Suez looks to Olympics to boost SITA UK profits

Despite this, Suez remains optimistic thatSITA’s multi-million pound deal to provide waste services at the Olympic Games in London (see letsrecycle.com story) and a number of long term contract wins will help bolster earnings for the remainder of the year.

The French-owned company published financial details for the first half of 2012 yesterday (August 1) showing that its UK revenue fell 4.7% compared to the same period in 2011.

Suez Group, which owns waste and recycling firm SITA UK and GDF Suez Energy UK, saw revenue in the UK drop from 470 million (370 million) in the first half of 2011, to 448 million (353 million) in 2012.

Production

According to Suez, the fall in earnings is a result of the difficult economic environment which has seen industrial production falling and has caused waste tonnages to drop by as much 11.7%, with the UK cited as a particularly challenging market.

Despite an increase in revenue of 2% for its European waste arm to 3,272 million (2,585 million) in the first six months of 2012, earnings before interest, taxes, depreciation and amortisation (EBITDA) shrank by 14.7% compared to the same period in 2011.

As a result of the reduction in earnings, Suez Environment has decided to speed up its cost reduction plan, as well as reducing investment, focusing instead on organic growth.

However, the company was keen to highlight its activities in recycling and energy-from-waste which now represent 20% of the revenue generated by its European waste division.

Performance

Commenting on the results, Suez Environment chief executive Jean-Louis Chaussade, said: The decline in industrial production in the first half of 2012, in a more difficult macroeconomic context, especially in Europe, impacted the performance of our Waste Europe division, which is reflected in a 3.2% year-on-year drop in volumes processed at the end of June 2012.

In response, Suez Environment has decided to increase its Compass cost reduction programme by a futher 40 million (31.6 million) and to reduce the envelope of net investment expenditure by 100 million (79 million).

He added: Thanks to a well balanced portfolio, Suez Environment is well positioned on both water and waste growing markets. Thanks to its capacity in innovation and Research & Development, the Group is a key actor and continues its development on evolving markets.