Up the creek

6 March 2003

Abrupt management changes, huge writeoffs and dwindling investor confidence have savaged the French utility s share price. Chairman and CEO Gerard Mestrallet says this year will be one of consolidation. But the case for a breakup of the group is growing.

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French utility Suez posted a slightly better than expected net loss in 2002 of E863m as chunky provisions to cover its operations in Argentina and the write down of noncore assets wiped out profits.

Profits before exceptional items at its energy, water and waste operations fell almost 2% to E1.1bn. The conglomerate, which laid out a restructuring plan on January 9, took E1.7bn in exceptional charges. It kept the dividend unchanged.

Suez's stock price has fallen by 65% since the start of 2002 on fears about its debts, which the group has said it will cut by a third. Last year, the firm reduced net debt by 7.2% to E26bn. Further reductions will come from asset sales and some E500m of cost cuts this year and another E100m in 2004.

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