Covid-19: Revenues fall and one-off costs mount at Suez

Bertrand Camus, CEO of Suez
02.07.2020 − 

The French environmental group Suez is yet another business heavily affected by the coronavirus crisis. In its Recycling & Recovery segment, the group expects revenues for the first half of 2020 to fall by around 8 per cent at constant exchange rates and scope of consolidation. While revenues in the first quarter were only marginally lower than they had been in the prior year, sales were particularly hard hit in the second quarter, especially in the months of April and May.

In Continental Europe however, the group's recycling activities generated nearly as much first half revenue as in 2019, Suez announced. Landfilled volumes in France were off by only 2 per cent year-over-year. Suez's business in Germany and the Netherlands had also proved to be quite resilient in the crisis. In UK, volumes were now rebounding, but the country had yet to entirely emerge form its shutdown, according to Suez.

The revenue and profitability low point for the group as a whole came in April and May. In June, there had already been "significant improvement", Suez reported. Overall, the group expects sales to fall by around 6 per cent on an organic basis for the first half. Adjusted earnings before interest and taxes (Ebit) would fall to between €320m and €330m. This figure excludes sizeable one-off charges.

Group reorganization and pandemic cause additional expenses of over €500m

The concern reported some €270m in restructuring costs and write-downs in the first half in connection with the implementation its "Shaping Suez 2030" strategy. However, Suez noted that these expenses were largely non-cash. Further extraordinary charges stemming from the measures taken to stem the spread of the pandemic were on a similar scale. Suez puts these one-time costs at between €270-290m for the first half of 2020. These additional costs were mainly tied to the expense of maintaining business operations, the risks associated with business interruption and the impact on receivables collection of "solidarity actions" taken to support the concern's consumer base.

Group CEO Bertrand Camus explained that, in view of the current conditions, the company remained "more focused than ever" on the deployment of its "Shaping Suez 2030" strategy and might accelerate some measures included in the plan. "We will speed up where appropriate the restructuring of our activities, restart aspects of our businesses differently and exit more quickly from non-core activities," he said.

You can read the full report on recent developments at Suez, its outlook following the Covid-19 shutdowns and the sales rumours surrounding its European waste business next week in EUWID Recycling & Waste Management 14/2020.

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