Strong underlying drivers lead to increasing demand Market dynamics Global annual Expected average Key drivers expenditures annual growth 2016 ($bn) 2016 - 2020 Increased production Water withdrawal regulation Food & Beverage 18 ++ Tightening discharge Water scarcity parameters Unconventional Oil & Gas Environmental regulations Oil & Gas Upstream 15 ++ Increase in produced water Optimization of production costs Emerging markets growth Environmental regulations Power 13 + Water scarcity Poor quality near-mine water sources Mining 7 +++ High mineral prices Tightening water discharge regulations Water scarcity Total cost of operation Oil & Gas downstream/ 6 ++ chemicals Environmental regulation Crude variability Discharge limitations/costs Water scarcity 1 (1) Micro Electronics +++ Device demand Cost-driven market Contamination prevention 1 (1) Pharma & Cosmetics +++ Environmental regulation (1) Only industrial Opex figures available for chemicals Source: Global Water Intelligence, internal analysis 19 2017 Education Day - December 13 th , 2017
BUILDING A BUSINESS POISED FOR PROFITABLE GROWTH HEINER MARKHOFF CEO of Water Technologies & Solutions
WT&S: delivering full-service across the value chain Technologies Solutions & Services Delivery Models On site services, product and Lifecycle Expert Equipment equipment replacement services and systems supply and services Data intelligence Engineering, Specialty and analytics for procurement, chemicals asset performance construction 21 2017 Education Day - December 13 th , 2017
Building on the best technology companies to grasp market opportunities Making of GE Water Execute growth Portfolio build-up as an integrated company strategy Industrial Solutions $2.7bn of revenue in 2016 Acquired and successfully integrated 5 key major water businesses Leverage integration experience to quickly and efficiently combine with SUEZ industrial water activities Exited low return/non-strategic businesses and strengthened technology & services portfolio Consolidated and strengthened manufacturing footprint, supply chain, information systems and management Investing in digital and analytical capabilities 22 2017 Education Day - December 13 th , 2017
Chemical & monitoring solutions: delivering value through integrated solutions and services Integrated chemical treatment solutions for industrial Description water & process applications Hydrocarbon Oil & Gas Key applications Cooling Boiler Wastewater Processing Production Refining & Chemical Processing Upstream Oil & Gas Served segments Power Commercial & Institutional Food & Beverage Primary Metals & Mining 23 2017 Education Day - December 13 th , 2017
Engineered systems: delivering solutions through technology to help customers solve their toughest water challenges A leading equipment and technology solution provider for Description water and wastewater treatment, water reuse and outsourcing Zero Liquid Water Key technologies Membranes Ozone Ultraviolet Discharge Outsourcing Refining & Chemical Processing Upstream Oil & Gas Commercial & Institutional Power Served segments Primary Metals & Mining Food & Beverage Municipal 24 2017 Education Day - December 13 th , 2017
A balanced business mix 2016 Pro-forma sales by segment 2016 Pro-forma sales by solution type Balanced business mix Steady, recurring sales Engineered Chemical & Systems Monitoring Solutions Non Recurring Recurring 40% 56% 60% 44% 25 2017 Education Day - December 13 th , 2017
A balanced business mix 2016 Pro-forma sales by major industries (1) 2016 Pro-forma sales by region Microelectronics Pulp & Paper & Pharma Asia-Pacific North America Mining Downstream 6% 2% Oil & Gas 19% 6% 23% Middle Market 8% 45% 9% Food & 22% 16% Beverage Europe 14% Power 7% 16% 7% Petrochemical Latin Middle-East Africa Municipal America (1) Data relating to GE Water scope only 26 2017 Education Day - December 13 th , 2017
A WINNING STRATEGY BASED ON FIVE DIFFERENTIATING FACTORS HEINER MARKHOFF CEO of Water Technologies & Solutions
1/ Strong presence all around the world drawing from an unparalleled supply-chain footprint from an unparalleled supply-chain footprint Key Chemical Monitoring Solutions (CMS) Engineered Systems (ES) Primary focus on global product manufacturing Combined and fulfillment Significant manufacturing process engineering domain expertise Manages 45 manufacturing sites and all active facilities Global operation business processes including customer care, production sales and inventory, asset and fleet management, logistics, lean six sigma and investment mgmt Manages global product quality, responsible for Cost of Quality 28 2017 Education Day - December 13 th , 2017
