Strong Increase in 2005 Results and 25% Increase in Ordinary
Dividend PARIS, March 13 /PRNewswire-FirstCall/ -- Revenues: EUR
41.5 billion (+9.0%) EBITDA: EUR 6.5 billion (+9.7%) Current
operating income: EUR 3.9 billion (+4.4%) Income from ordinary
activities: EUR 4.5 billion (+27.7%) Earnings per share: EUR 2.39
(EUR 1.70 in 2004) Net income group share: EUR 2.5 billion (+48.1%)
Gearing: 72% (91% end 2004) The Board of Directors meeting March 8,
2006, chaired by Gerard Mestrallet, approved the results for the
financial year 2005. The accounts will be submitted for approval to
the Annual General Shareholders' Meeting, May 5, 2006. - Strong
improvement in energy and environment results with organic growth
exceeding objectives - Record net income group share: EUR 2.5
billion - Sound financial structure, with a gearing reduced to 72%
after taking into account the EUR 11.1 billion combined public
offer for Electrabel (versus 91% at December 31, 2004) - Successful
offer for Electrabel (98.6%-held) and capital increase - SUEZ
Environment generated EUR 655 million net income group share
(+170%) - A 25% increase in ordinary dividend, to EUR 1.00/share,
will be submitted for approval to the Annual General Shareholders'
meeting, with payment on May 8, 2006 2006 Outlook - Continued
growth in all businesses, with organic growth of Group revenues
between 4 and 7% - EBITDA growth objective superior to 7% in 2006,
due mainly to stepped up implementation of profitability programs
(Optimax and synergies from integrating Electrabel) - Prospects
strengthened by the planned SUEZ - Gaz de France merger - on the
basis of one SUEZ share for one Gaz de France share - payment to
SUEZ shareholders of a exceptional pre-merger dividend of EUR
1.00/share For Gerard Mestrallet, SUEZ Chairman and CEO "The
Group's excellent operating performance is the fruit of a clear
strategy in all our energy and environment businesses, as reflected
in particular by the successful Electrabel offer. Today, SUEZ has a
central position in Europe and benefits from international growth
drivers. Ready to meet the great challenges of its sectors of
activity, the Group has a promising outlook for 2006 and the medium
term. The planned merger with Gaz de France will turn the new group
into a world class European player in energy and environment, both
in terms of growth and profitability." ANALYSIS OF 2005 RESULTS
Results exceed objectives 2005 saw a further improvement in SUEZ
performance with EUR 2.5 billion in net income group share and
EBITDA organic growth (+9.0%) outpacing organic growth in revenues
(+6.3%). The rate of organic growth in revenues and in EBITDA stood
in the upper range of the Group's medium-term objectives. The
buyout of Electrabel's minority interests (a EUR 6.3 billion impact
on Group debt) did not hinder the strengthening of the Group's
financial structure. Net debt at December 31, 2005 was less than
EUR 14 billion (versus EUR 11.8 billion at December 31, 2004).
Organic growth in revenues at +6.3% is in line with Group
objectives SUEZ saw sustained growth in activity, with total
revenues increasing +9.0% to EUR 41.5 billion. Organic growth in
revenues was +6.3%. Organic growth in EBITDA was substantially
above organic growth in revenues Total EBITDA grew by +9.7%.
Excluding changes in Group structure and currency effects, EBITDA
grew +9.0%. Improved EBITDA reflects the Group's continued
cost-cutting efforts and profitability improvements. In 2004,
current operating income growth (total +4.4% and organic +3.7%)
benefited from a number of favourable non-recurring items
(cancellation of provisions for pensions at Lydec, pension
liability adjustments for Electrabel distribution personnel,
provisions for nuclear fuel treatment). Excluding these
non-recurring items (2004 and 2005), current operating income
growth would be higher than that of EBITDA. This strong advance
reflects the success of the Optimax program, which had a EUR 329
million impact on current operating income, ahead of the cumulative
objective of EUR 550 million for 2005 and 2006. Net income group
share of EUR 2.5 billion Net income group share benefited from EUR
1,530 million in disposals[1], partially offset by recognition of
EUR 658 million for impairment in asset value, EUR 101 million for
restructuring costs and EUR 151 million negative impact for the
change in fair value of financial instruments on commodities. It
also benefited from strong improvement in financial income
(prepayment of the bonds redeemable in Fortis shares for +EUR 167
million), and a reduction in income tax, as well as improvement in
net income from associated companies (increase in Belgium of +EUR
245 million in contributions from mixed inter-municipal companies,
which in 2004 had reported a non-recurring expense of EUR 152
million related to pensions). Good operating performance in all
businesses SUEZ Energy Europe (SEE) Revenues were up +10.1% to EUR
14.2 billion at the end of December 2005. On a comparable basis, in
particular excluding the impact of gas prices (+EUR 594 million),
revenues rose by +EUR 528 million, for an organic growth rate of
+3.9%. In electricity, revenues were sustained mainly by wholesale
sales growth and price increases tied to increases in fuel costs,
and for Distrigas (growth of sales abroad and sales of LNG cargos).
