Suez Radd 2003 Us
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ACTIVITIES AND SUSTAINABLE DEVELOPMENT REPORT ACTIVITIES AND SUSTAINABLE 2003 A Public Limited Company with a share capital of €2,015,359,612 Corporate headquarters: 16, rue de la Ville l’Evêque, 75008 Paris, FRANCE +33 (0)1 40 06 64 00 Paris Register of Commerce: 542 062 559 2003 ACTIVITIES AND SUSTAINABLE DEVELOPMENT REPORT VAT FR 52 542 062 559 www.suez.com DELIVERING THE ESSENTIALS OF LIFE SUEZ values t Professionalism to improve customer services worldwide. t Partnerships to foster open and balanced relationships. t Team spirit to be entrepreneurial, innovative and creative, strengthening solidarity and developing synergy. t Value creation to improve profitability and financial strength, thereby guaranteeing company autonomy and continued success. Written and designed by: . t Respect for the environment to create sustainable Graphic design and production: . improvements in quality of life. English translation: Bowne. Graphics pp. 32-33: Studio Baylaucq / Charbo. t Ethics to foster relations of mutual respect with colleagues, Photo credits: M. Abadie, R. de Barse, R. Beckers, P. Crie, D. Darzacq, S. Dauwe, T. Dudivier/Trilogic, B. Holsnyder, J. Martinez Flores, D. Mossiat, F. Sautereau / customers and other outside partners. L'Œil Public, J. Vidry, R. Wolman, Getty Images / Jeremy Woodhouse, X. Photo libraries: SUEZ, Degrémont, Distrigaz, Electrabel, Electricité et Eau de Calédonie, Electricité de Tahiti, Elyo, Fabricom, Fluxys, Ondeo, Ondeo IS, SITA, Teris, Tractebel Andino, Tractebel EGI, X. © 05/2004 Contents 2 Message from the Chairman 4 2003 in figures 8 The Group 10 Ethics 12 Corporate governance 16 Action plan 18 Share trend 20 Environmental policy 24 Social policy 28 The businesses 32 The day-to-day activities of SUEZ 34 2003 highlights 36 Electricity & Gas Europe 42 Electricity & Gas International 48 Energy and Industrial Services OUR MISSION Delivering the essentials of life. 52 SUEZ Environment OUR IDENTITY 66 Environmental and An international industrial and services Group, social performance active in sustainable development, that provides 70 Auditors’ report businesses, public authorities and individuals with innovative solutions in Energy and the Environment. 72 Summary financial statements OUR BUSINESS 76 Main business units To imagine, design, implement and operate 78 Consolidated glossary systems and networks in the fields of electricity, gas, water and waste services. SUEZ ■ MESSAGE FROM THE CHAIRMAN 2003, a year of transformation Dear Shareholders: 2003 was a year of transformation for your The action plan came at a cost, which is Group. In uncertain and difficult international reflected in the 2003 results. We have decided economic circumstances, we set our priorities to accrue the entire costs of the action plan in January for the period 2003-2004: increase in 2003 in order to take full advantage of the and secure our profitability, and strengthen our turnaround in 2004. During the second half balance sheet and competitiveness. we pursued the restructuring and asset adjust- Subsequently, our teams mobilized with energy ments undertaken in the first half so that all and determination to reach these objectives. costs would be recorded in 2003 and that the They also put out an equally rigorous effort Group could begin with a clean slate in 2004. to respond to the expectations of our As a result, the Group is posting a net loss of customers. €2,165 million for 2003. The capital gain of €750 million on the sale of M6 in January 2004 is not included in these “Conditions have now been laid results and will have a positive impact in 2004. It is worth noting, however, that the 2003 for a new period of profitable results highlight a strong operating perform- ance. The action plan did not affect the growth and a return to positive Group’s potential growth. Revenues came in at €39.6 billion – virtually the same as in net income in 2004.” 2002. We have already achieved the objectives of the Two lessons emerge from the 2003 results. action plan. One objective was to reduce the Firstly, SUEZ was able to compensate the Group’s net debt by a third: we have slashed impact on revenues of the asset sales and it by half. Without affecting the Group’s core terminations of contracts considered high-risk businesses, we have completed the announced or low-margin by the strength of its commer- sales of assets: Nalco, Cespa, Fortis, M6, and cial actions and the commitment and skill of a reduction of our stake in Northumbrian. its staff. The fact that revenues hardly dipped Overall, these sales totaled €11 billion, but bears out our ability to generate organic our turnover has remained stable. growth and its buoyant prospects in the Energy Our objectives also included improving and Environment markets. operating results and financial ratios. The Secondly, Optimax produced results ahead of Optimax program was forecast to reduce costs expectations. We plan to resolutely continue by €500 million in 2003, yet actual cost down this road. The strengthening of the reductions amounted to €585 million. Our Group