Strong Increase in 2005 Results and 25% Increase in Ordinary Dividend

    PARIS, March 13 /PRNewswire-FirstCall/ --

    Revenues:                        EUR 41.5 billion (+9.0%)
    EBITDA:                          EUR 6.5 billion (+9.7%)
    Current operating income:        EUR 3.9 billion (+4.4%)
    Income from ordinary activities: EUR 4.5 billion (+27.7%)
    Earnings per share:              EUR 2.39 (EUR 1.70 in 2004)
    Net income group share:          EUR 2.5 billion (+48.1%)
    Gearing:                         72% (91% end 2004)


    The Board of Directors meeting March 8, 2006, chaired by Gerard
Mestrallet, approved the results for the financial year 2005. The accounts
will be submitted for approval to the Annual General Shareholders' Meeting,
May 5, 2006.
    - Strong improvement in energy and environment results with organic
growth exceeding objectives
    - Record net income group share: EUR 2.5 billion
    - Sound financial structure, with a gearing reduced to 72% after taking
into account the EUR 11.1 billion combined public offer for Electrabel
(versus 91% at December 31, 2004)
    - Successful offer for Electrabel (98.6%-held) and capital increase
    - SUEZ Environment generated EUR 655 million net income group share
(+170%)
    - A 25% increase in ordinary dividend, to EUR 1.00/share, will be
submitted for approval to the Annual General Shareholders' meeting, with
payment on May 8, 2006
    2006 Outlook
    - Continued growth in all businesses, with organic growth of Group
revenues between 4 and 7%
    - EBITDA growth objective superior to 7% in 2006, due mainly to stepped
up implementation of profitability programs (Optimax and synergies from
integrating Electrabel)
    - Prospects strengthened by the planned SUEZ - Gaz de France merger
    - on the basis of one SUEZ share for one Gaz de France share
    - payment to SUEZ shareholders of a exceptional pre-merger dividend of
EUR 1.00/share
    For Gerard Mestrallet, SUEZ Chairman and CEO "The Group's excellent
operating performance is the fruit of a clear strategy in all our energy and
environment businesses, as reflected in particular by the successful
Electrabel offer. Today, SUEZ has a central position in Europe and benefits
from international growth drivers. Ready to meet the great challenges of its
sectors of activity, the Group has a promising outlook for 2006 and the
medium term. The planned merger with Gaz de France will turn the new group
into a world class European player in energy and environment, both in terms
of growth and profitability."
    ANALYSIS OF 2005 RESULTS
    Results exceed objectives
    2005 saw a further improvement in SUEZ performance with EUR 2.5 billion
in net income group share and EBITDA organic growth (+9.0%) outpacing organic
growth in revenues (+6.3%).
    The rate of organic growth in revenues and in EBITDA stood in the upper
range of the Group's medium-term objectives. The buyout of Electrabel's
minority interests (a EUR 6.3 billion impact on Group debt) did not hinder
the strengthening of the Group's financial structure. Net debt at December
31, 2005 was less than EUR 14 billion (versus EUR 11.8 billion at December
31, 2004).
    Organic growth in revenues at +6.3% is in line with Group objectives
    SUEZ saw sustained growth in activity, with total revenues increasing
+9.0% to EUR 41.5 billion. Organic growth in revenues was +6.3%.
    Organic growth in EBITDA was substantially above organic growth in
revenues
    Total EBITDA grew by +9.7%. Excluding changes in Group structure and
currency effects, EBITDA grew +9.0%. Improved EBITDA reflects the Group's
continued cost-cutting efforts and profitability improvements.
    In 2004, current operating income growth (total +4.4% and organic +3.7%)
benefited from a number of favourable non-recurring items (cancellation of
provisions for pensions at Lydec, pension liability adjustments for
Electrabel distribution personnel, provisions for nuclear fuel treatment).
    Excluding these non-recurring items (2004 and 2005), current operating
income growth would be higher than that of EBITDA. This strong advance
reflects the success of the Optimax program, which had a EUR 329 million
impact on current operating income, ahead of the cumulative objective of EUR
550 million for 2005 and 2006.
    Net income group share of EUR 2.5 billion
    Net income group share benefited from EUR 1,530 million in disposals[1],
partially offset by recognition of EUR 658 million for impairment in asset
value, EUR 101 million for restructuring costs and EUR 151 million negative
impact for the change in fair value of financial instruments on commodities.
It also benefited from strong improvement in financial income (prepayment of