It is worth noting the very sharp increase in electricity sales by
Electrabel outside the Benelux countries, amounting to EUR 2,160
million (34.4% in total growth), particularly in France, Germany,
and Italy. This non-Benelux growth, on top of the wholesale market
(total growth +44% to EUR 1,428 million) offset sales losses to
final customers in Belgium arising from deregulation in the
electricity and gas sectors and confirms the expansion of SUEZ on
Europe's energy market. With the success of the combined public
offer on Electrabel, the Group holds 98.6% of that subsidiary. SEE
EBITDA amounted to EUR 2,855 million (+7.7% in total growth, +6.1%
in organic growth). Electricity in the Benelux countries
contributed +EUR 265 million, due in part to Electrabel's good
performance in energy trading (+EUR 62 million). 2005 also saw
steady affirmation of Electrabel growth drivers outside the Benelux
(+24% in organic growth, or +EUR 61 million) benefiting, for
example, from the first-time consolidation of SHEM (+EUR 47
million) and plants startups in Italy (+EUR 39 million). Against
the background of strong price increases in the electricity market,
the diversity and reliability of the Group's production base - in
particular its nuclear component, as well as its continued cost
control efforts, have contributed to this good operating
performance. Furthermore, sharp rises and important variances in
gas prices between European spot markets enabled Distrigas to take
advantage of arbitrage opportunities. Current operating income came
to EUR 1,963 million, stable in relation to 2004 which had
benefited from many favourable non-recurring items. SEE net income
from operating activities amounted to +EUR 2,383 million,
representing total growth of +18.7%. It benefited from +EUR 714
million in capital gains from disposals, +EUR 626 million of which
on capital gains from the stock market listing of 36.6% of Elia.
SUEZ Energy International (SEI) SEI benefited from strong economic
growth in its main markets and in particular from electricity price
increases in Brazil, a favourable evolution of demand in Thailand
and Brazil, greater LNG opportunities, and a market with promising
growth prospects. Revenues totalled EUR 5.9 billion and increased
by 20.2%, +15.4% (+EUR 786 million) on a comparable, exchange rate
and gas price basis. Organic growth stemmed principally from North
America (+EUR 600 million) with in particular the commercial
success of SERNA (SUEZ Energy Resources North America) which has
become the fourth largest independent provider in the United States
for direct energy sales to industrial and commercial customers
(+482 EUR million). Activity was also sustained in Asia / Middle
East (+EUR 147 million), with the February 2004 startup of the
Baymina power plant (770 MW), and in Latin America (+EUR 117
million). SEI EBITDA totalled EUR 1,335 million, with total growth
at +13.3% and organic growth at +9.0%. Latin America was the no. 1
contributor to this growth (+14%), and in particular Brazil which
benefited from the last year of replacements of initial contracts
with bilateral contracts at more favourable margins (+EUR 105
million). Current operating income amounted to EUR 747 million down
by - 4.2% in total growth. Excluding the impact of a non-recurring
provision for the AEP lawsuit in the US (- EUR 111 million),
organic growth yielded +EUR 37 million. SEI net income from
operating activities came to +EUR 801 million, +9.5% in total
growth. It is worth noting the successful stock market listings
with EUR 245 million in capital gains, related mainly to the sales
of 9.6% of Tractebel Energia in Brazil, 17% of EnerSur in Peru, and
30% of Glow in Thailand. SUEZ Energy Services (SES) Revenues came
to EUR 10.3 billion, for organic growth of +EUR 581 million (or
+6.1% total growth and +6.0% organic growth, versus +3.3% organic
growth in 2004). Activity was especially sustained in the
installation and maintenance segments in particular in France
(+9.8%). At Ineo, growth in France is supported by public service
contracts and by a satisfactory progression in revenues from
services industry customers. Services activities in France (Elyo)
recorded organic growth of +6.7%, the result of commercial
developments and, more marginally, of rate increases
(renegotiations or the impact of higher fuel prices) and increasing
unfavourable weather conditions. In Italy revenues were up +14.6%.
