Water group Suez strives to overcome Australian problem

The French environmental services group Suez said Wednesday that it would preserve a solid balance sheet after releasing 2011 results that were hit by problems at an Australian desalination plant.

Investors were not impressed, and drove the company's share price down in trading on the Paris stock exchange.

A Suez statement that underscored "an atonic economic environment" quoted chief executive Jean-Louis Chaussade as saying that his priorities this year and next were "to protect profitability and maintain a solid balance sheet with a sustained cash flow generation."

Suez reported a 6.9-percent increase in 2011 sales to 14.8 billion euros ($19.7 billion), but a 42.8 percent plunge in net profit to 323 million euros.

That was the result of additional construction costs at a desalination plant in Melbourne that cut 237 million euros from the group's bottom line.

The construction was now 89 percent complete, Suez said.

Core operating profit gained 7.4 percent to 2.5 billion euros meanwhile, and was forecast to reach or exceed 2.7 billion by the end of 2013, it added.

"Our two activities had very solid performances, above initial guidance, with dynamic sales activity in water in Europe, (and) the confirmation that waste industry is moving towards more recovery, and sustained growth internationally," Chaussade said.

Investors were disappointed by the results however, and Suez shares lost 0.74 percent to 10.02 euros in midday Paris trading.

The CAC 40 index of leading French stocks was 0.39 percent higher overall.

Suez noted meanwhile that group debt was stable at 7.6 billion euros.

Following the sale of the its UK unit Bristol Water late last year, Suez is finalising the divestment of the Berlin-based water and waste company Eurawasser to fellow German group Remondis for 95 million euros.