is also evident in the cohesion of our third objective was to reduce currency risks staff and their commitment to our culture of and capital employed in emerging countries: results and performance. capital employed in these countries has been Conditions have now been laid for a new reduced by 30%. period of profitable growth and a return to SUEZ t 2003 ACTIVITIES AND SUSTAINABLE DEVELOPMENT REPORT positive net income in 2004. We have we plan to take maximum advantage of our secure business model based on prof- confirmed the Group’s strategy and have industrial expertise while ensuring itable growth and total transparency. stabilized our business scope which has dynamic management of our positions. Your Group is one of the leading European been clarified through the sale of commu- The Group maintains a policy of trans- industrial groups. Our businesses – nication businesses and financial invest- parency based on a strong balance sheet. providing water, supplying electricity, ments. Our long-term operational strategy SUEZ has an adequate financial structure transporting natural gas and processing is based on Energy and the Environment, and its financial ratios are improving. We waste – are experiencing profound changes two profitable and complementary are setting ourselves demanding objectives and major developments. markets. for improvements in operating margins and We are ready for these new challenges. cash flow: These changes are associated with the 2003 also welcomed new strategic devel- t Average organic revenue and EBITDA evolution of our society: the reinforcement opments. I would like to emphasize our growth of 4% to 7%; of environmental standards, market liber- developments in the gas business, our t Improvements in cash flows so that alization, growing consumer demand, the stronger presence in the French elec- capital expenditure and dividends are optimization of public services, the ration- tricity market notably via investments in entirely self-financed from 2005; alization of industrial processes, new Compagnie Nationale du Rhône and a t Average annual capital expenditure of client demands, etc. commercial agreement with Société €4 billion; Every day, SUEZ staff take the opportu- Hydroélectrique du Midi, and lastly our t A targeted increase in return on capital nity to rise to such challenges, to deliver developments in Italy with Tirreno Power. employed of 11% for 2006. ever more innovative and well-adapted We also increased our equity stake in solutions to our clients. Electrabel. Your Group will be ready for We have confidence in our ability to The ability to adapt, to live up to new the deregulation of the European energy achieve these objectives. The Board of expectations and to motivate our staff is market on July 1, 2004. Directors recommended the maintenance the ability to remain loyal to our values and In Environment, we consolidated our of your dividend at the Annual General to a corporate culture which places European market positions with a refocus Meeting. This is a vote of confidence for mankind at the heart of its history. on profitable contracts. We pursued a the Group’s capacity to increase the prof- policy of very targeted growth abroad, itability of its businesses. notably in China, and dealt openly with Your Board, which is made up of presti- the various difficult situations we were gious figures from six different countries, facing. was particularly active in 2003, consid- ering the significant decisions it has had What is our ambition, our vision? Our to make. The Board thus unanimously priorities are clearly set. In France and confirmed the Group’s strategy, based on Benelux, our growth strategy is based on the simultaneous and sustainable devel- strong domestic market positions. In opment of its two activities: Energy and Gérard Mestrallet Europe, we will consolidate our profitable Environment. competitive positions in Environment and have targeted developments in electricity The conditions for a turnaround have been and gas. Lastly, in the rest of the world, established. SUEZ has moved towards a 2.3 SUEZ ■ KEY FIGURES 2003 in figures The key feature of 2003 was the implementation of the action plan, which gave results that exceeded the objectives announced in January 2003, with the result that debt was halved and operating costs reduced by €585 million. In a difficult economic context, SUEZ posted good operating performances and the major indicators showed strong organic growth. Group share of net income came in at a loss of €2,165 million due to exceptional items that were mainly recorded in the first half. GROUP CONSOLIDATED REVENUES BREAKDOWN OF REVENUES BY BUSINESS (in billions of euros – excluding energy trading) (in billions of euros) 40.7* 39.6* Energy 38.5 26.7 33.9 31.5 Environment* 12.3 Others *After netting out energy 0.6 trading (purchases and 99 00 01 02 03 sales) *excluding Nalco The excellent level of organic growth of the Group’s scope of activities 98% of revenues are generated by Energy and Environment, broken down redefined in the action plan (+6.1%) enabled the Group to hold revenues as 67% Energy and 31% Environment.