SUEZ ENVIRONNEMENT (EPA:SEV) EDUCATION DAY 2017 - Water Technologies & Solutions: Boosting the Group trajectory

Transparency directive : regulatory news

13/12/2017 07:30

press release

Paris, December 13th, 2017

                              EDUCATION DAY 2017

         WATER TECHNOLOGIES & SOLUTIONS: BOOSTING THE GROUP TRAJECTORY

An unparalleled platform in a large and growing industrial water market
- A $100bn industrial water market expected to grow at c. 5% per year
- $2.7bn in sales and $281m EBITDA in 2016(1)
- 10,000 employees serving 50,000 clients in 130 countries
- A global presence across the entire value chain in the water equipment and
  chemical treatment solutions

A game-changer accelerating SUEZ' profitable growth strategy

Outlook
- Achieve more than $3.1bn revenue in industrial water by 2020
- Cost and revenue synergies to contribute EUR90m to EBITDA by 2022
- Confirmed double-digit EPS accretion on run-rate cost synergies

SUEZ is hosting on December 13th a meeting with investors and financial
analysts to present its new "Water Technologies & Solutions" Business Unit
("WT&S"). Throughout this Education Day, key executives both at the Group's and
the unit's level will describe in detail WT&S business model and market
dynamics as well as how it creates new business opportunities for the Group and
strengthens SUEZ profitable growth strategy.

Jean-Louis Chaussade, Chief Executive Officer of SUEZ, stated: "Today marks a
major step for SUEZ as we present into details our new Water Technologies &
Solutions business unit to the financial community and detail its roadmap for
the coming years. This business unit offers an unparalleled platform to address
all water resources-related challenges, and we are truly convinced of its
ability to seize the important growth opportunities in the Industrial Water
market. WT&S is the only global player with a presence across the entire value
chain, with balanced operations in the equipment and treatment fields and a
footprint in the world's key regions. Beyond that, this new business unit
significantly enlarges our industrial client base, creates important
cross-selling opportunities within the Group, whilst rebalancing our geographic
presence and further improving our R&D and digital capabilities. The creation
of WT&S helps us build a stronger SUEZ with more visibility and diversity in
our revenue streams and will definitely be a booster for profitable growth."

(1) Based on unaudited pro forma, combining GE Water and SUEZ Industrial
Solutions; including best estimates of US GAAP conversion into IFRS

An unparalleled platform in a large and growing industrial water market

Industrial water represents an addressable market of over $100bn based on
estimated expenditures by industrial clients for water equipment and chemical
treatment solutions. Out of this total addressable market, the current served
market accounts for $24bn.

This global market is expected to grow at an average annual rate of c. 5% in
the coming years, driven by solid underlying trends, among which:

- Water scarcity: more prevalent need for water reuse solutions
- Focus on energy efficiency driving the future of water and wastewater
  treatment
- Growing trends towards industrial water outsourcing
- Increasing regulatory requirements
- Customers focus on productivity and efficiency gains

WT&S benefits from a predictable revenue stream, as c. 56% of its sales are
recurring. It also enjoys a balanced sales mix across its two complementary
divisions:

- The Chemical & Monitoring Solutions (CMS) division provides integrated
  chemical treatment solutions for industrial water & process assets.
- The Engineering Systems (ES) division is a leading equipment and technology
  solution provider for water and wastewater treatment, water reuse and
  outsourcing.

WT&S profitable growth strategy is based on five key differentiating factors:

- Strong global footprint: WT&S has a primary focus on global product
  manufacturing and fulfilment. It leverages a global footprint with a network
  of 45 manufacturing and service centres across the world, from where its
  10,000 employees serve 50,000 clients in all key regions.

- Leading presence across the entire value chain: The business unit provides a
  unique full-service offering across the entire value chain with leading
  technologies, equipment, solutions and services to address all industrial
  clients' water challenges.

- Strong go-to-market capabilities all over the world: The business unit offers
  added-value proposals for a diverse blue-chip customer base across key
  industry verticals and sells highly recognized brands in the industry with a
  sales force of 3,000 professionals.

- Global R&D and innovation capabilities: WT&S has a global technology
  footprint with R&D centers across four continents, where 400 scientists and
  engineers develop leading edge technologies.

- A leading digital platform driving client retention: WT&S digital solutions
  offer value-added services to the clients, notably by allowing real-time
  monitoring and predictive maintenance. They also help increasing internal
  efficiencies and provide insightful data analytics.

A game-changer accelerating SUEZ' profitable growth strategy
The creation of WT&S perfectly matches SUEZ strategic objectives by doubling
its industrial client revenues and expanding its relationships with large
blue-chip companies. It improves SUEZ's revenue profile with industrial clients
now representing 40% of the Group's revenues. WT&S also allows SUEZ to
rebalance its geographic presence with around 40% of its revenues generated
outside Europe.

WT&S benefits from significant opportunities to grow profitably via top-line
synergies, while the new global Key Account management organization implemented
by SUEZ will boost commercial development.

The team has identified more than $750 million of potential for top-line
synergies; our ambition is to convert yearly revenue synergies of EUR200
million by 2022. This will be mostly enabled by combined offering,
cross-selling and insourcing. Early wins are already materializing with cross-
selling and combined offering leading to new business.

SUEZ intends to fully leverage the depth and breadth of its water & waste
offering through a new global Key Account Management (KAM) organization at
Group level. It will continue strengthening its relationships with large
customers across the world in key business areas (Oil & Gas, Power, Food &
Beverage, etc.) and create for each market a more comprehensive offer, ensuring
internal coordination to deliver tailored, innovative and differentiating
solutions to the customers' needs.

Financial outlook of WTS Division(2)
2017-18 outlook:

- Q4 2017: revenue of $550-600m and EBIT above $50m
- 2018:
  * Revenue: c. $2,800m (+3-4% gross variation), supported by 4% growth in
    orders in 2017
  * EBITDA: c. $290m, including $20m of transitory costs
  * EBIT: c. $200m, including $20m of transitory costs(3)
- Exceptional costs below EBIT: transaction costs of c. EUR40m in 2017 and c.
  $80m of integration costs in 2018

Mid-term outlook:

- Expected mid-single digit revenue growth with EBITDA growing at a faster pace
  than revenue
- Achieve more than $3.1bn revenue for WT&S by 2020
- EUR90m contribution from both revenue and cost synergies to EBITDA by 2022

Hence, SUEZ is poised to create even more value for its shareholders and is
clearly moving towards a balance structure relying on the following 2 pillars,
infrastructures development and management, and also solutions and services for
cities and industrials.

The creation of WT&S is a game changer for the Group as it strengthens SUEZ
business model, by providing more visibility and diversity in revenue streams.
Moreover, it offers tremendous new business opportunities to be unlocked by the
new commercial organization. SUEZ is thus poised to create more value for its
shareholders and stakeholders.

(2) Combination of GE Water and SUEZ Industrial Solutions, including best
estimates of US GAAP conversion into IFRS
(3) Excluding purchase price allocation impact which, to be set by end of H1
2018

CONTACTS SUEZ
Media                                          Analysts & investors
Ophélie Godard                                 +33 (0)1 58 81 24 05
+33 (0) 1 58 81 54 73
ophelie.godard@suez.com

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 industries 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.

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SUEZ Headquarters - Tour CB21 - 16 place de l'iris, 92040 Paris La Défense
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SUEZ ENVIRONNEMENT (EPA:SEV) EDUCATION DAY 2017 - Water Technologies & Solutions: Boosting the Group trajectory

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