Suez 2007 Profit Rises 8.6% on More Power Sales, Higher Prices

Suez 2007 Profit Rises 8.6% on More Power Sales, Higher Prices

Feb. 26 (Bloomberg) -- Suez SA, the French energy and water group planning to merge with Gaz de France SA, increased profit 8.6 percent last year after selling more electricity in Europe at higher prices.

Net income rose to 3.92 billion euros ($5.81 billion) from 3.61 billion euros in 2006, the Paris-based company said in an e- mailed statement today. That was higher than the 3.1 billion-euro median estimate in a Bloomberg survey.

Suez, whose merger with Gaz de France will create the world's third-largest utility, is working to expand its power and natural gas business in Europe. The companies are targeting operating profit growth of about 10 percent this year and plan to double electricity output at home, according to joint targets they published in October. Their merger remains mired in procedural delays two years after it was announced.

Suez and Gaz de France ``will be operational from the first day of the merger, scheduled for the first-half 2008,'' Suez said in the statement.

Suez reaffirmed its target of about 10 percent growth in full-year earnings before interest, tax, depreciation and amortization.

Gaz de France and Suez yesterday said they bought a 1,875- megawatt gas-fired power plant in Teesside, U.K., to boost their presence in Europe's third-biggest electricity market.

The companies, through Suez's Electrabel SA unit, will each own half of Teesside Power Ltd. A price for the plant, which was sold by Goldman Sachs Group Inc. and Cargill Inc., was not disclosed.

Environnement

The company said Jan. 31 that revenue increased 11 percent to 13.2 billion euros in the fourth quarter after selling more electricity in Europe at higher prices.

Suez Energie Europe, the group's largest unit and operator of Electrabel, Belgium's biggest power company, boosted fourth- quarter sales 20 percent to 5.23 billion euros, Suez has said.

Suez Environnement, the waste and water unit to be spun off as part of the merger, increased sales 4.7 percent to 3.23 billion euros in the quarter.

Gaz de France, which serves about 11 million households in France, said Jan. 23 fourth-quarter sales climbed 13 percent to 9.3 billion euros, aided by colder-than-normal weather. The state- controlled utility is reporting earnings tomorrow.

Suez Chief Executive Officer Gerard Mestrallet and his counterpart at Gaz de France, Jean-Francois Cirelli, aim to complete their long-awaited alliance by the middle of this year.

BLOOMBERG