Promising Outlook and Accelerated Industrial Development
PARIS, March 8 /CNW/ - The Board of Directors meeting March 7, 2007,
chaired by Gerard Mestrallet, approved the results for the financial year
2006. The accounts will be submitted for approval to the Annual General
Shareholders' Meeting, May 4, 2007.
Record results in 2006 : dividend +20 %
(*)EBITDA: EUR 7.1 billion (+ 11.2% organic growth)
(*)Current operating income: EUR 4.5 billion (+ 15.9% organic growth)
(*)Net income group share: EUR 3.6 billion (+ 43.5%), a record high
(*)ROCE: 13% (10.7% at year-end 2005)
(*)Net debt: EUR 10.4 billion (EUR 13.8 billion in 2005)
- All 2004-2006 performance targets exceeded.
- Dynamic contribution of all business lines to excellent results.
- Acceleration of organic growth in operating performance indicators.
Streamlining and optimization of Group structure
- Buy out of remaining Electrabel shares (1.38%), for a total of
EUR 445 million
- Planned sale to Electrabel of 100% of SUEZ-Tractebel
Strong development prospect and value creation potential
- Accelerated industrial development: EUR 15 billion in investments,
- 75,000 MW installed capacity in 2012 (52,000 MW in 2006), developments
in nuclear, natural gas, and LNG
- Accelerated growth in environment activities (+ 6% to + 10% per year)
- Further improvements in operational and financial performance
- Shareholder return improvements
- Proposed ordinary dividend increase: + 20% (EUR 1.20/share)
- Share buy back program
- Dividend payout greater than 50% of recurring net income(1) starting
- Strengthened prospects with the planned merger with Gaz de France, a
Gerard Mestrallet, SUEZ Chairman and CEO, commented: "Our record-high
2006 results prove the strength of the SUEZ business model and the
effectiveness of the strategy. All energy division activities recorded current
operating income growth near or above 10%. The environment division reported
current operating income in excess of EUR 1 billion, a sign of exceptional
dynamism. On the basis of these record results, our unique positions in these
two sectors, and the strong promising opportunities provided by our business
environment, we have announced ambitious new objectives. SUEZ is accelerating
its industrial development and responding to the world's considerable
requirements for clean and secure energy, as well as its needs in water and
waste services. Together, they are among the world's most pressing challenges.
SUEZ strong prospects will be reinforced by the merger project with Gaz de
France, a major project for the Group."
Analysis of 2006 Results
Record results in all businesses, backed by strong growth
2006 was characterized by accelerated growth in Group results, with net
income group share breaking records at EUR 3.6 billion; organic growth in
EBITDA (+ 11.2%) outpaced organic growth in revenues (+ 8.2%), reflecting a
further increase in profitability.
The rates of organic growth in revenues as well as EBITDA exceeded the
Group's (2004-2006) medium-term targets.
At December 31, 2006, net debt was EUR 10.4 billion, compared with
EUR 13.8 billion at the end of 2005, representing 46.3% of shareholders'
equity at year-end 2006 (72% at December 31, 2005).
Revenues: acceleration in internal growth, + 11.3%
At December 31, 2006, after - EUR 1.7 billion in net impact of
acquisitions and disposals, SUEZ revenues were EUR 44.3 billion (versus
EUR 41.5 billion at December 31, 2005), reflecting a high organic growth
(excluding the positive impact of natural gas prices) rate of +8.2%, exceeding
the announced objective of +7%, and recorded a net increase compared to last
year. On a comparable structural and exchange rate basis, internal growth was
+11.3%. This excellent performance reflects the Group's commercial vitality.
EBITDA: further profitability improvement
Total EBITDA progressed + 8.8% to EUR 7,083 million. In organic terms, on
a comparable scope and exchange rate basis, EBITDA growth was + 11.2%. Along
with continued cost reduction measures, the EBITDA improvement reflects a
constant and sustained increase in Group profitability. EBITDA components
break down as follows:
- SUEZ Energy Europe (SEE): EUR 3,060 million, with organic growth of
9.2%. SEE's growth contributions include fine operating results in
electricity (good availability of power plants in the Netherlands and
plant startups and repowering in Italy and Spain), in natural gas
(commercial successes), and favorable market conditions despite
regulatory taxes in Belgium.
