The 2018 results confirm this: the Group can lay claim to excellent financial and extra-financial performance. We must now go further still to pursue the aim of a desirable future.
Bertrand Camus-Chief Executive Officer of SUEZ
The evolution of demographic and environmental factors is changing the background for SUEZ and its customers, whether public authorities or industrial companies.
These changes require businesses to be agile and responsive.
For SUEZ, this means a robust analysis of the risks and opportunities engendered by these “megatrends”, in alignment with the progress of the UN 2030 agenda.
The new Digital Roadmap will give the Group new skills and accelerate the development and launch of new digital solutions. A team and a network of data scientists have been put in place to better exploit in the future the huge quantities of data produced by the Group’s operational activities (water consumption data via smart meters; waste container fill levels and contents etc.).
The Innovation, Marketing and Industrial Performance department (DIPI) has reorganized to deploy a new Innovation/Digital/Performance/ Intrapreneurship system able to promote a Group-wide approach to innovation.
The digital transformation of the Group’s activities, and particularly waste collection and sorting, combined with improved procurement efficiency and reduced general and administrative costs, led to long-term net savings of €210 million in 2018, beating the target and paving the way for a programme to save €200 million in costs in 2019.
In 2018, the Group invested €120 million in Research and Development. The goal is to conquer the markets that serve sustainable development and prepare for the future of the SUEZ Group’s activities at the heart of an innovation ecosystem consisting of its own researchers, the international scientific community and start-ups. The Group also launched its first Innovation Week in 2018, together with the Digital Hub. By focusing resolutely on a structured open innovation policy, the Group can access knowledge and technologies that complement its own, accelerating the commercial development of innovative solutions.
This is the spirit in which SUEZ has come together with CNRS, Inria, Université PSL and other companies (Amazon, Criteo, Facebook, Faurecia, Google, Microsoft, NAVER LABS, PSA Group, Valeo) to found the PRAIRIE Institute (PaRis Artificial Intelligence Research InstitutE), a centre of excellence in artificial intelligence with three goals: contributing to the progress of basic knowledge in AI, taking part in solving concrete problems with high value in terms of applications and contributing to training.
The SUEZ Group’s contribution to society takes concrete form in a declaration of its financial and extra-financial performance, a tangible expression of the Group’s creation of global shared value.
Sanitation plants, essential facilities in the local circular economy
Working with local authorities, SUEZ upgrades wastewater treatment plants into renewable resource production centres (water and energy). With its partners John Holland and Beca, the Group has secured the contract to modernise the water recycling plant in Boneo, Australia, enabling agricultural land to be irrigated with treated wastewater and contributing to the local authority’s targets for reducing greenhouse gas emissions. The Eurometropolis of Strasbourg has renewed its confidence in SUEZ to operate the city’s wastewater treatment plant, a national showcase for the circular economy and the first to inject biomethane produced from wastewater into the natural gas network, while in Marseille the Group is building a unit for injecting biomethane produced from wastewater treatment that will be the biggest in France.
In Chile, the SUEZ subsidiary in Santiago was awarded the United Nations “Momentum for Change” prize at COP24 in Katowice, for its project to convert the city’s wastewater treatment plants into carbon-neutral, zero-waste biofactories by 2022 while helping to regenerate local wildlife. In Toulouse Métropole, the sanitation service for which SUEZ has secured the contract is designed to contribute to the area’s energy transition.
The city’s health: a new approach to air quality and cleanliness
With its “resource-city” approach, SUEZ encourages local authorities and industrial companies to work together, though they are not necessarily used to doing so. In France, for example, as part of a call for expressions of interest from regions with ambitious innovation plans, SUEZ has partnered with the Dunkirk urban district council to make the city a “demonstrator of 21st-century industry”. One of the goals is to improve air quality for Dunkirk residents, mobilising all the industrial companies involved to treat pollution at its source and anticipate its harmful effects. In Santiago, SUEZ is taking part in transforming Chile’s capital into a smart city by installing microsensors that measure air quality in real time. Following Marseille in 2017, SUEZ has won two new urban cleaning contracts in Bordeaux and Reims that take a new approach: they are based on citizens’ perceptions and the use of digital technology to optimise waste collection and respond to users’ expectations regarding their urban environment.
