SUEZ ENVIRONNEMENT (EPA:SEV) BUSINESS UPDATE: COMMENTS ON EXIT AND REBOUND

Transparency directive : regulatory news

30/06/2020 18:06

press release

Paris, June 30, 2020

                BUSINESS UPDATE: COMMENTS ON EXIT AND REBOUND

* After the low point during confinement in April and May, activity in June
  shows progressive normalisation

* SUEZ' businesses show their resilience: revenue in the first half of the year
  is expected to be around -6% organic compared to last year

* Our teams mitigated volume declines with in excess of EUR100m of additional
  cost reduction in H1

* Our transformation program is being accelerated; in our H1 results we will
  take one-off costs for this, but also to cover costs and risks related to the
  current environment

* Our financial structure is solid, and we have significantly reinforced our
  liquidity, with EUR2bn new long-term debt issued since March

* SUEZ' strategic position is even more relevant and supportive to a green,
  digital and sustainable recovery

As we reach the end of the second quarter, we can confirm that there is an
overall improvement in our business trends compared to the low point of
April/May in most regions in which SUEZ operates. Economies in Asia and Europe
are recovering. Although there remains substantial uncertainty, and whilst some
regions like Latam, India and the US are still suffering from the worst of the
pandemic, we are now in a position to give an update on current trading and
assess the one-off risks and impacts linked to the current environment.

In the face of the unprecedented situation experienced over the last 6 months,
the SUEZ teams worldwide have demonstrated their resilience and agility. They
have assured the continuity and quality of our vital public services, essential
to public health. As well as protecting our people and our clients, the Group
has won new business and made substantial adjustments to its costs and capex.
Together with the measures to reinforce our liquidity, the Group can look ahead
with confidence based on a solid financial structure.

Current business trends

As previously indicated, there has been a substantial impact in H1 and notably
Q2 on the economies in which we operate from the pandemic. For SUEZ, within Q2,
April and May were the low point in revenue and profitability, with June
showing a significant improvement in activity. Accordingly, we expect a
resilient top line and a substantial but mitigated impact from the volume
declines on our EBIT:

* Revenue in H1 2020 likely to show an organic decline of around -6% compared
  to last year
* An underlying EBIT of around EUR320-330m excluding all one-off charges. The
  one-off charges are explained further below.

We expect the following revenue evolution per segment in H1:

- Water: organic decline of around -6% (Q1 organic growth was +0.6%)
- Recycling and Recovery: organic decline of around -8% (Q1 organic decline was
  -0.3%)
- Environment Tech & Solutions: organic decline of around -4% (Q1 organic
  growth was +2.9%)

If confirmed, this would mean that the largest aggregate impacts from the
decline in activity this year would be in Q2. Although it is too early to
provide formal guidance, our experience of exit from the lockdown in China
since March and in Continental Europe more recently implies activity in the
second half is likely to come close to, whilst remaining below, last year's
levels, even assuming for example a disrupted summer for tourism. Activity week
to week can also be volatile. We will give a further detailed update on outlook
with our H1 results at the end of July.

Below are the current trends in our business as observed for the first three
weeks of June which illustrate the points made above:

* In Water:
- We are seeing volumes down -2 to -3% in France.
- Spain continues to be more impacted, with volumes down close to -10%, given
  the still limited tourist activity in the country.
- In Chile, volumes of water sold are down around -10%, reflecting the effects
  of confinement on the one hand, and precautionary measures of reduction in
  water consumption on the other hand, as the country is still suffering from
  the drought.
- Our US water business continues to see little impact from Covid-19 with
  weather conditions being more impactful.
- In China, volumes are within -3 to -4% of 2019 levels.

* In Recycling & Recovery:
- In Continental Europe, activity is close to 2019 levels. Landfill volumes in
  France are down by around -2%. Germany and the Netherlands resisted quite
  well throughout crisis.
- in the UK, volumes have started to pick up but exit from lockdown is still
  partial.
- In Australia, which started to be impacted in April, C&I collected volumes
  were up around +1% and landfill volumes decreased by around -5%.