- SUEZ Energy International (SEI): EUR 1,566 million, with sustained
organic growth of + 17.1%. These very fine results are mainly due to
strong growth in LNG activities, improvement in merchant plant
activity, and commercial successes with commercial and industrial
customers in the United States; advances in sales in Thailand; and new
projects in the Middle East.
- SUEZ Energy Services (SES): EUR 591 million, with an organic growth
rate of + 7.3%. The increase over 2005 is accounted for by commercial
dynamism (installations and services in France, HVAC in Europe, and
project engineering) and improved operating performance.
- SUEZ Environment (SE): EUR 1,983 million, with an organic growth rate
of + 7.8%. This strong progression is explained mainly by new waste
services contracts (including Zorbau, Spolana, Sleco, and SCIP) and
water contracts (Vallauris, Briancon, and Dunkirk). These strong
positions are bolstered by value-creating acquisitions and selective
developments in low-capital intensive activities (services provided in
Water in France, PFI UK, Water in China, and the Algiers contract).
Current operating income: strong, balanced growth contributed by each
Current operating income came to EUR 4,497 million, reflecting strength
in both total growth (+ 15.2%) as well as organic growth (+ 15.9%). Growth in
current operating income outpaced growth in EBITDA, benefiting mainly from the
Group's operational developments and the strong advance of EBITDA in all
- SEE: EUR 2,141 million, organic growth of + 9.5%.
- SEI: EUR 1,099 million, organic growth of + 45.7%.
- SES: EUR 392 million, organic growth of + 10.9%, twice as fast as
- SE: EUR 1,044 million, organic growth of + 7.3%.
Net income group share achieved an historic high, at EUR 3.6 billion
Net income group share benefited from a sharp improvement in income from
operating activities, which rose 18.7% to EUR 5,368 million.
This figure includes capital gains from disposals for EUR 1,093 million
(compared with EUR 1,530 million in 2005), and draws advantage from a strong
improvement in the change in fair value of commodity derivatives, asset
impairments, and restructuring costs. In addition, minority interests
decreased by EUR 676 million, as a result of the combined public offer for
Electrabel that closed December 6, 2005, and the 98.6% interest in Electrabel
held throughout 2006. For 2006, this transaction had an accretive effect of
+ 4.6%, one year ahead of its initial target.
Further increase in Group profitability
Return on capital employed (ROCE) increased to + 13% versus + 10.7% at
year-end 2005, to be compared with the weighted average cost of capital: 6.8%.
ROCE of all business lines is on the rise.
Very sound financial profile
The Group's cash flow generation finances dividends and industrial growth
The Group's excellent operating results generated EUR 5.4 billion in cash
flows, funding the Group's dividend (EUR 1.7 billion) and its industrial
expansion in 2006. Investments amounted to EUR 3.8 billion, including the
buyout of remaining capital in SHEM (France), the Bristol Water acquisition
(United Kingdom), completion of the heating and cooling system in Zaragoza
(Spain), and power plant developments, mainly in Italy and Spain.
25% net debt reduction to EUR 10.4 billion
Net debt at December 31, 2006 declined to EUR 10.4 billion, 99% of which
is hedged against interest rate increases. Taking into account the
simultaneous strengthening of shareholders' equity (EUR 22.4 billion, up
EUR 3.7 billion over year-end 2005), gearing is down to 46.3%, versus 72% at
December 31, 2005. The coverage ratio (net debt/EBITDA) is 1.5 versus 2.1 at
Streamlining and optimization of Group structure
The SUEZ Board of Directors has announced the company's intention to
launch a buy out for all Electrabel shares not yet held, either directly or
indirectly, i.e. 1.38% of Electrabel's capital. The offering price will be
EUR 590/share, amounting to a total investment of EUR 445 million, attached
coupons n 19 and following attached, subject to the conclusions of an
independent expert and the opinion of the Electrabel Board of Directors. On
March 20, 2007, SUEZ will file a prospectus with Belgium's Commission
bancaire, financiere et des assurances (CBFA).