the bonds redeemable in Fortis shares for +EUR 167 million), and a reduction
in income tax, as well as improvement in net income from associated companies
(increase in Belgium of +EUR 245 million in contributions from mixed
inter-municipal companies, which in 2004 had reported a non-recurring expense
of EUR 152 million related to pensions).
    Good operating performance in all businesses
    SUEZ Energy Europe (SEE)
    Revenues were up +10.1% to EUR 14.2 billion at the end of December 2005.
On a comparable basis, in particular excluding the impact of gas prices (+EUR
594 million), revenues rose by +EUR 528 million, for an organic growth rate
of +3.9%. In electricity, revenues were sustained mainly by wholesale sales
growth and price increases tied to increases in fuel costs, and for Distrigas
(growth of sales abroad and sales of LNG cargos).
    It is worth noting the very sharp increase in electricity sales by
Electrabel outside the Benelux countries, amounting to EUR 2,160 million
(34.4% in total growth), particularly in France, Germany, and Italy. This
non-Benelux growth, on top of the wholesale market (total growth +44% to EUR
1,428 million) offset sales losses to final customers in Belgium arising from
deregulation in the electricity and gas sectors and confirms the expansion of
SUEZ on Europe's energy market.
    With the success of the combined public offer on Electrabel, the Group
holds 98.6% of that subsidiary.
    SEE EBITDA amounted to EUR 2,855 million (+7.7% in total growth, +6.1% in
organic growth).
    Electricity in the Benelux countries contributed +EUR 265 million, due in
part to Electrabel's good performance in energy trading (+EUR 62 million).
    2005 also saw steady affirmation of Electrabel growth drivers outside the
Benelux (+24% in organic growth, or +EUR 61 million) benefiting, for example,
from the first-time consolidation of SHEM (+EUR 47 million) and plants
startups in Italy (+EUR 39 million).
    Against the background of strong price increases in the electricity
market, the diversity and reliability of the Group's production base - in
particular its nuclear component, as well as its continued cost control
efforts, have contributed to this good operating performance.
    Furthermore, sharp rises and important variances in gas prices between
European spot markets enabled Distrigas to take advantage of arbitrage
opportunities.
    Current operating income came to EUR 1,963 million, stable in relation to
2004 which had benefited from many favourable non-recurring items.
    SEE net income from operating activities amounted to +EUR 2,383 million,
representing total growth of +18.7%. It benefited from +EUR 714 million in
capital gains from disposals, +EUR 626 million of which on capital gains from
the stock market listing of 36.6% of Elia.
    SUEZ Energy International (SEI)
    SEI benefited from strong economic growth in its main markets and in
particular from electricity price increases in Brazil, a favourable evolution
of demand in Thailand and Brazil, greater LNG opportunities, and a market
with promising growth prospects.
    Revenues totalled EUR 5.9 billion and increased by 20.2%, +15.4% (+EUR
786 million) on a comparable, exchange rate and gas price basis. Organic
growth stemmed principally from North America (+EUR 600 million) with in
particular the commercial success of SERNA (SUEZ Energy Resources North
America) which has become the fourth largest independent provider in the
United States for direct energy sales to industrial and commercial customers
(+482 EUR million). Activity was also sustained in Asia / Middle East (+EUR
147 million), with the February 2004 startup of the Baymina power plant (770
MW), and in Latin America (+EUR 117 million).
    SEI EBITDA totalled EUR 1,335 million, with total growth at +13.3% and
organic growth at +9.0%. Latin America was the no. 1 contributor to this
growth (+14%), and in particular Brazil which benefited from the last year of
replacements of initial contracts with bilateral contracts at more favourable
margins (+EUR 105 million).
    Current operating income amounted to EUR 747 million down by - 4.2% in
total growth. Excluding the impact of a non-recurring provision for the AEP
lawsuit in the US (- EUR 111 million), organic growth yielded +EUR 37 million.
    SEI net income from operating activities came to +EUR 801 million, +9.5%
in total growth. It is worth noting the successful stock market listings with
EUR 245 million in capital gains, related mainly to the sales of 9.6% of
Tractebel Energia in Brazil, 17% of EnerSur in Peru, and 30% of Glow in
Thailand.
    SUEZ Energy Services (SES)
    Revenues came to EUR 10.3 billion, for organic growth of +EUR 581 million
