Suez announces today “Shaping Suez 2030”, a comprehensive strategic plan to position the Group – now - for the opportunities and the challenges of the next decade. The plan enhances value creation for all stakeholders over 4 years with material results as soon as 2021.
Given the key trends in our business – the continued growth of the circular economy and its impact on our customers, the emergence of new business models and new competitors, combined with a profound shift of the mindset of citizens towards the climate crisis and a need for concrete action – Suez will accelerate its transformation.
With this new plan, the Group leverages its core strengths – innovation, best in class technologies and know-how, exceptional teams and an excellent reputation. The plan drives selectivity in growth, simplicity in its way of working and a renewed engagement grounded on a passion for the environment.
“Shaping Suez 2030” will increase value for all stakeholders by accelerating:
- Selectivity in organic growth, comprising capex discipline and also portfolio rotation for which businesses have been identified accounting for 15-20% of our capital employed.
- Simplicity with a leaner organization, underpinned by a €1bn efficiency plan by 2023 which will in part improve operating profitability as well as finance a step-up in investment in innovation and digitization
- Engagement with our customers and from our employees, embracing change and reviving our winning spirit with a refreshed core of values
- The plan will transform the Group at all levels in the mid-term: our ambition for the four years to 2023 is to embed our new values and culture firmly across the Group, set the scene for sustained organic growth with lower capital intensity, change our business portfolio and improve our returns on capital employed by at least two points, enhancing our capacity to increase our dividend at a normal payout ratio.
Change will be evident already by 2021 and the Group’s financial objectives for that year reflect our intention to focus going forward on profitability and sustainability:
- €0.8 recurring EPS
- €500 million recurring Free Cash Flow
- Net Debt2 at 2.8 to 3.0x EBITDA
“With Shaping Suez 2030, our ambition is to be the global leader in environmental services, making us the preferred choice of our customers, employees and stakeholders, working together to restore and preserve the fundamental elements of the environment: water, air and soil. Building on Suez’s long-standing reputation, best-in-class technologies, expertise in sustainability, we will reposition the Group’s strategy.” says Bertrand Camus, Chief Executive Officer of Suez.
“Shaping Suez 2030” will be implemented across the Group’s three business segments:
- Water (c. 40% of 2018 sales) regroups all SUEZ municipal water activities globally,
- Recycling & Recovery (c. 40% of 2018 sales) regroups all Suez waste activities related to non-hazardous waste with municipal as well as with Industrial & Commercial customers,
- Environmental Tech & Solutions (c.20% of 2018 sales) regroups WTS, hazardous waste and speciality environmental solutions for industrial and municipal customers.
The main drivers of the plan are:
Selectivity – Steering selectivity in growth, the Group intends to leverage its strong European innovation capabilities and accelerate where it has identified the best opportunities on the following priorities for all parts of the Group:
- International markets: The Group targets growth in selected countries where it will deploy its full-value proposition and further expand into innovative services. In addition, it plans to enter selected markets with fast-growing environmental infrastructure needs, with the ambition to reach 60% of Group revenue.
- Industrial customers: The Group accelerates on 5 key high-growth markets and prioritizes activities with the highest value-add leveraging its distinctive portfolio of solutions. Working hand-in-hand with its industrial customers, it will design custom made, integrated solutions to help them achieve their sustainability roadmap, with the ambition to be above 50% of Group revenue.
- Technology and data-driven solutions: The Group leverages proprietary technologies and innovation to develop and roll-out globally advanced solutions. It will also build new high-potential asset-light businesses such as air quality management and smart agriculture, with the ambition to exceed 30% of Group revenue.
The Group’s capital allocation will evolve, to reflect these priorities:
- Prioritize value over volume with a strong change of direction in nature of spending.
- Align business portfolio with value creation ambitions: businesses representing 15-20% of capital employed have been identified as part of asset rotation program.
Simplicity – Promoting simplicity in its way of working, Suez will improve its operational performance, in part to boost innovation and digitization to fuel future growth.
- Roll out a leaner and more efficient organization, with reduced number of business units and a devolved decision-making process to best serve our customers.
- Optimize and standardize industrial processes, accelerate transformation in procurement and external resources, rationalize indirect costs, notably SG&A.
- The objective of the above measures is to deliver €1bn of annual savings by 2023 of which 35 to 45% are expected to benefit Suez’s profitability with around 45 to 50% of this annual saving already evident in 2021.
Engagement with our customers and from employees – Embrace change and renew the Suez winning spirit.
- Foster engagement around 4 new values: passion for the environment, customer first, respect, team spirit.
- Upgrade talents, leadership and skills across the organization.
- Promote new Centers of Excellence in emerging markets with distinctive capabilities.
- Accelerate execution and performance, thanks to increased accountability.
- Management team’s incentives will be realigned with financial objectives.
Upgraded sustainable development commitment for 2030:
- Reduce GHG emissions by 45% (vs. 30% previously), in line with +1.5°C trajectory/carbon neutrality in 2050.
- 100% sustainable solutions.
- 20 MT of CO2 emissions saved, yearly, for our customers.