On the other hand, the SUEZ Board of Directors announces the company's
intention to sell SUEZ-Tractebel to Electrabel. This project will be submitted
at a later date for decision to the Boards of Directors of Electrabel and
SUEZ. The main SUEZ-Tractebel operational assets are: SUEZ Energy
International, the consulting engineers Tractebel Engineering, and equity
holdings in Distrigas and Fluxys.
Acceleration of industrial investments, 2007-2009: EUR 15 billion
The Group enjoys excellent industrial prospects related to a favorable
business environment in the energy and environment sectors and to the Group
proven commercial dynamism. The competitive position of SUEZ businesses, its
experience, and its technological leadership constitute strong growth drivers
in markets undergoing substantial change (such as consolidation among major
players, energy market regulatory developments, and new water treatment
In this context, the Group is accelerating its industrial development.
Excluding major acquisitions, its investments will increase to EUR 15 billion
during the period 2007-2009, compared with EUR 10.2 billion for 2004-2006,
excluding the combined public offer for Electrabel. These investments will be
realized while observing the Group's financial discipline (maintenance of a
"A" credit rating and respecting internal investment criteria).
Within this framework, one of the Group's objectives is to increase its
installed capacity to 75,000 MW in 2012 (compared with approximately 52,000 MW
today, a 50% increase). SUEZ has the firm intention of increasing its nuclear
power generation capacities through the construction of new power plants in
Europe in line with national public policies. The objective for 2015-2020 is
to own and operate new 3rd generation nuclear plants.
For 2007, the Group's targets for operational performance are:
- EBITDA growth above + 10%
- Current operating income growth above + 15%
- ROCE in 2007 greater than ROCE in 2006.
In particular, for the period 2007-2009, SUEZ Environment performance
- Average annual growth in revenues between + 6% and + 10%
- Growth in EBITDA greater than growth in revenues
- Between EUR 4.0 billion and EUR 4.5 billion in industrial investments,
SUEZ will continue its efforts to increase operational profitability and
generate liquidity in all its businesses. It will also benefit from
operational synergies generated from the full integration of Electrabel (the
EUR 250 million target between 2006 and 2008, announced at the time of the
combined public offer, will be exceeded), and should benefit from enhanced
financial synergies (EUR 190 million on a full-year basis, instead of the
announced EUR 100 million).
The performance improvement programs (Optimax) have over delivered. Thus,
the cost savings program which objective was EUR 550 million for the period
2005-2006 ultimately produced savings of EUR 591 million. The Group will
continue its efforts with a new cycle of continuous operational processes
performance improvement OPERANDI program.
Shareholder return improvements
Confident in the Group's outlook in each of its businesses, at its
March 7, 2007 meeting the Board of Directors confirmed its intention to
continue a dynamic and competitive dividend payout policy:
- for 2006, an ordinary dividend of EUR 1.20 per share will be proposed
to the Shareholders' General Meeting, representing an increase of 20%
over the dividend paid for 2005;
- for the following years, a dividend payout greater than 50% of
recurring net income (excluding capital gains, in particular).
In addition, the Group will implement a share buyback program.
Planned merger with Gaz de France: a major opportunity
The merger with Gaz de France will further strengthen the Group's
In 2007, SUEZ teams will keep on working towards the merger with Gaz de
France. The project responds to an undisputed industrial logic and is value
creating for all stakeholders of the two groups': shareholders, employees, and
The recent geopolitics and sectors evolutions (ongoing sector
consolidation, fossil fuel prices fluctuations, debate around the european
energy policy and supply security) also validate the strategic interest of
such a merger.
SUEZ, an international industrial and services Group, designs sustainable
and innovative solutions in the management of public utilities as a partner of
public authorities, businesses and individuals. The Group aims to answer
essential needs in electricity, natural gas, energy services, water and waste
management. SUEZ is listed on the Brussels, Luxembourg, Paris, New York and
Zurich stock exchanges and is represented in the main international indices:
CAC 40, BEL 20, DJ STOXX 50, DJ EURO STOXX 50, Euronext 100, FTSE Eurotop 100,
MSCI Europe and ASPI Eurozone.