Increasing 24/7 access to water while reducing consumption
Improving network efficiency and securing drinking water supplies are central to the contracts secured in Latin America in São Paulo (Brazil), Querétaro (Mexico) and Santo Domingo (Ecuador), while SUEZ is continuing its development in Singapore by deploying the ICE Pigging technology to clean the city-state’s drinking water networks. In Egypt, Uganda, Côte d’Ivoire and Nigeria, the Group is contributing to several major projects to provide drinking water to a fast-growing population, while in India SUEZ has been tasked by the city of Davanagere to improve its drinking water service and provide a continuous supply for its population of 500,000. As part of its global plan to improve water quality, the city of Woonsocket in the USA has commissioned SUEZ to build and operate its new drinking water production plant.
Optimised resource management solutions in industrial markets
The Group is strengthening its presence in the foodprocessing market. In Morocco, NABC (North Africa Bottling Company, which bottles Coca-Cola) has just entrusted waste management at its four factories to SUEZ, which also supports Lesieur Cristal, Nestlé, Mondelez, Pepsi, Danone and Nespresso via a circular economy partnership to recycle coffee pods.
In Brazil, Mexico and Costa Rica, SUEZ supplies leading producers of drinks, sugar and ethanol with equipment, services and packaging products to optimise water management in production processes. In the oil and gas markets, the Group’s dynamism, thanks to the widening of the WTS membrane technology range and its product innovations in separating water from oil, is being demonstrated on several continents: in Brazil, it supplies Modec, a global supplier and operator of floating offshore platforms, with a full range of treatment solutions including desalination units and is opening an innovation and development laboratory in Rio de Janeiro to test custom solutions and offer them to industrial companies in the sector.
In Saint Petersburg, during the 2018 International Economic Forum, SUEZ reinforced its collaboration with Rosneft by signing a strategic cooperation agreement to encourage the technological development and deployment of programmes to manage water, wastewater and waste at its refineries and petrochemical plants.
Custom services to reinforce the environmental leadership of committed companies
As part of the global agreement protocol signed in 2017 with L’Oreal to contribute to its ambitious environmental performance commitments, SUEZ signed specific contracts in 2018 for effluent treatment and recycling and for the recovery of waste from several factories and a distribution centre. In France, SUEZ will build effluent treatment plants for the L’Oreal factories in Vichy (Allier) and Caudry (Nord) and operate them for three years.
In Mexico, SUEZ will rehabilitate and extend the effluent treatment plant for the Xochimilco factory in southern Mexico City. These plants will be equipped with a membrane treatment process so that treated effluents can be reused on site. RecyCâbles, the result of a joint venture between SUEZ and Nexans in 2008, has become the European leader in cable recycling and recovery in the space of 10 years. Every year, approximately 30,000 tonnes of cables are recovered at SUEZ’s Nord eco-centre in Noyelles-Godault and transferred to specialist processing channels, including the production of new cables by Nexans. By 2020, the site aims to reach its maximum processing capacity of 36,000 tonnes of cables recovered every year by creating a second crushing line in 2018, while Nexans is extending its partnership with SUEZ by three years to align cable production with the circular economy approach from the design stage.
The Group conducted a global employee engagement survey, “Tell Us”, in all its business units worldwide for the first time in 2018. The survey reveals a high level of engagement (61%) and real employee pride in working for SUEZ (72%). Thanks to the high response rate (72%), the results of Tell Us have also been a rich source of information for use in developing concrete action plans based closely on expectations. 2018 continued the harmonisation of corporate cultures among employees of the former GE Water and SUEZ to accelerate the conquest of new industrial markets.
The Group’s digital revolution was applied to professional mobility policies with the creation of the “#mymobility” platform, which helped to increase the number of internal transfers within the Group by over 12% in a year; it was also used to support training, with a rise of over 35% in e-learning hours. In line with the sustainable development goals, the percentage of women in management rose by a point between 2017 and 2018 (29.4% excluding WTS), resulting from a diversity roadmap with strong ambitions to accelerate the recruitment of women, reduce the gender pay gap and develop the corporate culture with a campaign against everyday sexism in all the Group’s business units.
The health and safety policy is the SUEZ Group’s main strength in the eyes of employees: results continued to improve in 2018, with new targeted action plans such as the one focused on boosting the prevention of collisions between vehicles and pedestrians.
