SUEZ ENVIRONNEMENT (EPA:SEV) SHAPING SUEZ 2030: a comprehensive plan to become the global leader in environmental services

Transparency directive : regulatory news

02/10/2019 07:30

press release

Paris, 10/02/2019 - 7:30 am

                               SHAPING SUEZ 2030

  A COMPREHENSIVE PLAN TO BECOME THE GLOBAL LEADER IN ENVIRONMENTAL SERVICES

SUEZ announces today "Shaping SUEZ 2030", a comprehensive strategic plan to
position the Group - now - for the opportunities and the challenges of the next
decade. The plan enhances value creation for all stakeholders over 4 years with
material results as soon as 2021. The plan positions SUEZ as the global leader
in environmental services.

Given the key trends in our business - the continued growth of the circular
economy and its impact on our customers, the emergence of new business models
and new competitors, combined with a profound shift of the mindset of citizens
towards the climate crisis and a need for concrete action - SUEZ will
accelerate its transformation.

With this new plan, the Group leverages its core strengths - innovation, best
in class technologies and know-how, exceptional teams and an excellent
reputation. The plan drives selectivity in growth, simplicity in its way of
working and a renewed engagement grounded on a passion for the environment.

"Shaping SUEZ 2030" will increase value for all stakeholders by accelerating:
- Selectivity in organic growth, comprising capex discipline and also portfolio
  rotation for which businesses have been identified accounting for 15-20% of
  our capital employed

- Simplicity with a leaner organization, underpinned by a EUR1bn efficiency
  plan by 2023 which will in part improve operating profitability as well as
  finance a step-up in investment in innovation and digitization

- Engagement with our customers and from our employees, embracing change and
  reviving our winning spirit with a refreshed core of values

The plan will transform the Group at all levels in the mid-term: our ambition
for the four years to 2023 is to embed our new values and culture firmly across
the Group, set the scene for sustained organic growth with lower capital
intensity, change our business portfolio and improve our returns on capital
employed by at least two points, enhancing our capacity to increase our
dividend at a normal payout ratio.

Change will be evident already by 2021 and the Group's financial objectives for
that year reflect our intention to focus going forward on profitability and
sustainability:

2021 guidance(1):

* EUR0.8 recurring EPS
* EUR500 million recurring Free Cash Flow
* Net Debt(2) at 2.8 to 3.0x EBITDA

Bertrand Camus, SUEZ CEO, commented:

"With Shaping SUEZ 2030, our ambition is to be the global leader in
environmental services, making us the preferred choice of our customers,
employees and stakeholders, working together to restore and preserve the
fundamental elements of the environment: water, air and soil.

Building on SUEZ's long-standing reputation, best-in-class technologies,
expertise in sustainability, we will reposition the Group's strategy. We will
embrace changes in our markets and contribute here and now to environmental
needs, while driving improvements in the value we create as soon as 2021. Our
comprehensive plan calls for selectivity in growth, simplicity in our way of
working and an evolution in the company's culture.

We see opportunities across each of our three business segments (Water,
Recycling & Recovery and Environmental Technologies & Solutions): we will grow
in International markets, do more with Industrial customers and win business
based on technology and data-driven environmental solutions, with Europe
remaining at the heart of our innovation and sustainability.

Taken together, the set of actions we have started to execute take us on a
4-year journey to 2023, during which we will transform the group in every
respect. We commit to show visible progress already in 2021.

The engagement and full support of all the teams at Suez and the Board of
Directors has enabled us to build an ambitious, robust and exciting plan - we
have now started to execute.

The success of SUEZ 2030 will be based on mobilizing the energy and expertise
of all our committed employees - to better serve our customers and partners.
Our new values - passion for the environment, customer first, respect, team
spirit - combined with a culture which revives our winning-spirit, will all
support the deep transformation which underpins our strategic plan."

(1) 2021 guidance assumes no material change in economic and market conditions
(incl. interest rates, forex and commodity prices) vs. those observed over the
past 12 months. Please, see definition of alternative performance indicators in
appendix.
(2) Debt including IFRS 16.

"Shaping SUEZ 2030" will be implemented across the Group's three business
segments:

* Water (c. 40% of 2018 sales) regroups all SUEZ municipal water activities
  globally,

* Recycling & Recovery (c. 40% of 2018 sales) regroups all SUEZ waste
  activities related to non-hazardous waste with municipal as well as with
  Industrial & Commercial customers,

* Environmental Tech & Solutions (c.20% of 2018 sales) regroups WTS, hazardous
  waste and speciality environmental solutions for industrial and municipal
  customers.

The main drivers of the plan are:

Selectivity - Steering selectivity in growth, the Group intends to leverage its
strong European innovation capabilities and accelerate where it has identified
the best opportunities on the following priorities for all parts of the Group:

* International markets: The Group targets growth in selected countries where
  it will deploy its full-value proposition and further expand into innovative
  services. In addition, it plans to enter selected markets with fast-growing
  environmental infrastructure needs, with the ambition to reach 60% of Group
  revenue.

* Industrial customers: The Group accelerates on 5 key high-growth markets and
  prioritizes activities with the highest value-add leveraging its distinctive
  portfolio of solutions. Working hand-in-hand with its industrial customers,
  it will design custom made, integrated solutions to help them achieve their
  sustainability roadmap, with the ambition to be above 50% of Group revenue.

* Technology and data-driven solutions: The Group leverages proprietary
  technologies and innovation to develop and roll-out globally advanced
  solutions. It will also build new high-potential asset-light businesses such
  as air quality management and smart agriculture, with the ambition to exceed
  30% of Group revenue.