2/ Leading presence across the entire value chain Chemical Water Monitoring/ Engineering, Industrial Water Equipment Operations Treatment Analytics/ Instrumentation Procurement Solutions & Systems & Maintenance and Related Digital Services and Construction Services Present No/Limited Presence 29 2017 Education Day - December 13 th , 2017
3/ Strong go-to-market capabilities across the globe Diverse blue-chip customer base across key industry verticals Focused effort to expand strategic industrial Result-oriented value proposition for customers Strong experience and technical sales force 3,000 customer facing professionals Highly recognized brands in the industry (ZeeWeed, GenGard, Sievers, Ozonia, InSight…) 30 2017 Education Day - December 13 th , 2017
4/ Strong R&D and innovation capabilities ~400 scientists and engineers with strong domain expertise Global technology footprint with R&D centers across the world Large portfolio of c. 3,200 patents/applications Developing leading edge technologies: Green chemistry Next generation membrane technology Energy neutral water treatment Integrated solutions for Oil & Gas 31 2017 Education Day - December 13 th , 2017
5/ A leading digital platform driving value creation Customer engagement 24/7 digitized access Customized solutions Customer engagement eCommerce Workforce & supply chain Asset performance optimization management Increased customer Utilize data and Workforce & Customer collaboration advanced analytics supply chain asset/plant Faster proposal generation Optimize performance optimization management of customer assets Elevated on-site service Automate data collection Streamlined fulfillment and reporting Digital tools to enhance productivity and maximize value 32 2017 Education Day - December 13 th , 2017
OUR AMBITION: STRENGTHEN OUR GLOBAL LEADERSHIP HEINER MARKHOFF CEO of Water Technologies & Solutions
A clear roadmap for growth Being bolder in selected growth regions 1 Leveraging key accounts and the SUEZ Group to drive business growth 2 Driving portfolio differentiation and competitiveness 3 with accelerated commercialization Creating new service models based on expanded offerings and data/analytics 4 5 Digitalization of our core processes to gain internal productivity Operating with agility and speed 6 Field Services and Engineering 34 2017 Education Day - December 13 th , 2017
Targeting more than $3 billion of revenue by 2020 > $3.1bn Synergies ES Sales c.$2.7bn CMS 2016 2020 Field Services and Focus on execution will drive mid-single digit growth Engineering 35 2017 Education Day - December 13 th , 2017
An unparalleled industrial water platform Addressing a >$100bn market expected to grow by 5% 1 Operating in key growing industrial verticals with large 2 blue-chip client portfolio 3 Global footprint - Global capabilities with regional execution to deliver Leading presence across the entire industrial water value chain 4 Solid business model built for profitable growth 5 Strengthen the global leadership position in the water technologies and solutions sector Field Services and Engineering 36 2017 Education Day - December 13 th , 2017
CHEMICAL & MONITORING SOLUTIONS: DELIVERING VALUE THROUGH INTEGRATED SOLUTIONS AND SERVICES AMY ERICSON Executive Vice-President Chemical & Monitoring Solutions
Providing added value services through integrated solutions Key financials 2016 total sales: ~$1.1 billion % Recurring: ~95% 2016 Sales breakdown By end market By geography Asia-Pacific Power Other 9% 11% Chemical 21% Europe process industry 20% Food 18% North & Beverage 51% 9% America 3% 6% Upstream Greater China 3% Oil & gas 13% 25% 11% Middle-East Africa Commercial & Refining instutitions Latin America 38 2017 Education Day - December 13 th , 2017
Providing added value services through integrated solutions Segment Key applications • Prolongs the life of physical assets • Maximizes process productivity Water treatment • Prevents issues due to corrosion, deposition, chemicals fouling and biological growth on operations • Meets wastewater regulations • Antifoulant chemical treatment, corrosion inhibitors, and finished product additives • Real-time monitoring and domain expertise to maximize Oil & Gas process performance, dependability, and business productivity chemical treatment • Cost effective solutions to address flow assurance, asset integrity, and production optimization challenges in onshore and offshore field applications Comprehensive portfolio of chemical treatments: • Longer run times Industrial process • Less fouling • Improved compliance with safety regulations chemical treatment • Enables customers in mining, minerals and power industries to tackle suppressing dust and reducing air emissions 39 2017 Education Day - December 13 th , 2017
