Water Industry News

Veolia Environnement turns profitable

MAR. 16, 2005

French utility giant Veolia Environnement SA swung to a net profit in 2004 due to a two-year restructuring program that left it with lower debt, the company said Wednesday.

Veolia, one of Europe's largest publicly traded water, waste, energy and transport service companies, reported a 2004 net profit of 125.4 million (US$167.8 million) compared with a net loss of euro2.06 billion in the previous year.

The 2004 profit was significantly below an analysts' forecast of
390 million (US$521.94 million). Chief Financial Officer Jerome Contamine said that was because some analysts hadn't factored in a 208 million charge associated with asset disposals and booked in the second half.

Veolia, which was once at the heart of the Vivendi Universal SA conglomerate, moved to offload assets last year and restructure its businesses to help reduce a bulging debt. As part of the shake-up, Veolia sold U.S. water treatment company USFilter and its most profitable asset, an interest in Spain's construction company Fomento de Construcciones y Contratas.

Proceeds from disposals and improved cash flow allowed the company to reduce its debt to euro9.8 billion (US$13 billion) at the end of 2004, from 12.5 billion a year earlier.

Veolia shares climbed 0.8 percent to euro26.10 (US$34.93) in early trading.

Operating profit fell 7.4 percent to euro1.62 billion (US$2.17 billion). Excluding asset disposals, operating profit rose 13 percent.

Veolia said it will propose a 23 percent increase in its dividend to 68 euro cents (91 U.S. cents) a share, from
0.55 a year ago. Chairman Henri Proglio said Veolia remains committed to a double-digit increase in dividend in the coming years.

For 2005, Veolia expects revenue to rise between 5 percent and 7 percent and to post double-digit growth in operating profit. The company reiterated its goal to reduce annual costs by
300 million in 2006.