The Group's capital allocation will evolve, to reflect these priorities:

* Prioritize value over volume with a strong change of direction in nature of
  spending

* Align business portfolio with value creation ambitions: businesses
  representing 15-20% of capital employed have been identified as part of asset
  rotation program

Simplicity - Promoting simplicity in its way of working, SUEZ will improve its
operational performance, in part to boost innovation and digitization to fuel
future growth

* Roll out a leaner and more efficient organization, with reduced number of
  business units and a devolved decision-making process to best serve our
  customers

* Optimize and standardize industrial processes, accelerate transformation in
  procurement and external resources, rationalize indirect costs, notably SG&A

* The objective of the above measures is to deliver EUR1bn of annual savings by
  2023 of which 35 to 45% are expected to benefit SUEZ's profitability with
  around 45 to 50% of this annual saving already evident in 2021

Engagement with our customers and from employees - Embrace change and renew the
SUEZ winning spirit

* Foster engagement around 4 new values: passion for the environment, customer
  first, respect, team spirit
* Upgrade talents, leadership and skills across the organization
* Promote new Centers of Excellence in emerging markets with distinctive
  capabilities
* Accelerate execution and performance, thanks to increased accountability
* Management team's incentives will be realigned with financial objectives

Guidance and forward looking information:

2021 guidance(3):
* EUR0.8 recurring EPS
* EUR500 million recurring Free Cash Flow
* Net Debt(4) at 2.8 to 3.0x EBITDA

Additional financial elements, including one-offs:

2019:   EUR150-200m one-offs offsetting Argentine settlement, largely non-cash
Future: EUR500-700m total one-off charges, majority to be accounted for in 2020

The new reporting segments will take effect at the latest on 1 January 2020 and
a reconciliation will be given with the prior framework.

Note: Concerning targets previously given for 2019, under its current reporting
framework and excluding any impact of the plan announced today, the Group
confirms these targets(5):

- Organic revenue growth of 2% to 3%
- Organic EBIT growth of 4% to 5%
- FCF growth of around 7% to 8%
- Leverage ratio (Net debt/EBITDA) of c.3x in 2019(6)
- Continued ambition to lower debt ratio in 2020

On this basis, and in accordance with the Board of Directors, the Group intends
to propose a dividend of EUR0.65 per share in respect of 2019 at the Annual
General Meeting in May 2020.

Upgraded sustainable development commitment for 2030:

* Reduce GHG emissions by 45% (vs. 30% previously), in line with +1.5°C
  trajectory/carbon neutrality in 2050
* 100% sustainable solutions
* c.20 million tons of CO2 emissions saved, yearly, for our customers.

(3) 2021 guidance assumes no material change in economic and market conditions
(incl. interest rates, forex and commodity prices) vs. those observed over the
past 12 months. Please, see definition of alternative performance indicators
in appendix.
(4| Debt including IFRS 16.
(5) 2019 guidance assumes water volumes sold remain in line with historic
trends, volumes of waste treated rise by +1.5% in Europe and raw materials
prices are stable relative to December 31, 2018.
(6) Excluding impact of application of IFRS 16 accounting standard

                 Appendix: Alternative performance indicators

Recurring EPS (Earning per share):
(net income group share - (hybrid coupon + all one-off costs cash and non-cash
+/- capital gain/losses on disposals) x (1 - applicable tax rate))/ number of
shares.
By way of comparison, the 2018 recurring EPS is estimated at EUR0.56.

Recurring Free Cash Flow:
Cash Flow from operating activities - hybrid coupon + restructuring (cash
expenses) - property plant, equipment - intangible capex - lease expenses -
net financial charges - flows including dividends to/from minorities
By way of comparison, the 2018 recurring Free Cash Flow is estimated at EUR95m.

ROCE (Return on capital employed):
((EBIT - Share in net income of equity-accounted companies) x (1 - normative
tax rate) / (Simple average of the capital employed at the end of the year
before and at the end of the current year including, incl. IFRS 16)
By way of comparison, the 2018 ROCE is estimated at 4.9%.

SUEZ presents Shaping SUEZ 2030 on 2 October 2019 at an investor meeting in
Paris. The meeting, which starts at 10.00 CET (9.00BST) will be webcasted live
and supporting documents made available on SUEZ website.

FINANCIAL CALENDAR:

* October 30, 2019: Publication of nine-month revenue 2019 (conference call)

SUEZ contacts
Press                                  Analysts / Investors
Isabelle Herrier Naufle                Mathilde Rodié / Cécile Combeau
+33 (0) 1 58 81 55 62                  +33 (0) 1 58 81 24 05
isabelle.herrier.naufle@suez.com

Disclaimer

This press release contains unaudited financial data. Unless specified, 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

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
treats over 45 million tons of waste a year, produces 4.4 million tons of
secondary raw materials and 7.7 TWh of local renewable energy. It also secures
water resources, delivering wastewater treatment services to 66 million people
and reusing 1.1 billion m3 of wastewater. SUEZ generated total revenues of 17.3
billion euros in 2018.

Find out more about SUEZ Group on the website & on social media
Twitter, Linkedin, YouTube, Instagram

SUEZ
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 EUR2,485,450,316 -
Siren (French business administration number) 433 466 570 RCS Nanterre -
VAT FR 76433 466 570

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SUEZ ENVIRONNEMENT (EPA:SEV) SHAPING SUEZ 2030: a comprehensive plan to become the global leader in environmental services

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