(or +6.1% total growth and +6.0% organic growth, versus +3.3% organic growth
in 2004). Activity was especially sustained in the installation and
maintenance segments in particular in France (+9.8%).
    At Ineo, growth in France is supported by public service contracts and by
a satisfactory progression in revenues from services industry customers.
    Services activities in France (Elyo) recorded organic growth of +6.7%,
the result of commercial developments and, more marginally, of rate increases
(renegotiations or the impact of higher fuel prices) and increasing
unfavourable weather conditions. In Italy revenues were up +14.6%.
    EBITDA totalled EUR 563 millions, slightly above the 2004 level (+0.9%).
    SES current operating income was up sharply (+64.9%), to reach +EUR 359
million. Organic growth was EUR 143 million, up +66%, benefiting in
particular of improvements in operating performances in SES's various
activities, as well as of the adjustment of provisions for pensions and the
cancellation of provision for disputes without merit.
    Net income from operating activities came to EUR 229 million, up +14%,
and includes capital gains from disposals of activities or non-strategic
assets which generated EUR 42 million in net income, as well as expenses due
to the restructuring of this division created in June 2005.
    SUEZ Environment (SE)
    2005 recorded a very sharp improvement in net income (EUR 655 million, or
+170%) and in return on capital employed (10.7% versus 8.8% in 2004), as well
as a strong commercial dynamism which focused on activities with lower
capital intensity and differentiating technology.
    SUEZ Environment generated EUR 11.1 billion in revenues at December 31,
2005 with a total growth of +5.2%, compared with EUR 10.5 billion at
Decembre,31 2004. Organic growth was significantly higher, totalling +EUR 532
million (+5.1%), reflecting a pick-up in waste services during the 4th
quarter.
    EBITDA came to EUR 1,914 million, representing a substantial improvement
with a total growth of +8.5%. Excluding currency and changes in Group
structure impacts, the business line recorded sustained organic growth of
+EUR 195 million, or +11.4%. This growth was particularly apparent in water
activities in Europe (+EUR 59 million, or +10.2%) and internationally (+EUR
72 million, or +17.6%).
    SE current operating income amounted to EUR 1,004 million, +6.8% in total
growth and +9.3% in organic growth.
    Net income from operating activities came to +EUR 1,265 million showing a
+64% advance, thanks in particular to capital gains on disposals of EUR 510
million (sale of a 25% interest in Northumbrian Water Group, the initial
public offering of 45% of IAM in Chile, etc.).
    A sound financial structure
    Strong cash generation
    Gross cash flow before financial expenses and taxes totalled EUR 5,751
million at December 31, 2005. Cash flow from operating activities benefited
from a further improvement in working capital requirements.
    Investments are impacted by the buyout of Electrabel minority interests
(EUR 11.1 billion) and are otherwise under control (EUR 3.5 billion at
December, 31 2005 versus EUR 2.7 billion at December 31,2004).
    Disposals, which came to EUR 3 billion (Elia EUR 710 million, IAM in
Chile EUR 246 million, Tractebel Energia in Brazil EUR 273 million, and Glow
in Thailand EUR 165 million) nearly cover the balance of the Group's
investments.
    Net debt at December 31, 2005 increased slightly to EUR 13.8 billion
(versus EUR 11.6 billion at January 1, 2005). This increase is explained by
the buyout of Electrabel minority interests. Excluding the impact of that
operation and the related EUR 2,335 million capital increase, net debt at
December 31, 2005 would have amounted to EUR 7.6 billion.
    Furthermore, during the 1st quarter of 2005, the Group refinanced in
advance its EUR 4.5 billion syndicated credit line via a new syndicated
credit for the same amount (likewise guaranteed by GIE Suez Alliance), but
with a lengthened 7-year maturity and a substantial improvement in financial
terms.
    Continued improvements in return on capital employed
    Excluding the impact of the Electrabel offer, in 2005 return on capital
employed (ROCE) would have come to 13.7% under IFRS (versus 12.4% in 2004).
After taking into account the buyout of Electrabel minority interests, ROCE
came to 10.7% at the end of 2005. This ROCE compares with an estimated
weighted average cost of capital of 6.5% and illustrates the Group's
long-term capacity to generate a return higher than its average cost of
capital.
    POSITIVE 2006 OUTLOOK
    The Group has excellent industrial prospects, related to a favorable
economic environment for energy and environment activities and to its