This communication does not constitute an offer to purchase or exchange
or the solicitation of an offer to sell or exchange any securities of Suez or
an offer to sell or exchange or the solicitation of an offer to buy or
exchange any securities Electrabel or Gaz de France, nor shall there be any
sale or exchange of securities in any jurisdiction (including the United
States, Germany, Italy and Japan) in which such offer, solicitation or sale or
exchange would be unlawful prior to the registration or qualification under
the laws of such jurisdiction. The distribution of this communication may, in
some countries, be restricted by law or regulation. Accordingly, persons who
come into possession of this document should inform themselves of and observe
these restrictions. To the fullest extent permitted by applicable law, Gaz de
France and Suez disclaim any responsibility or liability for the violation of
such restrictions by any person.
The Gaz de France ordinary shares to be issued in connection with the
proposed business combination to holders of Suez ordinary shares (including
Suez ordinary shares represented by Suez American Depositary Shares) may not
be offered or sold in the United States except pursuant to an effective
registration statement under the United States Securities Act of 1933, as
amended, or pursuant to a valid exemption from registration.
In connection with the proposed business combination, the required
information document will be filed with the Autorite des marches financiers
("AMF") and, to the extent Gaz de France is required or otherwise decides to
register the Gaz de France ordinary shares to be issued in connection with the
business combination in the United States, Gaz de France may file with the
United States Securities and Exchange Commission ("SEC"), a registration
statement on Form F-4, which will include a prospectus. Investors are strongly
advised to read the information document filed with the AMF, the registration
statement and the prospectus, if and when available, and any other relevant
documents filed with the SEC and/or the AMF, as well as any amendments and
supplements to those documents, because they will contain important
information. If and when filed, investors may obtain free copies of the
registration statement, the prospectus as well as other relevant documents
filed with the SEC, at the SEC's web site at www.sec.gov and will receive
information at an appropriate time on how to obtain these transaction-related
documents for free from Gaz de France or its duly designated agent. Investors
and holders of Suez securities may obtain free copies of documents filed with
the AMF at the AMF's website at www.amf-france.org or directly from Gaz de
France on its web site at: www.gazdefrance.com or directly from Suez on its
website at: www.suez.com, as the case may be.
This communication contains forward-looking information and statements
about Gaz de France, Suez and their combined businesses after completion of
the proposed business combination. Forward-looking statements are statements
that are not historical facts. These statements include financial projections,
synergies, cost-savings and estimates and their underlying assumptions,
statements regarding plans, objectives, savings, expectations and benefits
from the transaction and expectations with respect to future operations,
products and services, and statements regarding future performance.
Forward-looking statements are generally identified by the words "expect,"
"anticipates," "believes," "intends," "estimates" and similar expressions.
Although the managements of Gaz de France and Suez believe that the
expectations reflected in such forward-looking statements are reasonable,
investors and holders of Gaz de France and Suez ordinary shares are cautioned
that forward-looking information and statements are not guarantees of future
performances and are subject to various risks and uncertainties, many of which
are difficult to predict and generally beyond the control of Gaz de France and
Suez, that could cause actual results, developments, synergies, savings and
benefits from the transaction to differ materially from those expressed in, or
implied or projected by, the forward-looking information and statements. These
risks and uncertainties include those discussed or identified in the public
filings with the Autorite des marches financiers ("AMF") made by Gaz de France
and Suez, including those listed under "Facteurs de Risques" in the Document
de Reference filed by Gaz de France with the AMF on May 5, 2006 (under no:
R.06-050) and in the Document de Reference and its update filed by Suez on
April 11, 2006 (under no: D.06-0248), as well as documents filed by Suez with
the SEC, including those listed under "Risk Factors" in the Annual Report on
Form 20-F for 2006 that Suez filed with the SEC on June 26, 2006, and in the
Amended Annual Report on Form 20-F/A filed with the SEC on February 1, 2007.