Entrenched customer relationships drive sales across full portfolio Significant opportunities to cross-sell the entire SUEZ portfolio through existing customers Business Maintaining and growing customer relationships Driving growth development with value-add solutions Long lead sales Daily customers Digital and Entrenched Defend customer process: interaction with monitoring relationship with base, build commercial and capabilities customers pipeline, and drive ~6 to 24 months field service teams designed into resulting in steady cross-selling from initial contact on customer sites customer stream of across portfolio to ramp up processes driving business and Less than ~5% efficiency, asset opportunities customer attrition protection, for growth per annum and reliability 40 2017 Education Day - December 13 th , 2017
A sound profile enabling recurring activity Long-lasting business relationship A diversified portfolio of clients based on value delivery Coveted blue-chip customer base across Index based mulitple-year contractual industry verticals agreements Pricing improvements through value creation No customer accounts for more than 5% and service excellence of the business Result-oriented value proposition for customers A partner in improving customers' operation 95% contract renewal rate, building the base for steady business baseline 41 2017 Education Day - December 13 th , 2017
Water treatment chemicals: a leading provider of water treatment solutions Competitive advantages Key highlights • People: industry’s deepest bench of subject matter experts fully supporting commercial teams Cooling - A leader in halogen resistant chemistry supported with differentiated GenGard technology (execution at the ground level) • Differentiated Technology: for highly stressed cooling water, for boiler treatment with simplified and best-in-class chemistry, membrane cleaning Boiler – Differentiated film forming condensate with lowest total cost of cleaning and restoration and feedwater treatment • Solutions: ability to bundle specialty chemical applications with digital solutions for transparency Membrane chemicals – Cleaners and antiscalant and ease of operations endorsed and tested for SUEZ and competitive membranes Primary industry verticals served o Power Wastewater – Full portfolio of coagulants and flocculants differentiated with NOVUS technology o Refining o CPI o Food & Beverage Service -based business model for specialty chemical applications; trusted provider of digital-based asset o Commercial & Institutions protection and process efficiency expertise 42 2017 Education Day - December 13 th , 2017
Industrial process chemical treatment Competitive advantages Key highlights • People: industry’s deepest bench of subject matter experts fully supporting commercial teams Dust control – Mine to Power plant dust control (execution at the ground level) capabilities with patented oxidation inhibitors • Differentiated Technology committed to specific industries : fuels and combustion Scale control – Best-in-class industrial process for Power, scale and dust control for mining, antiscalants for mining, FGD, and steel centered increased output and quality of product for around the Patented and differentiated STP sugar, ethanol, corn milling and breweries dispersant for Food & Beverage • Solutions – Bundling of customer designed Food process – Class leading technologies with formulations, hardware and packaged software GRAS and FDA approval for sugar and biofuels, corn milling, and brewing industries Primary industry verticals served o Power Fuel treatment – Best-in-class technologies and OEM approved for slagging control from o Food & Beverage the combustion of fuels. Also helps power plants meet regulatory emission targets o Mining o Steel 43 2017 Education Day - December 13 th , 2017
Oil & Gas Process Chemical Treatment: cost-effective solutions to solve the sector challenges Competitive advantages Key highlights • People: industry’s deepest bench of subject Predictive capabilities – Identify crude issues matter experts fully supporting commercial before they occur and to process more low cost teams (execution at the ground level) crudes • Differentiated Technology: advanced antifoulant Corrosion control – Maximize product yields while programs, ethylene compressor, flow assurance minimizing performance risk to maximize the toughest of crude compositions • Solutions: unique, fully integrated chemical, Fouling control – Leading edge technology provider equipment and operational service offering for Ethylene market (e.g. high temperature furnace antifoulant) for Oil & Gas Polymerization control – Optimized program using multiple polymerization inhibitors, building on market Primary industry verticals served leading styrene inhibitor technology o Refining Flow assurance – Modelling software database o CPI allows dose rate optimisation and up to 50% pipeline CAPEX reduction o Upstream Finish product additives – Used to bring product to market and regulatory specification 44 2017 Education Day - December 13 th , 2017
