February 22, 2018 / 7:46 AM / 10 months ago

UPDATE 1-Utility Veolia 2017 core earnings up 2 pct, says 2018 started strongly

* CEO says company starts 2018 “at full speed”

* Asia, Latam saw 20 percent growth rates last year

* Modest Europe inflation boosts contract indexation

* Sees limited impact from Gabon issues (Adds detail on industrial clients, Gabon, Sheffield)

By Geert De Clercq

PARIS, Feb 22 (Reuters) - French water and waste group Veolia said double-digit international growth and a recovery in France boosted its 2017 core earnings by two percent, and added that an acceleration of growth in the fourth quarter had continued into early 2018.

Veolia’s core earnings before interest, tax, depreciation and amortisation (EBITDA) rose 2 percent to 3.28 billion euros ($4 billion), in line with forecasts.

The company increased its dividend to 0.84 euros per share versus 0.80 euros last year and Veolia confirmed its 2018 outlook for core earnings greater than last year, and for 2019 core earnings between 3.3-3.5 billion euros.

With growth rates of more than ten percent in the US and more than 20 percent in Latin America and Asia, international revenue outside Europe was up nearly 10 percent to 6.62 billion euros, as total group revenues rose 3.9 percent to 25.12 billion euros ($30.82 billion), in line with expectations.

Sales in France, which for years has been under pressure due to the renegotiation of municipal water concession contracts, fell 0.1 percent.

However, Veolia chief executive Antoine Frerot said slight inflation in Europe had boosted profits since prices on some of those contracts reflected the inflation trends.

Frerot added that an acceleration of growth in the fourth quarter had continued into the first months of this year.

“We are starting 2018 at full speed,” Frerot told reporters.

Frerot, whose board has proposed a third mandate for him at the April 19 shareholders meeting, said industrial clients, who made up just 20 percent of 2011 revenue, accounted for 46 percent of 2017 revenue.

Frerot is still targeting a 50-50 balance between municipal and industrial customers.

He also said that the seizure of Veolia’s Gabon water and electricity distribution unit SEEG this month would have a limited impact on earnings, as it accounts for just one percent of revenue and core earnings and half a percent of profit.

He added that Veolia expects to reach in the coming weeks or months a “win-win” compromise with the English city of Sheffield over its waste handling contract in the coming months.

Sheffield City Council in 2016 threatened to cancel the 2001-2036 contract under which Veolia handles waste for the city. In July, Veolia already said it expected a compromise in coming months.

$1 = 0.8152 euros Reporting by Geert De Clercq Editing by Sudip Kar-Gupta

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