France's Suez switches back to profit in 2004

10th March 2005, Comments 0 comments

PARIS, March 10 (AFP) - French energy and environment utility Suez said on Thursday that it had switched into strong profit in 2004 from a heavy loss in 2003, thanks to a new business strategy and cost cutting.

PARIS, March 10 (AFP) - French energy and environment utility Suez said on Thursday that it had switched into strong profit in 2004 from a heavy loss in 2003, thanks to a new business strategy and cost cutting.

Net profit last year amounted to EUR 1.804 billion (USD 2.38 billion), including EUR 700,000 of exceptional contributions, after a record loss of EUR 2.165 billion in 2003.

Net profit included a EUR 697 million exceptional capital gain from the sale of its stake in the broadcaster M6, part of the group's aim to divest non-core communications assets.

Operating profit before amortisation and provisions rose to EUR 5.935 billion from EUR 5.727 billion in 2004, while standard earnings before interest, tax, depreciation and amortization (EBITDA) was EUR 6.12 billion, representing organic growth of 10.5 percent.

Analysts at Exane BNP Paribas had expected EBITDA of EUR 6.134 billion, while Deutsche Bank had expected EUR 6.1 billion.

The group had reduced net debt by EUR 3.5 billion to EUR 11.5 billion at the end of 2004 and the board recommended a 13-percent increase in the dividend to EUR 0.80.

Suez said it was standing by a target to achieve internal growth of sales amounting to 4.0-7.0 percent and said that gross operating margin would grow by more.

In early February the group had reported sales in 2004 had totalled EUR 40.7 billion, representing an increase of 2.8 percent from the figure for 2003 owing to strong activity in its energy division.

Profitability was improved sharply by a cost-cutting plan which had saved EUR 917 million in 2004.

Total savings in 2003-2004 exceeded EUR 1.5 billion.

A new cost-saving plan was under way for 2004-2005 with a target of reducing costs further, by EUR 550 million, of which half would be achieved from this year.

Company chairman Gerard Mestrallet said that the group had exceeded its targets in terms of growth and profitability.

He told a conference by telephone: "This reflects the accuracy of our strategic choices: 2004 was the year Suez took off in its new business orientation, energy and environment."

Suez said that it intended to pursue its investment programme to the extent of EUR 7 billion from 2004 to 2006.

Suez said its business strategy would be based on internal growth for its energy, environment and industry services.

© AFP

Subject: French News

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