CASE STUDY #1 PROTECTION OF ASSETS AMY ERICSON Executive Vice-President Chemical & Monitoring Solutions
Provide greater flexibility, lower overall cost and improve margins of a large refinery in India Customer: a large refinery in India Challenges A large refinery in India, operating multiple crude & vacuum unit complexes, wanted to systematically increase the TAN operating limits of their crude feed, as a way to provide greater flexibility in crude selection, lower overall cost of crude, and improve refinery margins SUEZ solution SUEZ recommended the use of Predator 61N for excellent corrosion inhibition performance, lowest level of phosphorous in any phosphate-ester based corrosion inhibitor and its synergistic blend of phosphate-ester and phosphonate salt that has the lowest potential to foul the vacuum column packed beds Outcome The corrosion inhibition results achieved using Predator 61N while processing crudes in a TAN range of 0.5 – 0.8 mg/g KOH were excellent. The results show that corrosion rates, in the highest risk loops, were controlled within acceptable limits. There was no measurable increase in the pressure drop in any of the vacuum column packed beds 47 2017 Education Day - December 13 th , 2017
Considerably improving environmental performance of an Oil & Gas customer with monitoring solutions Customer: a Scottish petrochemical plant Challenges Water cooling system limited to four cycles due to calcium phosphate and calcium carbonate scaling SUEZ solution Utilized data analytics on the information received from online monitoring of the plant’s cooling system Based on the intelligence from the analytics, provided integrated solution with GenGard chemistry, TrueSense cooling control and InSight asset performance management system Outcome Increased water cycles in the cooling tower to eight cycles, conserving approximately 400 million liters of water per year and thereby delivering significant and sustainable savings 48 2017 Education Day - December 13 th , 2017
Aligning talent capabilities & coverage to execute faster on imperatives 2 core products groups 2 key differentiators • Application expertise and services • Water treatment chemistry IP protected specialty • Digital integration with industry vertical • Process treatment chemistry chemicals automation/analytics Strategies to propel growth through innovation and differentiation • Grow in markets with stringent regulations – FGD, dust control, raw water/dewatering, etc. Drive growth 1 • in core Accelerate integrated solutions in HPI/CPI • Expand in Commercialize Flow Assurance by leveraging offshore platform wins 2 • Oil & Gas Production Vertical integration - Raw material consolidation, cost out, and partnerships • HPI/CPI: India, Mexico, Saudi Arabia, Russia and Caspian; Upstream: Caspian, North Sea and Australia Expand 3 • geographically Invest in incremental local expertise and service capabilities • Develop new business models… guaranteed outcomes and pay for performance Leverage digital 4 • Leverage productivity gains from automation & applied data analytics, e-commerce, and other digital tools • Niche growth areas for backwards integration and/or product portfolio completion • Grow inorganically Selected regional plays to improve market penetration 5 • Scale up digital software capabilities Driving 3 Key Outcomes for Our Customers Environmental Productivity Operational stability / reliability stewardship Fortify and leverage key accounts 49 for growth in priority industry verticals 49 2017 Education Day - December 13 th , 2017
ENGINEERED SYSTEMS: HELPING CUSTOMERS ADDRESS THEIR TOUGHEST WATER CHALLENGES KEVIN CASSIDY Executive Vice-President Engineered Systems
Solving customers' toughest water challenges Key financials 2016 total sales: ~$1.6bn Large backlog: • Projects: $600m+ • Services: $1bn+ 2016 Breakdown by subsegment 2016 Breakdown by region Latin America Projects 3% Asia Products 19% 33% 34% North 45% America Middle-East 11% Africa 33% 22% Europe Services 51 2017 Education Day - December 13 th , 2017
Providing full lifecycle water treatment • Product development & domain expertise drive PRODUCTS sales and build foundation for PROJECTS AND SERVICES Lifecycle Products • PROJECTS pull through • SERVICES pull through Products combined with process Products combined with engineering expertise and work engineering expertise, field with partner EPCs or utilize our Customer service, and fulfillment to build own capabilities to deliver a a recurring revenue stream complete solution and build Projects Services an installed base Lifecycle • Combination of Products, Projects, Services, and Digital create a complete LIFECYCLE offering and provides ongoing aftermarket services to the installed base as well as expansion opportunities Opportunities to drive efficiency, reliability, and asset protection through digital monitoring and predictive analytics across all segments and product life cycles 52 2017 Education Day - December 13 th , 2017
