7.3.2003: Meldung: Suez SA: 2002 Results

Press release
Strong operating performance

Strong operating performance in challenging times :
· 5.7% organic revenue growth, 3.3% organic growth in EBITDA
· 5.8% increase in cash flow on a constant exchange rate and structural basis

Solid balance sheet:
· EUR 2 billion reduction in net debt (-7.2%)
· Net cash and cash equivalents of EUR 7.1 billion, plus EUR 2.7 billion in non-strategic
liquid assets

Exceptional impact of external factors, leading to equity write downs:
· Net loss for the year: EUR 863 million
· Net exceptional losses of EUR 1,733 million

Net div idend recommended to the Annual General Shareholders" Meeting: EUR 0.71 (+0.355 for tax credit) per share. Dividend payment date May 2, 2003.

The Board of Directors meeting March 5, 2003, chaired by Gérard Mestrallet, approved the results for financial year ended December 31, 2002; to be submitted for approval by the Annual General Shareholders Meeting April 25, 2003.

· Revenues*
organic growth (on a constant structural, accounting method,
and excluding natural gas price variations)
40,218 M€ + 4.5%
+ 5.7%

· Gross operating income (EBITDA)
organic growth
7,254 M€ - 4.1%
+ 3.3%

· Net current income, Group share of businesses
excluding Argentina
1,135 M€ - 1.7%
+ 4.9%

· Net exceptional loss, Group share
(1,733) M€

· Net loss
(863) M€

· Cash flow
organic growth
4,857 M€ + 0.8%
+ 5.8%

· Net debt
26,006 M€ -7.2%
* Excluding energy trading

Commenting these results, SUEZ Chairman and C.E.O. Gérard Mestrallet
summarized the Board"s opinion:
"In a particularly challenging world economic environment, SUEZ has proved the Group"s solid operating performance and confirms the strength of its positions. This past year saw the first fruits of the Group"s debt reduction program. "Our priorities for 2003-2004 are clear: improve and protect the Group"s profitability, strengthen its financial soundness .We are actively implementing the action plan announced January 9."

(1) Revenues: sustained activity, with organic growth at 5.7%
SUEZ revenues*, increased by 4.5%. This trend was based on sustained organic growth (up 5.7%), which during the second half benefited in particular from the growing importance of the Puerto Rican contract (+ EUR 241 million).

Revenues generated in Europe and in North America increased by 8% and represent 89% of the total. The commercial drive of SUEZ"s Energy and Environment activities is reflected in this revenue growth. Revenues were negatively impacted, by foreign currency fluctuations for a total of EUR 1,526 million, resulting from the Argentine peso devaluation (- EUR 834 million), depreciations of the Brazilian real (- EUR 305 million) and the U.S. dollar (- EUR 267 million), and the 1.5% fall in natural gas prices (-EUR 643 million) with but a limited impact on operating margins. Revenue growth arising from acquisitions came to EUR 1,698 million (+ 4%), and corresponds to Group acquisitions in 2001and 2002. * excluding energy trading

(2) Energy and Environment: Resilient EBITDA
EBITDA (Gross operating income) came to EUR 7,254 million, with organic growth of 3.3%, but with an overall contraction of 4.1% on an actual exchange rate and structural basis.
EBITDA for Energy was EUR 4,125 million, representing organic growth of 1.4%. This rise is based mainly on an increase in the Electricity & Gas International (EGI) EBITDA which jumped 21.6%, offsetting the lower contribution of Electricity & Gas Europe (EGE) which suffered from rate reductions carried out in Belgium in conjunction with deregulation.
EBITDA for Environment was EUR 2,916 million, with an organic growth rate of 2.8%. EBITDA for Environment Local Services (SELS) was EUR 2,380 million, for an organic growth of 2.2%, sustained by Ondeo Degrémont"s strong advance and satisfactory performances in France of Lyonnaise des Eaux and SITA. EBITDA for Environment Industrial Services (SEIS) amounted to EUR 536 million, with organic growth of 5.2%, supported by Ondeo Nalco"s 6.7% organic growth rate.

