energy

Merger proves profitable for French energy giant

Monday 01 September 2008

GDF Suez, the product of a recent merger between Gaz de France and the Suez group, has published promising first half earnings with profits up 14 percent and sales up by 17 percent. The company's shares rose by nearly 1 percent.

New French energy giant GDF Suez said Monday its first half net profit and sales rose by double digits, allowing it to confirm its forecasts for the year.

The company, formed in a government promoted merger between Gaz de France and environmental services group Suez, said net profit in the six months to June increased 14 percent to 3.4 billion euros (5.0 billion dollars) on sales of 43.1 billion euros, up 17 percent.

Operating profit was up 20 percent to 5.5 billion euros.

"The maiden results for GDF Suez are excellent despite a difficult economic environment ... All our indicators are in line with the targets fixed for 2008," chief executive Gerard Mestrallet told a conference call.

Investors responded positively to the figures, with GDF Suez shares up 0.98 percent to 39.78 euros as the broader market slipped more than 0.50 percent.

The company said its first half results, presented on a pro forma basis because it only came into existence officially in July, showed all operations posting solid growth.

The tie-up between resulted in the separation of Suez's services unit -- ranging from water supply to waste management -- into a separate company, Suez Environnement.

GDF Suez is the third-biggest company by capitalisation on the French CAC 40 stock index after Total and electricity generator and distributor EDF.

Suez shareholders hold 55 percent of the new entity while those from GDF have 45 percent.

The French state, which had an 80.2 percent interest in GDF, remains the biggest single shareholder with 35.6 percent.

In 2007, GDF and Suez made combined net profit of 5.6 billion euros (8.9 billion dollars), had sales of 74.3 billion euros and debt of 15.8 billion euros.