PARIS (Reuters) - French utility Veolia Environnement (VIE.PA) reassured investors that its plans slim down the group and reduce debt remain on track after it reported a 25 percent drop in nine-month profit.
Chief Executive Antoine Frerot announced plans in December last year to scale back the business, which went on an expansion spree and piled up debt when the economic crisis first hit in 2008.
Shares in Veolia, which have fallen by about 10 percent since the start of the year as the waste market has continued to deteriorate, were the best performer on the benchmark CAC 40 index .FCHI in morning trade, up 7.3 percent at 1039GMT.
The water, waste and energy company said on Wednesday that it could cut debt by up to 3 billion euros ($3.84 billion) in the fourth quarter through the sale of several small-to-medium-sized assets worth “hundreds of millions of euros” and the closing of the sale of its U.S. waste business, expected in the next few weeks.
But the company reiterated that there were no merger or disposal talks with smaller rival Suez Environnement (SEVI.PA). Last month both companies denied that they were working on a merger after Le Monde newspaper reported that they had held talks that fell apart over antitrust concerns.
Veolia’s deal to cede control of transport joint venture Veolia Transdev to its partner, state-owned Caisse des Depots et Consignations (CDC), will become final in 2013 and will not have an impact on this year’s accounts, the company said.
Pending a final agreement, Veolia will cut its stake in Veolia Transdev to 40 percent, while CDC will lift its holding to 60 percent.
“After that, we want to go down to 20 percent within a reasonable time frame, let’s say two years, and become minority shareholders,” Chief Financial Officer Pierre-Francois Riolacci told reporters.
Adjusted operating income in the first nine months of 2012 declined 25 percent to 840.9 million euros, while sales rose 1 percent at constant exchange rates, to 21.6 billion euros.
Veolia also confirmed its targets for 2012/13, including disposals worth 5 billion euros and the shrinking of debt to less than 12 billion euros. Debt stood at 15.2 billion euros at the end of September. ($1 = 0.7812 euros) (Additional reporting by Gilles Guillaume in Paris; Editing by James Regan and David Goodman)