May 3, 2018 / 5:45 AM / a year ago

New recycling services boost utility Veolia's first-quarter revenue

PARIS (Reuters) - Veolia (VIE.PA) said first-quarter revenue climbed by 3.7 percent to 6.4 billion euros ($7.7 billion) as its French water business returned to growth and international activities also showed double-digit growth, with new services driving earnings.

The water and waste group said its key French water business was boosted by new contract wins and better price indexations of its municipal water contracts, although waste revenue was down due to lower commodities prices. French revenues overall rose 0.6 percent to 1.3 billion euros.

International revenue growth was also strong, with Europe excluding France up 7.4 percent to 2.4 billion euros, although exchange rates - mainly the strong euro - had a 204 million euro negative impact on revenue.

Revenue in the rest of the world was up 14.7 percent to 1.6 billion euros, but up just 2.8 percent after factoring in currency swings, while Asia and Latin America both grew more than 20 percent at constant exchange rates.

Veolia chief executive Antoine Frerot said on an earnings call that new lines of business represented more than half of the first-quarter’s revenue growth.

These new activities for Veolia include the likes of plastics and chemicals recycling, toxic waste handling, the management of water for aquaculture, the production of energy from waste or biomass and the capture of methane.

Frerot added that these new services now make up about 30 percent of Veolia’s revenue, from 15 percent five years ago.

Along with its competitor Suez (SEVI.PA), Veolia is boosting recycling and waste water handling services for industrial companies as its traditional French water business faces pressure from contract renegotiations.

Veolia’s core earnings before interest, tax, depreciation and amortisation (EBITDA) rose 3.4 percent to 876 million euros, in line with forecasts for 872 million euros.

Current EBIT (earnings before interest and tax) rose 4.8 percent to 448 million, while net profit jumped 26 percent to 193 million euros partly because of capital gains on the sale of its industrial services division in the United States.

Veolia also confirmed its earnings guidance. For 2018 it forecasts core earnings growth greater than in 2017, while for 2019, it expects core earnings of at least 3.5 billion euros.

Frerot said that Veolia could not bid for unlisted smaller French competitor Saur if it were to be sold because of antitrust reasons.

($1 = 0.8340 euros)

Reporting by Geert De Clercq; Editing by Sudip Kar-Gupta

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