* In Environmental Tech & Solutions:
- In Hazardous Waste in China, underlying volumes have been progressively
  catching up to last year's levels and our volumes are up year on year given
  the additional capacity brought on stream this year.
- In Hazardous waste in Europe, the exit of lockdown drove volumes up to around
  -1% vs last year.
- WTS chemicals and products revenue has held up well. New order intake
  continues to be slower than last year and there has been some disruption to
  project and service activities.
- Although some parts of SES were affected by the physical constraints of
  confinement, there are clear signs that clients are intending to increase
  their spending on the activities covered by SES in the rebound period.

Mitigation and performance plan

Faced with a sharp slowdown of activity, our teams reacted rapidly to mitigate
the impact on our profitability. These measures should generate in excess of
EUR100m of cost reduction in H1 over and above both our ongoing cost reduction
efforts and our normal fixed/variable cost split.

Of course, part of these exceptional efforts will reverse as activity picks up.
But we believe that an important part, linked to sustainable changes in the way
we work, can be retained for the future and would be in addition to our SUEZ
2030 performance plan.

Currently, this SUEZ 2030 performance plan is on track to deliver in 2021 45 to
50% of the total target of EUR1bn gross annual savings, but we are also taking
steps to accelerate and expand the plan.

One-off charges

We had signalled costs of EUR500-700m to implement our Shaping SUEZ 2030
transformation over 2020-23 of which EUR300-350m in 2020. We will accelerate
more of these transformation costs into 2020. H1 restructuring charges and
write-offs in respect of this plan will be around EUR270m, largely non cash.

In addition, beyond the impacts from business volumes, we will have a range of
additional costs and charges linked to the current business environment whose
impact will be felt largely in H1. 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 our solidarity actions on receivables collection where we have been
supporting our customer base during this difficult period. The total one-off
costs linked to these impacts to be taken in H1 is estimated at EUR270 to
EUR290m.

These one-off costs will be taken across our P&L (above and below EBIT) and we
will call out their impacts against each of our main financial aggregates.

Solid financial structure with reinforced liquidity

We have reinforced our financial structure and our liquidity remains very high.
Since March 26th, the Group has issued c.EUR2bn of new-long term debt which is
equivalent to all our long-term debt maturing out to June 2022. We confirm our
objective to reduce capex by around 15% over the full year.

Bertrand Camus, Suez CEO, commented:

"I am particularly proud and grateful for what our teams achieve every day all
over the world, enabling the Group to guarantee its essential and vital
services, while ensuring our employees were able to work safely. As we come to
the end of the first semester, and while we continue to acknowledge both the
risks looking ahead and that some of our teams are still in the heart of the
crisis, we can say that our group shows great resilience.

We remain more focused than ever on the deployment of our Shaping SUEZ 2030
strategy in the current context and will accelerate some aspects of our
transformation. We will speed up where appropriate the restructuring of our
activities, restart aspects of our businesses differently and exit more quickly
from non- core activities.

Our Shaping SUEZ 2030 strategic plan aims at driving sustained organic growth
with lower capital intensity, rotating our business portfolio and improve
returns on capital employed. Our commercial success throughout the first
semester shows that we can build our business on this basis.

The challenges identified during the development of our plan remain priorities
in today's world and our value proposition is more relevant than ever. Focused
on solutions with a positive impact on health, quality of life, climate and the
natural capital of the planet, we bring concrete answers as soon as now.

In summary, we can see more opportunities going forward to deploy our talent,
expertise, technology and know-how to help shape a sustainable future in the
rebound."

CONTACTS

Media                                 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

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.

      Find out more about the SUEZ Group on the website & on social media

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SUEZ
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 2,513,450,316 Siren
(French business administration number) 433 466 570 RCS Nanterre
VAT FR 76433 466 570

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