France's Suez, the world's fourth most valuable diversified utility, expects global sales to be steady in 2004 while pursuing growth in the water treatment business in China, its top executive said on Tuesday.
Suez, which embarked on a programme in 2003 to cut costs and sell assets to focus on its core energy, waste and water management business, sees January-to-September sales of 30 billion euros ($38.3 billion), Chairman Gerard Mestrallet said.
Turnover should hit 40 billion euros for all of 2004, Mestrallet told Reuters during a visit to Shanghai, China's commercial hub.
"Thirty billion euros for the three quarters, means 40 billion euros for one year," Mestrallet said at a cocktail reception on the top floor of the city's historic Grand Theatre.
"Energy will have naturally a rhythm of growth which is slightly (higher), especially at the international level."
The French company, due to unveil third-quarter sales figures on Wednesday, has said it is aiming for 4 to 7 percent underlying 2004 sales growth.
A Suez spokesman in Paris said the company would reaffirm that forecast to the market on Wednesday.
"At that occasion, the group will say it maintains its objective of 4 to 7 percent organic growth in sales over 2004-2006," he said, adding EBITDA (earnings before interest, tax, depreciation and amortisation) would exceed sales growth.
Some seven analysts polled by Reuters had predicted 9-month revenues in a 29.4 billion to 30.6 billion euro range but most said their focus on Wednesday would be on underlying growth for the period.
"Any improvement on the organic growth above the 5.3 percent (the level of organic growth in the first-half) could be positively perceived," Dresdner Kleinwort Wasserstein analysts said in a note. They had forecast 9-month revenue of 29.4 billion euros.
Reported sales for 2003 totalled 39.6 billion euros, according to Suez's Web site.
Suez's turnover in the nine months ended September 2003 climbed 4.4 percent to 30.538 billion euros after gas price rises and structural changes offset negative currency effects.
Suez, which vies with domestic rival Veolia Environnement and Germany's RWE and traces its history back to 1822, generates 80 percent of its revenue in Europe. Last year, revenue in Asia fell 11.5 percent to 1.8 billion euros.
Mestrallet has said Suez aims to save more than 900 million euros by the end of the year. Cost-cutting measures included outsourcing maintenance, renegotiating contracts with poor returns and closing offices. The French company made a net profit of 1.31 billion euros in the first half, turning from a 1.64-billion-euro net loss a year earlier, after selling a stake in broadcaster M6. Now the company was looking for opportunities in China for its water treatment plants.
Only two fifths of urban waste water in the world's seventh largest economy was treated in 2002, according to the official Xinhua news agency.
Stinking sewers and blackened waterways are common in cities due to decades of under-investment in basic infrastructure, pollution and a swelling urban population.
"In terms of IT and financial services, growth is at the top. But in terms of the environment, there is a gap yet to be filled," Mestrallet said in an interview.
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