The circular economy is also community-focused and collaborative
SUEZ encourages complementarity between its skills and those of social and environmental entrepreneurs and start-ups within local loops of the circular economy to amplify their potential for integration and job creation. The SUEZ Maison pour Rebondir programme, tasked with reinforcing the Group’s local impact on jobs, has also mobilised players in the social and community economy as co-contractors within the framework of the Bordeaux urban cleaning contract secured in 2018: the Atelier Remuménage employment support project is responsible for collecting bulky items using tricycles, while the startup Ecomégot collects cigarette butts by bicycle and is working with research centres to create commercial recovery channels. Elixir, a social enterprise that collects unsold fruit and vegetables from supermarkets and resells them in the form of ready meals, is one of the components of the SUEZ anti-waste programme aimed at supermarkets in south-western France. In Latin America, an entrepreneurship programme open to vulnerable communities living near the Mapocho El Trebal and La Farfana sites aims to reinforce the social and environmental impact of biofactories.
Social innovation to serve professional integration
Strengthening cooperation with local employment and back-to-work initiatives, diversifying sources of candidates and securing the integration of people finding it difficult to enter the job market into the SUEZ workforce are objectives shared with the Maison pour Rebondir programme, which spread from Bordeaux to Ile-de-France and Lyon in 2018: over the year, 550 people with employment difficulties were trained in SUEZ’s activities and 75 people with poor job prospects were supported and recruited into the Group. In Morocco, backed by Fondation Lydec, the Coop Créatives project, which promotes economic inclusion through baking, cooking and dress-making for women in difficult circumstances, has contributed to training for 40 women and raised their awareness of resource preservation. The Group’s social impact is reinforced by sponsorship: Fondation SUEZ supports the Jouques and Villeurbanne projects, which are among the ten areas in the “Zero Long-Term Unemployment” trial, which aims to create supported employment companies. In 2018, the Group made a commitment to employing refugees as part of the HOPE programme offering accommodation, guidance and routes to employment: 12 candidates were trained as truck drivers to work for the Group’s sites in France and supported by SUEZ Rebond Insertion teams.
275,000 direct and indirect jobs supported by SUEZ in the regions
The number of direct and indirect jobs supported by SUEZ grew markedly in 2018, due to the integration of GE Water & Process Technologies, the rise in international activity and better integration of the sustainable procurement policy, particularly in Africa, the Middle East and Latin America. This policy aims to reinforce the Group’s contribution to regional development by encouraging support for SMEs: 32% of procurement by volume worldwide comes from these companies. Improving the Group’s socio-economic footprint is both quantitative and qualitative: the review of the subcontractor and supplier qualification process led to an increase in the proportion of supplier contracts including CSR clauses from 40% in 2017 to 55% in 2018.
Performance to serve public health
In 2018, SUEZ maintained a level of performance well above European requirements in terms of the air emission quality of waste-to-energy plants, with an annual average of 660 mg of NOx emissions and 51 mg of SOx emissions per tonne of waste incinerated. An annual report on the Group’s contribution to air quality will reinforce the coordination of action plans in this area starting in 2019. To preserve consumer health, SUEZ deploys significant resources to analyse and control drinking water quality, together with methods designed to prevent any risk of non-compliance, such as ISO 22 000 certification on food safety management. With regard to the European Union quality thresholds, the compliance level of the water produced and distributed by the Group worldwide was 99.7% in 2017.
A carbon profile in line with the Group’s commitments to the climate
While the absolute rise in the Group’s greenhouse gas emissions in 2018 is due to the change in the scope of consolidation following the acquisition of the former GE Water, the average carbon intensity of the Group’s activities continued to fall, illustrating the resolute low-carbon focus of the projects backed by the Group. As a corollary, the emissions avoided by SUEZ customers in 2018 exceeded the value of 10MtCO2e, partly due to growth of 15% in a year in its production of renewable energy. In 2018, the Group’s Scope 3 emissions remained stable at 17.5 MtCO2e (including 4.4 MtCO2e from procurement and 13.1 MtCO2e from domestic hot water).
A strengthened contribution to the protection of water resources
The Group’s alternative water production capacity rose by 30% in a year thanks to the commissioning of major processed wastewater reclamation projects, as in Spain and Mexico, and desalination projects, as in the Middle East. The integration of the former GE Water’s activities also contributed to this significant growth. Moreover, the continued reductions in leaks on the distribution network once again saved water consumption equivalent to that of 1.3 million residents in 2018.
