October 27, 2017 / 6:47 AM / a year ago

UPDATE 1-Utility Suez confirms 2017 guidance as 9-month earnings slip

* Q4 trends in line with full-year outlook, CFO says

* To focus on integration of GE Water for now (Adds CFO comments)

PARIS, Oct 27 (Reuters) - French waste and water group Suez said earnings before interest and taxes (EBIT) fell 0.6 percent to 926 million euros ($1.1 billion) in the first nine months, although it confirmed its 2017 earnings guidance.

Chief financial officer Christophe Cros said on an earnings call that fourth-quarter trends were in line with the company’s outlook.

Suez confirmed its outlook for slight organic growth in revenue and EBIT this year, and for free cash flow of around 1 billion euros. That outlook does not include the impact of the takeover of industrial water specialist GE Water, which was finalised earlier this month.

Core earnings before interest, tax, depreciation and amortisation (EBITDA) fell 1.7 percent to 1.92 billion euros, while revenues rose 0.7 percent to 11.30 billion, but on an organic basis - excluding acquisitions and foreign exchange impact - revenue was up 1.3 percent and EBIT was up 1.4 percent.

Cros said that GE Water and Suez’s existing industrial water activities - which have revenues of $2 billion and 500 million euros respectively - would be integrated in its international division, the smallest of its three divisions with 2.94 billion euros in revenue in the first nine months of 2017.

That division saw 2.6 percent nine-month revenue growth but Cros said it remained on track for 6-8 percent average annual growth.

The company’s key Europe waste division had nine-month revenue of 4.56 billion euros, up 0.8 percent on a gross basis and up 2.9 percent on an organic basis, fuelled by a recovery in commodity prices and better volumes.

Its Europe water unit saw revenue rise just 0.1 percent gross to 3.41 billion euros as low inflation in Europe limits water tariff increases.

Cros said that in the short term, Suez would focus on the integration of GE Water rather than on new acquisitions, but he added that the company has sufficient financial margins to do more takeover operations should a good opportunity arise.

Suez will outline the strategy for its new industrial water unit on Dec. 13, with full-year results due in March 2018.

Suez shares are up 8 percent in the year to date, underperforming bigger sector peer Veolia, whose shares are up 24 percent.

$1 = 0.8596 euros Reporting by Geert De Clercq; Editing by Sudip Kar-Gupta

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