employees' commercial adeptness and drive.
    SUEZ also enjoys strong growth drivers in the competitive positioning of
its businesses, its experience, and its technological leadership.
    SUEZ will continue the efforts it has undertaken to increase the
operating profitability and cash generation in all its businesses.
Furthermore, it will benefit from enhanced synergies generated within the
framework of the integration of Electrabel.
    For 2006, operating performances will be expected to stand in the upper
range of the Group's medium-term target objectives:
    - organic growth in revenues between 4 and 7%
    - EBITDA growth greater than 7%
    - respect the overall investment envelope for 2004 to 2006, or EUR 10.5
billion
    - maintain ongoing ROCE improvement objectives (return on capital
employed).
    Based on its good Optimax results of 2005, SUEZ maintains its cost
reductions objective of EUR 550 million for 2006 in relation to 2004.
Moreover, the synergistic effects from the buyout of Electrabel minority
interests, which will be implemented rapidly, will facilitate EUR 250 million
in operational synergies (over and above the Optimax cost-savings) and an
additional EUR 100 million in fiscal and financial optimization in view of
2008.
    In light of this positive context, the Board of Directors will recommend
to the Annual SUEZ General Shareholders' Meeting an increase in the ordinary
dividend for 2005 to EUR 1.00/share, or a 25% growth over the 2004 dividend.
    With the planned SUEZ - Gaz de France merger, the Group's prospects will
be improved. The merger plan represents an industrial project at the European
level, ambitious and value accretive. It will lead to the creation of a world
leader in the energy and environment sectors, placing the merged entity in an
ideal position to benefit from the complete deregulation of the European
energy markets in 2007.
    This project is beneficial and constructive for all stakeholders -
shareholders, consumers, employees - and is consistent with respect for
public institutions and of public service missions.
    2006 FINANCIAL CALENDAR
    - Publication of first-quarter revenues: May 4, 2006
    - Annual General Shareholders' Meeting: May 5, 2006
    - Publication of first-half revenues: August 1, 2006
    - First-half 2006 results: September 7, 2006
    - Publication of third-quarter revenues: October 30, 2006
    SUEZ, an international industrial Group, designs sustainable and
innovative solutions for the management of public utility services as a
partner of public authorities, businesses and individuals. The Group aims to
meet essential needs in electricity, natural gas, energy services, water and
waste management. SUEZ is listed on the Brussels, Luxembourg, Paris, New York
and Zurich stock exchanges and is represented in the major international
indices: CAC 40, BEL 20, DJ STOXX 50, DJ EURO STOXX 50, Euronext 100, FTSE
Eurotop 100, MSCI Europe and ASPI Eurozone. The Group employs 157,650 people
worldwide and achieved revenues of EUR41.5 billion in 2005, 89% of which were
generated in Europe and in North America.
    Disclaimer
    This press release contains certain forward-looking statements,
particularly with respect to future events, trends, plans or objectives.
These statements are based on management's current views and assumptions and
involve a number of risks and uncertainties that may lead to a significant
difference between actual results and those suggested either explicitly or
implicitly in these statements (or suggested by past results). Additional
information about these risks and uncertainties appears in documents filed by
SUEZ with the U.S. Securities and Exchange Commission and the Autorite des
Marches Financiers (French securities regulator). The present forward-looking
statements are made as of the date of the present release, with no
undertaking by SUEZ to update or revise them, whether in connection with new
information, future events, or any other factor.

    Press Contacts:

    France:  Catherine Guillon:    +33(0)1-4006-6715
             Caroline Lambrinidis: +33(0)1-4006-6654
             Antoine Lenoir:       +33(0)1-4006-6650

    Belgium: Guy Dellicour:        +32-2-370-34 05

    Analyst Contacts:

             Arnaud Erbin:         +33(0)1-4006-6489
             Bertrand Haas:        +33(0)1-4006-6609
             Eleonore de Larboust: +33(0)1-4006-1753


    This release is also available on the Internet: http://www.suez.com
    ---------------------------------
    [1]. As a reminder, under IFRS the gain generated in 2004 on the disposal
of M6 is accounted under "discontinued activities".

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