Suez Environnement Sales Rise on Higher Water Prices

By Tara Patel

July 24 (Bloomberg) -- Suez Environnement, Europe's second- biggest water company, said revenue rose 4.4 percent in the first-half because of increased prices for water and recyclable raw materials.

Sales rose to 6.03 billion euros ($9.5 billion) compared with 5.78 billion euros last year, the Paris-based company said in an e-mailed statement today. The company maintained its target for operational performance this year. Like-for-like revenue growth stripped of the Applus unit sold last year was 6.7 percent.

The Paris-based company was spun off and listed two days ago as part of the merger of Suez SA and Gaz de France SA, nearly 2 1/2 years after the combination was first proposed by the French government. Suez Environnement shares soared on their trading debut as investors considered them a bargain compared to rival Veolia Environnement SA.

The shares dropped as low as 17.05 euros and were trading 2.6 percent, or 47 cents lower, to 17.32 euros at 9:45 a.m. in Paris. NYSE Euronext yesterday fixed the reference price at 14 euros a share before trading began.

Suez stockholders were given shares in Suez Environnement as part of its merger with Gaz de France. Merger terms were for Suez to swap 22 shares for 21 of Gaz de France, after spinning off 65 percent of the water and waste division. Suez distributed one share in the waste and water unit for four Suez shares.

Earnings before interest, tax, depreciation and amortization are forecast at 2.1 billion euros to 2.15 billion euros in 2008, Suez Environnement said last month. Operating profit last year was 2.06 billion euros. Industrial investments in the 2008-2010 period will be 4.5 billion euros.

The company is targeting average annual like-for-like sales growth ``in excess of 5 percent'' and plans to make small acquisitions that will have an impact greater than 2 percent on revenue growth, the company said.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net