EBITDA totalled EUR 563 millions, slightly above the 2004 level
(+0.9%). SES current operating income was up sharply (+64.9%), to
reach +EUR 359 million. Organic growth was EUR 143 million, up
+66%, benefiting in particular of improvements in operating
performances in SES's various activities, as well as of the
adjustment of provisions for pensions and the cancellation of
provision for disputes without merit. Net income from operating
activities came to EUR 229 million, up +14%, and includes capital
gains from disposals of activities or non-strategic assets which
generated EUR 42 million in net income, as well as expenses due to
the restructuring of this division created in June 2005. SUEZ
Environment (SE) 2005 recorded a very sharp improvement in net
income (EUR 655 million, or +170%) and in return on capital
employed (10.7% versus 8.8% in 2004), as well as a strong
commercial dynamism which focused on activities with lower capital
intensity and differentiating technology. SUEZ Environment
generated EUR 11.1 billion in revenues at December 31, 2005 with a
total growth of +5.2%, compared with EUR 10.5 billion at
Decembre,31 2004. Organic growth was significantly higher,
totalling +EUR 532 million (+5.1%), reflecting a pick-up in waste
services during the 4th quarter. EBITDA came to EUR 1,914 million,
representing a substantial improvement with a total growth of
+8.5%. Excluding currency and changes in Group structure impacts,
the business line recorded sustained organic growth of +EUR 195
million, or +11.4%. This growth was particularly apparent in water
activities in Europe (+EUR 59 million, or +10.2%) and
internationally (+EUR 72 million, or +17.6%). SE current operating
income amounted to EUR 1,004 million, +6.8% in total growth and
+9.3% in organic growth. Net income from operating activities came
to +EUR 1,265 million showing a +64% advance, thanks in particular
to capital gains on disposals of EUR 510 million (sale of a 25%
interest in Northumbrian Water Group, the initial public offering
of 45% of IAM in Chile, etc.). A sound financial structure Strong
cash generation Gross cash flow before financial expenses and taxes
totalled EUR 5,751 million at December 31, 2005. Cash flow from
operating activities benefited from a further improvement in
working capital requirements. Investments are impacted by the
buyout of Electrabel minority interests (EUR 11.1 billion) and are
otherwise under control (EUR 3.5 billion at December, 31 2005
versus EUR 2.7 billion at December 31,2004). Disposals, which came
to EUR 3 billion (Elia EUR 710 million, IAM in Chile EUR 246
million, Tractebel Energia in Brazil EUR 273 million, and Glow in
Thailand EUR 165 million) nearly cover the balance of the Group's
investments. Net debt at December 31, 2005 increased slightly to
EUR 13.8 billion (versus EUR 11.6 billion at January 1, 2005). This
increase is explained by the buyout of Electrabel minority
interests. Excluding the impact of that operation and the related
EUR 2,335 million capital increase, net debt at December 31, 2005
would have amounted to EUR 7.6 billion. Furthermore, during the 1st
quarter of 2005, the Group refinanced in advance its EUR 4.5
billion syndicated credit line via a new syndicated credit for the
same amount (likewise guaranteed by GIE Suez Alliance), but with a
lengthened 7-year maturity and a substantial improvement in
financial terms. Continued improvements in return on capital
employed Excluding the impact of the Electrabel offer, in 2005
return on capital employed (ROCE) would have come to 13.7% under
IFRS (versus 12.4% in 2004). After taking into account the buyout
of Electrabel minority interests, ROCE came to 10.7% at the end of
2005. This ROCE compares with an estimated weighted average cost of
capital of 6.5% and illustrates the Group's long-term capacity to
generate a return higher than its average cost of capital. POSITIVE
2006 OUTLOOK The Group has excellent industrial prospects, related
to a favorable economic environment for energy and environment
activities and to its employees' commercial adeptness and drive.