Products: providing first-class equipment Competitive advantage • Robust membrane technology • Low lifecycle cost for customers • World-class production and fulfillment Product portfolio Key product Product capabilities • Water recovery and reuse • Drinking water treatment • Reverse osmosis pretreatment Membranes • Compliance with environmental regulations • Pressurized and immersed • Reverse osmosis: industrial water, seawater desalination, ultrapure water, and wastewater applications • Electroseparation: Food and beverage applications, whey separation, Standard equipment glycerin desalting, fruit juice de-acid, ultrapure water, robust water / wastewater treatment; high recovery • Total organic carbon monitoring • Regulatory compliance productivity and process control Analytical instruments • Pharmaceutical and semiconductor segments • Purify water and wastewater with Ozone against chlorine resistant Purification micro-organisms and viruses. Ozone is an efficient treatment for removal & disinfection of micropollutants and Hard COD 53 2017 Education Day - December 13 th , 2017
Projects: a leading technology provider for integrated water projects Competitive advantage • Integrate core product technology • World-class process engineering expertise • Global execution Technology portfolio Key technology Technology capabilities • Municipal and industrial wastewater treatment for reuse or discharge; Membrane bioreactor (MBR) operating in a small footprint • Provide zero liquid discharge treatment solutions in water stressed areas Zero liquid discharge and treat the toughest water to meet the most stringent regulations • Recycle Municipal sludge, biosolids and industrial (or Food & Beverage Anaerobic digestion industry) bio-waste into methane and valuable by-products • Equipment to separate water from hydrocarbon in Upstream Oil water separation and Downstream/refinery Oil & Gas 54 2017 Education Day - December 13 th , 2017
CASE STUDY #2 MEMBRANE BIOREACTOR KEVIN CASSIDY Executive Vice-President Engineered Systems
Membranes, a key equipment in water systems ZeeWeed membrane... A key building block in Membrane Bioreactors SUEZ is a world leader in membrane bioreactor (MBR) technology with over 1,000 plants installed across the entire globe. Increased productivity Smaller footprint Simplified design Energy savings Guaranteed reliability 57 2017 Education Day - December 13 th , 2017
An example of application – Allowing reuse of water in a large industrial site Customer: a large petrochemical plant in Italy Challenge Built in the late sixties, the plant became one of the most important facilities in Europe. Groundwater started to be contaminated by heavy metals (arsenic, iron and manganese) and hydrocarbons. With intervention from the authorities, the site was forced to reclaim the contaminated areas SUEZ solution Providing a ZeeWeed membrane bioreactor system, which combines the proven activated sludge process with the absolute barrier charateristic of ultrafiltration membranes Outcome Customer was able to reliably treat its contaminated groundwater and reuse it as boiler make-up. In addition, the water reuse plan helped the plant establish a more positive environmental image in the local authority 58 2017 Education Day - December 13 th , 2017
Services: a leading provider of water outsourcing Competitive advantage • Integrate core products expertise • One of the largest global fleets of mobile assets • World-class field service and fulfillment capabilities • Financing capabilities Service portfolio Key services Technology capabilities • One of the world's largest fleets of mobile water treatment systems, supplying any water Mobile quantity and quality needed on a short-term, emergency, or commissioning basis • Wide range of applications including boiler feed water, desalination, Build-own-operate and water reuse serving industries and municipalities • Rental and regeneration of deionization resin vessels to customers Service deionization in the microelectronics, commercial and light industrial segments • Optimize the operation of customers' water assets Operating & Maintenance 59 2017 Education Day - December 13 th , 2017
CASE STUDY #3 Water outsourcing KEVIN CASSIDY Executive Vice-President Engineered Systems
Providing a mobile trailer for nearly any situation Delivering a wide range of water treatment solutions for planned and unplanned events, including: Emergency outages or equipment failure Planned outages for equipment repair Seasonal demands and product expansion Plant start-ups Changes in raw water quality Sudden changes in effluent specifications Augmentation/expansion of existing water plant Regeneration and cleaning services Drought and hurricanes 61 2017 Education Day - December 13 th , 2017
