial production in Europe and stable raw
materials prices
(5) Subject to approval by the 2018 Annual General Meeting

In EURm

APPENDICES

REVENUE BY GEOGRAPHIES

In EURm                      Q1 2016    Q1 2017  % in Q1    Var.
                                                   2017    17/16

FRANCE                        1,194     1,234     33.2%    +3.3%
Spain                           399       412     11.1%    +3.3%
UK                              263       239      6.4%    -9.1%
Others Europe                   589       614     16.5%    +4.2%
EUROPE (excluding France)     1,252     1,265     34.0%    +1.0%
North America                   246       254      6.8%    +3.3%
South America                   231       257      6.9%   +11.3%
Oceania                         253       297      8.0%   +17.2%
Asia                            120       130      3.5%    +8.6%
Others International            260       284      7.6%    +9.1%
INTERNATIONAL
(excluding Europe)            1,109     1,222     32.8%   +10.2%
TOTAL                         3,555     3,721    100.0%    +4.7%

FROM REPORTED TO PRO FORMA FIGURES

Revenue in EURm
             Reported R&R Central Water Italy & Industrial Others(1) Pro forma
              Q1 2016   Europe      Central       Water               Q1 2016
                                    Europe

Water Europe   1,110                 (31)         (18)         49      1,109
R&R Europe     1,501   (45)                                            1,456
International    920    45            31          (90)        (49)       859
Other Division    24                              108                    132
SUEZ           3,555    -              -            -           -      3,555

(1) USG and Treatment Infrastructures in France, Spain, Latam

SUEZ
We are at the dawn of the resource revolution. In a world facing high
demographic growth, runaway urbanisation and the shortage of natural resources,
securing, optimising and renewing resources is essential to our future. SUEZ
(Paris: SEV, Brussels: SEVB) supplies drinking water to 92 million people,
delivers wastewater treatment services to 65 million, recovers 16 million tons
of waste each year and produces 7 TWh of local and renewable energy. With
82,536 employees, SUEZ, which is present on all five continents, is a key
player in the sustainable management of  resources. SUEZ generated total
revenues of EUR15.3 billion in 2016.

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

All the latest news on our SUEZ Newsroom & Twitter @SUEZ

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. 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). 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 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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