Transforming the sites managed by the Group into biodiversity reservoirs
As part of the Act4Nature initiative, backed by 65 major French companies in 2018, SUEZ underlined its commitment to establishing biodiversity action plans at 50% of the priority sites managed by the Group by 2021. This commitment has already been achieved at 34% of these sites, where there is a need to go beyond the avoid/reduce/compensate principle and support a significant net improvement in the ecological quality of habitats.
Elsewhere, the Group’s Spanish water subsidiary was rewarded by the European Commission’s European Business Awards for the Environment for its BiObserva project, which involves employees in protecting biodiversity.
Towards personalised services
Personalising water services involves using individualised indicators providing information on consumption (including domestic hot water) and the breakdown between different uses relative to other similar homes: the ON’Connect™ Coach application supplies this data and evaluates the savings that could be made. In 2018, the Group also launched the ON’Connect™ Generation platform, which offers care workers and community social organisations a preventive support service for isolated elderly people to help them stay independent in their own homes by interpreting their daily water consumption data. At the same time, SUEZ continued its efforts to improve drinking water quality in 2018, including helping the water agency on the Gennevilliers peninsula to implement a collective service to soften the water, saving an average of €150 a year for every household and protecting the environment by reducing detergent consumption.
Involving users in governance and new circular economy solutions
Invited to rank the Group’s 17 sustainable development commitments as part of the SUEZ Reputation Survey, customers listed “Acting for the health of the environment and the protection of the oceans” in first place followed by “Offering 100% sustainable solutions”. The ranking illustrates the growing importance of environmental concerns in public opinion, changing expectations with regard to water and recycling services: residents behave as both consumers and citizens in terms of services linked to the resource protection issues on which they want to take action. SUEZ strives to favour structures that enable citizens to be actively involved in their services, such as the public service contract for sanitation awarded to the Group by Toulouse Métropole in 2018, which provides for the creation of a company with a supervisory board including representatives of civil society (environmental associations, user groups and the scientific community). As well as being involved in governance, users are also taking part in new circular economy solutions: the RECO® kiosks developed by the Group and its partners allow for voluntary deposits of plastic bottles for highquality recycling. SUEZ is also involved in launching LOOP, an e-commerce site that will enable consumers to order products for delivery in a bag that will be collected on the doorstep with used packaging for cleaning and reuse.
Developing female leadership to facilitate access to essential services
Access to essential services is still the priority issue in developing countries. Since 1990, the SUEZ Group’s activities have connected 17.5million people to drinking water services and 9.2 million to sanitation. This contribution is supplemented by the action of Fondation SUEZ, which supports 30 projects a year dedicated to access to essential services in the countries with the greatest need: between 2011 and 2018, these projects have improved living conditions for 5.5 million residents, particularly women. For those who still have to travel to fetch water from a well, access to resources also means access to fulfilment, development and thus emancipation. SUEZ supports Women4Climate, which promotes women’s leadership on environmental issues
In the 2018 financial year, SUEZ achieved revenue of €17,331 million, a gross increase of €1,548 million on the 2017 financial year, with organic change of +3.6% (€564 million). This organic revenue growth, which cuts across all divisions, was partly driven by the Water Technologies and Solutions division, formed in 2017 following the Group’s strategic acquisition of GE Water (+6.7% relative to 2017 pro forma), and by the International division (+5.0%). In addition, the scope effect due to the impact of the former GE Water’s activity in the first full year accounted for +8.3% and exchange rate change for -2.0%.
EBIT reached €1,335 million, a gross rise of €123 million compared to 2017 (+10.2%), or +11.5% at constant exchange rates, despite the -€30 million negative impact from commodity price trends (diesel, recycled raw materials, energy) in Europe. Given the reduction in restructuring costs in 2018 relative to 2017 (€88 million compared with €158 million) and capital gains on non-strategic assets amounting to €54 million, the net income Group share ended at €335 million in 2018, up 13.4%.
Net investments amounted to €1,257 million. In line with its strategic priorities, SUEZ maintained strict discipline on capital expenditure which broke down into €607 million in maintenance capex and €895 million in growth capex. The Group also had €245m in asset sales. Net debt was €8,954 million at December 31, 2018, for a net debt/EBITDA ratio of 3.2x, down 0.1x relative to December 2017 As of 1 March 2019, taking into account the cash inflow from the sale of a 20% stake of the Group’s regulated water activities in the United States, announced in July 2018, this ratio will be approximately 3x the EBITDA.
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