One of the leading providers of water treatment outsourcing A mobile trailer can be transported Why choose SUEZ? and in service within hours Rapid deployment of mobile assets Pioneers in mobile water treament with the largest fleet of more than 800 units in service Production continuity, productivity gains Water treatment can occur independent No capital investment to meet seasonal from weather, limited resources and address demands restrictions on municipal supply or discharge Reduced time and costs for repairs Cost of owning complex technology means and new plant or process startups that flexibility from Mobile Water treatment can deliver tremendous value Guaranteed water quality and quantity Water purification outsourcing is growing Extended asset life with high-quality water rapidly which reduces costs and improves treatment reliability Safe operation and regulatory compliance 62 2017 Education Day - December 13 th , 2017
An example of application – Allowing savings thanks to our mobile solutions Customer: a 250 MW power plant in Western US Challenges with their 3 evaporation ponds Contaminant levels: unexpected 80% increase in the amount of total dissolved solids Capacity: levels of wastewater productions much higher than anticipated, with ponds reaching maximum levels after 3 years, while they were planned for 15 years Initial solutions Shutting down operations or de-rating until the excess of water could be hauled away in trucks, which would be extremely costly SUEZ solution Wastewater reuse and treatment to remove contaminants; entire system was delivered in just days and functioned as self-contained operation in containerized water treatment units Outcome Allowing the customer to save $20m 63 2017 Education Day - December 13 th , 2017
Growth trajectory clearly identified Products Projects Services Lead with Technology Grow Installed Base Drive Outsourcing Strengthen the core Build on core membrane, Focus on strength of core WTS Improve utilization in mobile, water/wastewater & disinfection technology & product portfolio drive recurring revenue streams product technology expertise with selective EP+C scope (BOO, Industrial O&M) Develop new products Enter into new markets Bring new economic models Innovate, incubate & commercialize Translate design/build capability; Expand mobile fleet-based 1 1 1 energy efficient technologies: contract directly with end users - grow technology offerings: wastewater with membranes… Zeelung, Ozone M Series, Alt brine installed base and service opportunity concentration Build and shape most attractive Create funding capacity with external 2 2 2 Advance core membrane segments: energy neutral, financing to accelerate BOO technologies: Next gen 500, tough-to-treat, Lithium, FGD and O&M growth High flow RO, Sulfate removal NF Expand standardization to reduce Extend BOO and O&M reach 3 3 3 Expand instrument offering: new design/engineering cost, improving to include more industrial waste water segments beyond TOC; Endotoxin competitiveness in the mid-market operations, refurbishments and asset (Food & Beverage, Pharma, management Improve portfolio competitiveness; 4 cosmetics) design to value Drive additional services enabled 4 by digital 64 2017 Education Day - December 13 th , 2017
A LEADING DIGITAL PLATFORM UNDERPINNING GROWTH STRATEGY RALPH EXTON Chief Marketing Officer of Water Technologies & Solutions
A leading digital platform driving value creation Customer engagement 24/7 digitized access Customized solutions Customer engagement eCommerce Workforce & supply chain Asset performance optimization management Increased customer Utilize data and Workforce & Customer collaboration advanced analytics supply chain asset/plant Faster proposal generation Optimize performance optimization management of customer assets Elevated on-site service Automate data collection Streamlined fulfillment and reporting Digital tools to enhance productivity and maximize value 67 2017 Education Day - December 13 th , 2017
Driving growth and profitability via digitalization Website eCommerce InSight APM • Leverage digital marketing • Modernize the B2B • Operate assets at the to generate leads and drive buying experience highest levels of reliability , revenue efficiency and output Strong value proposition to customers enabling asset protection, predictive maintenance, and improved overall system efficiency Deepens customer relationships and increases retention Enhanced top and bottom-line growth through an integrated thread of digital platforms and initiatives 68 2017 Education Day - December 13 th , 2017