(3) Improved financial income
Financial income for 2002 (- EUR 976 million) showed a clear improvement over the 2001 figure (- EUR 1,258 million. This progress is explained by the growth in dividends from unconsolidated companies (Fortis increased by EUR 119 million), and reduced interest expense (down EUR 260 million) under the combined effect of lower interest rates and a reduced level of debt starting in the second half of 2002.

(4) Net loss resulting from exceptional items
Net current income, Group share, for the business lines was EUR 1,135 million (-1.7%). Excluding Argentina the increase was 4.9%. The Group"s net current income figure came to EUR 870 million, mainly taking into account the Fortis deconsolidation, the drop in cable income (Noos) and private equity activity and a less fiscal integration with headquarters.
Net exceptional loss, Group share, impacted by the stock market and Argentine crises, came to EUR 1,733 million. This result includes EUR 500 million for the Argentine subsidiaries, impairment of listed assets for a loss of EUR 795 million, writedowns in the value of unlisted assets (EUR 564 million), and provisions for cessation of or withdrawal from certain activities (EUR 244 million). Also included are capital gains from disposals for EUR 937 million. Hard hit by these exceptional items, the Group recorded a net loss of EUR 863 million for 2002.

(5) Net debt now below the year-end 2000 level
Net debt decreased by EUR 2 billion in relation to 2001, down 7.2%. At December 31, 2002, net debt came to EUR 26 billion, below the year-end 2000 figure (EUR 26.4 billion). The decline in net debt and improved cash flow has led to a lowering of the ratio of net debt to cash flow from 5.9 to 5.3.

Cash flow was EUR 4.9 billion, with organic growth of 5.8% mainly illustrating the impact of lower financial expenses. Net tangible and intangible investments (capital expenditures) of businesses were down 5.3% to EUR 4.2 billion.

Free cash flow from the business lines came to EUR 2.9 billion, reflecting Group businesses" financial balance. This performance was shared by every business line activity; Energy businesses generated a positive free cash flow figure of EUR 2 billion, with Environment generating EUR 0.9 billion.

At December 31, 2002, SUEZ had a net cash and cash equivalents position of EUR 7.1 billion, to which should be added EUR 2.7 billion in non-strategic liquid assets, and EUR 3.6 billion in confirmed, undrawn, and available credit lines. This position may be viewed in light of the Group"s maturing debtin 2003 of EUR 6.1 billion, hence a liquidity surplus of EUR 7.3 billion.

(6) Action Plan progress
Implementation of the 2003-2004 Action Plan announced January 9 is already underway. The Executive Committee is in place and the staff responsibilities of the joint head office have been set. Cost reduction measures already implemented have begun to bear fruit and will lead to savings of EUR 500 million in 2003 on a full-year, pre-tax basis, plus an additional EUR 100 million in 2004. A systematic review of cost reduction measures is already underway, with application planned for the second half of this year. The asset disposal program"s objective is to concentrate efforts and financial resources on assets and activities which the Group will develop and optimize. Its three equal assessment criteria are net surplus liquidity, ROCE, and risk exposure. In this respect SUEZ recently announced the termination of the Manila and Atlanta contracts. Disposals of non-strategic assets continue. On February 28, SUEZ announced it had sold its remaining investments in AXA and Vinci and had considerably reduced its Total Fina Elf investment.

(7) Dividend maintained
As a sign of its confidence in the Group"s perspectives, the Board of Directors decided to recommend to the April 25, 2003 Annual General Shareholders" Meeting that the SUEZ dividend be maintained at its 2002 level, or EUR 0.71 which, with the French dividend tax credit, means a total dividend per share of EUR 1.065 euro. Dividend payment will be made May 2, 2003.

(8) Outlook
The Group"s priorities were reiterated at the January 9, 2003 presentation of the 2003-2004 Action Plan. They are to improve and protect profitability and strengthen the financial soundness. SUEZ has substantial resources for sustainable growth in Energy and Environment, bolstered in particular by commercial breakthroughs achieved serving both industrial and local government customers. In this context, SUEZ favors:
- profitability growth;
- organic development;
- accelerated refocusing on Energy and Environment;
- ongoing evaluations of the Energy and Environment business portfolios
- emphasis on cost reduction programs;
- reduce debt and exposure to developing countries
- cash flow generated by business lines to finance all their investments
2003 will be a year of consolidation for SUEZ
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