Except as required by applicable law, neither Gaz de France nor Suez
undertakes any obligation to update any forward-looking information or
This release is also available on the Internet: http://www.suez.com
SUEZ Energy Europe: Strengthened positions in several European countries
- Acquisition in the Netherlands of electricity and natural gas supply
and distribution companies (Rendo and Cogas).
- Acquisition of the remaining shares of Societe Hydro Electrique du
Midi (SHEM) in France.
- Extension of generating facilities in Italy (Rosignano), Poland, and
- Natural gas pipeline startup between Balgzand (Netherlands) and Bacton
- Increased renewable energy generation capacity.
SUEZ Energy International: Leader in its key electricity and LNG markets
- Middle East: leader in electricity generation (8,200 MW) and seawater
desalination (2 million m3/jday), n 1 private investor in these
activities. Startup of 2 power plants, in Oman and Bahrain.
Acquisition of a power plant in Bahrain. Contract awards for 2 major
electricity generation and desalination plants: in Oman and Saudi
- Brazil: sustained commercial development by Tractebel Energia.
Electricity auction success (EUR 8 billion in cash flow guaranteed
over 30 years, beginning 2009 and 2011).
Two new projects : Sao Salvador and Estreito.
- United States: 3rd largest electricity supplier to commercial and
- Liquefied natural gas (LNG):
- United States: construction permit awarded for 2 LNG regasification
terminals: Neptune, at the latest 2009 (offshore from Boston) and
Calypso (Florida), beginning in 2010.
- Chile: master agreement with GasAtacama to develop an LNG
regasification terminal, between now and the end of 2008.
- Nigeria: preliminary LNG supply agreement with Brass LNG for 20 years.
SUEZ Energy Services: Strong sales activity
- Construction and operation of a heating and cooling system by Elyo
Iberica (in consortium) for the International Exposition "Expo Agua
Zaragoza 2008" (35 years, EUR 300 million).
- Renewal of an Elyo facilities management contract at PSA Peugeot
Citroen sites in the Paris region (5 years, EUR 143 million).
- GTI (in consortium) industrial maintenance contract for the Shell site
at Pernis (Netherlands), (5 years, EUR 100 million).
- Renewal of a multi-technical Endel maintenance contract for the CNES
Space Center installations at Kourou in Guyana (5 years,
EUR 90 million).
- Completion by Axima of air conditioning for 2 cruise ships for the
account of Aker Yards (EUR 58,3 million).
- Ineo global multi-technical maintenance contract for the Total
installations at Lacq and Champs du Sud Ouest (12 years,
EUR 12 million).
- Three contracts for Tractebel Engineering: design and planning for LNG
terminals in Sicily and Morocco (EUR 12 millions).
- Operation and maintenance contract with performance guarantee by Axima
Services for two prestige buildings in Brussels: Juste Lipse and Tour
Dexia (10 years, EUR 30 million).
SUEZ Environment: bountiful contracts in 2006
- Two contracts in the United Kingdom for universal waste management:
Cornwall region (30 years, EUR 1.5 billion) and Northumberland
(28 years, EUR 1 billion).
- Water services management at Changshu, near Shanghai (30 years,
EUR 1 billion).
- Operation over 30 years of a wastewater treatment plant at Tangjiatuo
(China) and a 30-year management contract for wastewater services
north of Chongqing.
- Design, construction and operation over a 2-year period of Europe's
largest reverse osmosis water desalination plant, at Barcelona
(EUR 159 million).
- Acquisition by Agbar of Bristol Water (annual revenues:
EUR 130 million).
- Renewal of a public/private service contracts with the town of Creteil
for water (15 years, EUR 124 million), and the town of Senart for
water and wastewater treatment (15 years, EUR 118 million).
- Design, construction and operation by Degremont of the Lusail
wastewater treatment plant at Qatar (10 years, USD 188 million).
- Contract with the City of Algiers: modernization of the water and
wastewater treatment service (5 years, EUR 120 million).
- Wastewater contract with localities in the Brianconnais region of
France (25 years, EUR 115 million).
- Decontamination of the Spolana chemical complex (Prague),
EUR 90 million.
(1) Excluding capital gains in particular.
For further information:
For further information: Press Contacts: +33-1-40-06-66-51/66-68;
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