Genesis Morocco: Veolia Environment Rates Sell

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Genesis Morocco

Project Genesis is a strategic sustainable development framework for Morocco to translate from being a net importer of energy and a country facing water shortage issues, into the number one producer both of clean renewable energy and water in the region.

Saturday, October 8, 2011    <<Home

Veolia Environment Rates Sell

Personal Notes : "Veolia Environnement Maroc has been awarded three concession contracts to provide water, wastewater and electricity services which are managed by Redal for the city of Rabat/Salé and by Amendis for the cities of Tangiers and Tetouan. Veolia Environment Maroc currently provides services to 34 local authorities serving about 3.6 million people.". 

Well, that what their website says, what the article below points at is that this is all going to change pretty soon. Morocco is on list of the countries where Veolia is loosing money, so Redal and Amendis are going to be sold. Problem is they don't seem to find buyers, even worse their own share value is taking a beating from the market. Redal and Amendis might have to fill for bankruptcy if Veolia doesn't find any other exit solution, so who is going to step in in their shoes ? Suez Environment is a likely prospect, after all they are making money in the very same sector where Veolia doesn't, maybe they know a couple of things about this sector that others don't. To be followed. 

Veolia Environnement SA (VIE), the world’s biggest water company, may add to write-downs it booked in the first half as management struggles with plans to cut losses by selling assets as economic growth weakens, UBS AG said.

“While we believe the largest write-downs on individual assets happened in the first half, it is likely that there is more to come,” UBS analysts including Per Lekander wrote in a report. “Selling underperforming assets, often with goodwill attached to them, in a bear market may prove challenging.”

Veolia fell 3.8 percent to 10.495 euros by 11:34 a.m. in Paris trading. UBS cut its rating on the stock to “sell” from “neutral,” saying the company was too risky for the price.

Veolia Chairman and Chief Executive Officer Antoine Frerot plans to halt operations in at least 37 countries and sell 1.3 billion euros ($1.75 billion) of assets this year to restore profit. The company, which lost half its value this year, posted a first-half loss on write-downs on operations in Italy, Morocco and the U.S. and said it uncovered fraud at a U.S. business.

Third-quarter results, due Nov. 10, aren’t expected to be strong, UBS said. Veolia plans an investor day on around Dec. 6.

Veolia, based in Paris, faces price pressure on water and waste contracts with cash-strapped municipalities and may also suffer difficulties with labor relations, the bank said.

Suez Environnement, a smaller rival also based in the city, sold 70 percent of the regulated business of Bristol Water to Capstone Infrastructure Corp. for 152 million euros, 20 times net income, according to an Oct. 5 statement.

Suez Environnement, 34 percent-held by GDF Suez SA, says 2011 will be a year of growth and in August kept its estimate for higher earnings before interest, taxes, depreciation and amortization for 2011 through 2013. CEO Jean-Louis Chaussade plans to cut its debt ratio this year after buying Sociedad General de Aguas de Barcelona SA, a Spanish water supplier.

Marie-Claire Camus, a spokeswoman for Veolia, declined to comment on how the company’s restructuring is progressing.

To contact the reporter on this story: Tara Patel in Paris at tpatel2

To contact the editor responsible for this story: Will Kennedy atwkennedy3.