SUEZ also enjoys strong growth drivers in the competitive
positioning of its businesses, its experience, and its
technological leadership. SUEZ will continue the efforts it has
undertaken to increase the operating profitability and cash
generation in all its businesses. Furthermore, it will benefit from
enhanced synergies generated within the framework of the
integration of Electrabel. For 2006, operating performances will be
expected to stand in the upper range of the Group's medium-term
target objectives: - organic growth in revenues between 4 and 7% -
EBITDA growth greater than 7% - respect the overall investment
envelope for 2004 to 2006, or EUR 10.5 billion - maintain ongoing
ROCE improvement objectives (return on capital employed). Based on
its good Optimax results of 2005, SUEZ maintains its cost
reductions objective of EUR 550 million for 2006 in relation to
2004. Moreover, the synergistic effects from the buyout of
Electrabel minority interests, which will be implemented rapidly,
will facilitate EUR 250 million in operational synergies (over and
above the Optimax cost-savings) and an additional EUR 100 million
in fiscal and financial optimization in view of 2008. In light of
this positive context, the Board of Directors will recommend to the
Annual SUEZ General Shareholders' Meeting an increase in the
ordinary dividend for 2005 to EUR 1.00/share, or a 25% growth over
the 2004 dividend. With the planned SUEZ - Gaz de France merger,
the Group's prospects will be improved. The merger plan represents
an industrial project at the European level, ambitious and value
accretive. It will lead to the creation of a world leader in the
energy and environment sectors, placing the merged entity in an
ideal position to benefit from the complete deregulation of the
European energy markets in 2007. This project is beneficial and
constructive for all stakeholders - shareholders, consumers,
employees - and is consistent with respect for public institutions
and of public service missions. 2006 FINANCIAL CALENDAR -
Publication of first-quarter revenues: May 4, 2006 - Annual General
Shareholders' Meeting: May 5, 2006 - Publication of first-half
revenues: August 1, 2006 - First-half 2006 results: September 7,
2006 - Publication of third-quarter revenues: October 30, 2006
SUEZ, an international industrial Group, designs sustainable and
innovative solutions for the management of public utility services
as a partner of public authorities, businesses and individuals. The
Group aims to meet 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 major international indices: CAC 40, BEL
20, DJ STOXX 50, DJ EURO STOXX 50, Euronext 100, FTSE Eurotop 100,
MSCI Europe and ASPI Eurozone. The Group employs 157,650 people
worldwide and achieved revenues of EUR41.5 billion in 2005, 89% of
which were generated in Europe and in North America. Disclaimer
This press release contains certain forward-looking statements,
particularly with respect to future events, trends, plans or
objectives. These statements are based on management's current
views and assumptions and involve a number of risks and
uncertainties that may lead to a significant difference between
actual results and those suggested either explicitly or implicitly
in these statements (or suggested by past results). Additional
information about these risks and uncertainties appears in
documents filed by SUEZ with the U.S. Securities and Exchange
Commission and the Autorite des Marches Financiers (French
securities regulator). The present forward-looking statements are
made as of the date of the present release, with no undertaking by
SUEZ to update or revise them, whether in connection with new
information, future events, or any other factor. Press Contacts:
France: Catherine Guillon: +33(0)1-4006-6715 Caroline Lambrinidis:
+33(0)1-4006-6654 Antoine Lenoir: +33(0)1-4006-6650 Belgium: Guy
Dellicour: +32-2-370-34 05 Analyst Contacts: Arnaud Erbin:
+33(0)1-4006-6489 Bertrand Haas: +33(0)1-4006-6609 Eleonore de
Larboust: +33(0)1-4006-1753 This release is also available on the
Internet: http://www.suez.com/ ---------------------------------
[1]. As a reminder, under IFRS the gain generated in 2004 on the
disposal of M6 is accounted under "discontinued activities".
DATASOURCE: SUEZ CONTACT: France: Catherine Guillon:
+33(0)1-4006-6715, Caroline Lambrinidis: +33(0)1-4006-6654, Antoine
Lenoir: +33(0)1-4006-6650, Belgium: Guy Dellicour: +32-2-370-34 05,
Analyst Contacts: Arnaud Erbin: +33(0)1-4006-6489, Bertrand
Haas:+33(0)1-4006-6609, Eleonore de Larboust: +33(0)1-4006-1753
Copyright