Following the publication of its 2013 financial results, Suez Environnement’s CFO has told WMW that the company is rapidly expanding its waste to energy capacity globally and that both MENA and Asia are key growth areas.
French waste and water company, Suez Environnment (Paris: SEV, Brussels: SEVB), posted a net profit of €352 million for the 12 months to December 2013 - an increase of just over 40% over the previous year.
The latest annual figures from the company showed that while profit has risen, revenues fell by 3% to €14,644 million for the year, primarily due to currency fluctuations, asset disposals and weaker market prices for secondary raw materials.
However, Earnings Before Interest, Taxes, Depreciation and Amortisation (EBTDA) showed a gross increase of 2.9% to reach €2,520 million for the year. The company largely attributed this to the growth of its International division.
While the Waste Europe division, which the company said was affected by an economic environnement that remained difficult and by lower volumes, registered a 4.5% or €38 million decrease, elsewhere the company continued to expand into new markets.
Speaking to WMW, Jean-Marc Boursier, chief financial officer at Suez Environnement said that on the back of the year’s solid financial performance, which included a reduction in net financial debt of around €200 million, the company is very confident for 2014 and is targeting a growth in profitability of 2%.
Growing energy recovery business
The company’s Waste Europe division reported revenues of €6,551 million - an organic decrease of -1.2% over the previous year. It attributed this in part to the impact of a deterioration in European industrial output and a 3.2% decrease for the year in the volume of wastes it processed.
However, according to Boursier, one of the growth areas for the company has been in the recovery of energy from waste.
“We have a significant chunk of our investment that is dedicated to energy from waste facilities. We have six of those under construction in the UK, we have one that has recently been taken over in France and one in Poland. We will become more and more a significant energy producer,” he said.
“For each of the projects as they become live, that will be an additional turnover of approximately €50 million,” he added.
Boursier also highlighted the company’s increasing production of Refuse Derived Fuel (RDF) in the UK, and its contracts to supply cement manufacturer, CEMEX.
Markets for recyclates
Cited by the company as one of the reasons for its declining revenues from its European waste business, Boursier explained that the market prices being achieved for secondary raw materials has fallen, with prices for both paper and scrap metal have experienced a 10% decline.
The company said that this drop in prices also impacted on its reported Earnings Before Interest, Taxes, Depreciation and Amortisation (EBTDA) of €797 million, an organic decrease of 4.5% compared with 2012.
Explaining the importance of material prices to Suez, the CFO noted that the company processes some 25 million tonnes of waste in Europe, of which around 7.5 million tonnes is recycled and sold as secondary raw materials.
“We are counting on stability of the price, or maybe even a slight increase in 2014,” he said.
Having been awarded major contracts in both Morocco and Lebanon this year, Boursier said that the Middle East and North Africa (MENA) region presents significant opportunities for the environnemental services company to grow its international business.
“There is much more good news to come from Morocco because we are in a significant competition in the Casablanca area,” Boursier alluded.
“The local authorities want to protect the environnement and the want to improve the quality of their landfill. Secondly, in some cases like Morocco and Algeria, they have an issue with energy, so if they can combine protection of the environnement with energy production - they will go for it. In this part of the world, we see significant potential business for us in the waste area,” he continued.
Boursier added that China is also a significant growth market for the company, with a booming waste to energy sector. The company is also growing its business in India.
For more information on the company's operations click on the infographic above.
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