A leading digital platform driving client retention InSight is an Asset Performance Management solution that uses data InSight APM and analytics to ensure assets operate at the highest levels of reliability , efficiency and output c. 50,000 4,000+ active assets customers connected under management 20+ 75+ Industries served countries served PREVENT CONNECT PREDICT Visualize, trend, alert, report Cloud-based, Agnostic analytics driven IoT connectivity 69 2017 Education Day - December 13 th , 2017
Delivering financial value and outcomes for our customers Lead with best-in-class digital innovations that enhance customer experiences, generate profitable business growth, and drive business productivity Customer experience Leadership & differentiation Drive customer loyalty by enhancing Be recognized in the Water market quality and reliability with digital tools as an innovative digital leader and initiatives Top line growth & cash flow Bottom line productivity Leverage digital to generate Deliver efficiencies through digitized incremental revenue and improve self-service, advanced manufacturing, cash position and digital engineering tools 71 2017 Education Day - December 13 th , 2017
POISED FOR GROWTH IN EMERGING MARKETS HEINER MARKHOFF CEO of Water Technologies & Solutions
Growing emerging markets to more than $1.1bn by 2020 WT&S revenue split by region Europe $0.6bn North America $1.2bn MEA LATAM $0.2bn Asia Pacific $0.2bn $0.5bn Key Chemical Monitoring Solutions (CMS) Engineered Solutions (ES) Combined 73 2017 Education Day - December 13 th , 2017
Example: India is increasingly a key growing market A market growing by more than 15% p.a. Sound market drivers over the coming years Rapid growth in population, urbanization & industrialization leading to increase in water requirements Twofold increase in industrial water demand expected in the next 15 years (~50,000 million liters per day) <50% of industrial wastewater is currently treated 74 2017 Education Day - December 13 th , 2017
Longstanding presence in the country and deep knowledge of local dynamics Long & recognized experience in India: >450 projects executed over more than 30 years Strong local capabilities: ~ 650 local team with 4 manufacturing facilities & R&D center Significant market share & strong presence in heavy industries (Power, Refinery & Metals) and Food & Beverage sector Comprehensive solution provider Driving the adoption of advanced technologies: localized membrane manufacturing & technology based products and integrated zero-liquid discharge solutions Leading Water & Process Chemicals solutions provider for Utilities (Cooling, Boiler, wastewater) & Crude Oil processing Center of excellence for Engineering and Digital technologies for global requirements Driving strong double digit growth in India 75 2017 Education Day - December 13 th , 2017
AN UNPARALLELED EXPERTISE IN THE FAST GROWING INDUSTRIAL WATER MARKET HEINER MARKHOFF CEO of Water Technologies & Solutions
An unparalleled industrial water platform 1 Addressing a >$100bn market expected to grow by 5% 2 Operating in key growing industrial verticals with large blue-chip client portfolio 3 Global footprint - Global capabilities with regional execution to deliver 4 Leading presence across the entire industrial water value chain 5 Solid business model built for profitable growth Strengthen the global leadership position in the water technologies and solutions sector Field Services and Engineering 77 2017 Education Day - December 13 th , 2017
Q&A SESSION
WATER TECHNOLOGIES & SOLUTIONS: A GAME CHANGER FOR SUEZ COMMERCIAL DEVELOPMENT MARIE-ANGE DEBON SUEZ Senior Executive Vice-President in charge of International
Accelerating Group strategic priorities x5 Industrial x2 large industries Industrial clients water revenues revenues of revenues +38% International generated development internationally Accelerating the trajectory through two levers: top-line synergies & key account management 80 2017 Education Day - December 13 th , 2017
DERIVING SIGNIFICANT TOP-LINE SYNERGIES MARIE-ANGE DEBON SUEZ Senior Executive Vice-President in charge of International
More than $750m of opportunities identified Target: achieve 200m euro p.a. Total of opportunities identified in top line synergy by 2022 Total of initiatives identified In $m >$750m >$750m of opportunities identified, 300 Forecasted 250 spread over more than 300 projects 200 orders funnel, $m p.a. 15 2017 2018 2019 2020 Breakdown of synergies by initiative Key enablers required to implement initiative Cross training of services Support from: Orders funnel Initiative description $m p.a. and product Commercial operations >$750m Proper incentive mechanisms Specialized sales 400 1 Combined offering Key accounts and market drive SUEZ Group procurement 2 300 Cross-selling Regional leadership Digital as a business to develop synergies enabler 3 Insourcing 50 Enhanced business offerings Marketing & communications 82 2017 Education Day - December 13 th , 2017
