French utility Suez Environnement (SEV.FR) said net profit for the first half of 2008 fell 14%, hindered by costs related to its creation as a separate company, and confirmed its 2008-2010 guidance.
The Paris-based water and waste utility, spun off by Suez before it became part of GdF Suez SA (GSZ.FR), said net profit fell to EUR201 million for the six months ended June 30, from EUR233 million a year earlier.
Earnings before interest, taxes, depreciation and amortization, or Ebitda, rose to EUR1.01 billion from EUR956 million a year earlier.
That is in line with an average forecast of EUR1.01 billion, according to a Dow Jones Newswires poll of six analysts.
July 24, Suez Environnement said first-half revenue rose 4.4% to EUR6.03 billion from EUR5.78 billion a year earlier.
"Suez Environnement confirms its 2008-2010 financial objectives," Chief Executive Jean-Louis Chaussade said during a conference call with reporters.
During the call, Chaussade referred to costs of EUR19 million linked to Suez Environnement's stock market debut.
A share distribution program for employees also had a negative impact on the company's bottom line in the first half, a Suez Environnement spokeswoman said.
Chaussade confirmed during the conference call that 2008 net profit will exceed that of 2007, and will grow faster than Ebitda.
The 2008-2010 objectives the company confirmed include an Ebitda target of between EUR2.1 billion and EUR2.15 billion in 2008.
"A portion of Suez's deficit as of Dec. 31, 2007, estimated at EUR0.5B, will be allocated to Suez Environnement," the company also said.
Suez Environnement noted that it expects to save EUR40 million a year in taxes after becoming a separate company.
CM-CIC Securities said the company's first-half results are "in line with expectations, and the only surprise is that there's no good surprise, something which could perhaps weigh on the immediate performance of the stock in the short-term but doesn't call into question our positive opinion."
As of 0832 GMT, shares in Suez Environnement were up 0.4% at EUR18.71, against a CAC-40 index down 0.7%. The company made its stock market debut on July 22.
"We view Suez Environnement as a solid low-risk stock, but approaching full value," UBS, which has a neutral rating and a EUR19 target price, said in a note to clients after the results.
"We prefer it relative to Veolia due to a 15% price/earnings discount, a more conservative strategy, and we think less risk for near-term negative news," the UBS note said.
Suez Environnement describes itself as a "pure-play" waste and water group, set against larger French peer Veolia Environnement (VE), which also has energy services and transport divisions.