A well diversified portfolio of synergies opportunities Achieve 200m euro p.a. in top line synergies By nature By markets Digital Chemicals O&G Services 3% Municipal 6% 20% 4% 26% Products 1% 51% Automotive 13% Chemical 36% 12% & Pharma 3% Other Projects 11% EPC 1% 5% 8% P&P F&B Microelectronic Mining & Metals 83 2017 Education Day - December 13 th , 2017
Significant progress in extracting revenues synergies, with encouraging quick wins Segment Amount Insourcing Several areas of potential in SUEZ plants well underway Anticorrosion, antiscalant, digital monitoring in Energy-from-Waste in Europe & Asia CMS Membranes, membrane chemicals and wastewater treatment chemicals for desalination ES+CMS and wastewater treatment plants Combined offerings 3 dimensions: GE Water + SUEZ IS, WTS + R&R Europe, WTS + Municipal Municipal water client in America – Technologies for Anaerobic Digestion and O&M ES $7-15m Eurasia industrial water client – Ultrafiltration, reverse osmosis and Zero-liquid discharge ES $20m Power client in India – Zero-liquid discharge and pretreatment ES $30-40m Power clients in Europe – WTS newly referenced thanks to a broader range of capabilities CMS >$10m in WTS Cross-selling: 3 dimensions: GE Water + SUEZ IS, WTS + R&R Europe, WTS + Municipal SUEZ municipal water client in China – Ozone and membranes ES $4-5m US oil & gas clients – Chemicals and BOO ES+CMS $3m 84 2017 Education Day - December 13 th , 2017
KEY ACCOUNTS MANAGEMENT MARIE-ANGE DEBON SUEZ Senior Executive Vice-President in charge of International
Increasing client demand for integrated offers… Lower environmental footprint: Lower CO ² emission Common drivers Lower energy consumption of demand for Reduce water consumption waste and water offers Increase waste recovery 86 2017 Education Day - December 13 th , 2017
… highlighting the need for an integrated KAM approach Success factors Become trusted Better understand customers’ needs points of contacts for key account at global level and to develop tailored & approach throughout our BUs differentiating solutions Create for each market, a more comprehensive Global answers Close internal offer to our customers provided coordination by capitalizing to guarantee level Strengthen on our global footprint of services globally our relationship with key customers Foster water & waste Significant Build innovative cross-selling performance integrated contribution solutions and cross-selling that can be scaled opportunities over the market 87 2017 Education Day - December 13 th , 2017
An enhanced global KAM structure to drive innovative offering EXECUTIVE SPONSORS 22 Global Key Accounts Chemical Food & Pulp Mining & GLOBAL KA Oil & Gas Power Construction & Pharma. Beverage & Paper Metallurgy Group Level Marketing & Commercial Support 7 Regional KA led by R&R Europe REGIONAL KA Activity Level 13 Regional KA led by WTS Local & National accounts led by BUs NATIONAL KA Experts support 88 2017 Education Day - December 13 th , 2017
Unlocking the potential of our presence in all key industrial markets Before integration After integration WATER ~ €2.0bn WATER ~ €0.5bn Chemical & Chemical & WASTE ~ €1.5bn WASTE ~ €1.5bn Pharmaceutical Pharmaceutical Power Power Construction Construction Total Total Oil & Gas revenue revenue € 1.9bn €3.5bn Oil & Gas Food & Beverage Mining & Metallurgy Mining & Metallurgy Food & Beverage Pulp & Paper Pulp & Paper 89 2017 Education Day - December 13 th , 2017
Case study: seize new opportunities with a large pulp & paper customer KEY ENVIRONMENTAL CHALLENGES Zero 100% residual Fiber optimization waste Sustainable Water energy sufficiency neutral plant SUEZ solutions A fully integrated Supplying paper for recycling with adapted quality company positioned on the whole recycling Recovering fiber along production process paper value chain, Minimizing waste production with activities Full recycling of all valuable waste streams in plastics packaging. Securing the supply of high quality water and reuse water 114 sites in 8 European countries, Securing water discharge with global effluent management 8,064 employees Supplying green fuels Optimizing energy recovery from your effluent 90 2017 Education Day - December 13 th , 2017
WATER TECHNOLOGIES & SOLUTIONS: AN UNPARALLELED EXPERTISE ENHANCING SUEZ’ VALUE CREATION CHRISTOPHE CROS SUEZ Chief Financial Officer
Transaction structure set to preserve SUEZ financial flexibility Transaction structure Key financing terms €680m equity provided by CDPQ €750m capital increase in May 2017 WTS 70% 30% €600m hybrid bond in April 2017 at 2,875% WATER €1,200m senior unsecured bond in March 2017: Industrial Solutions - €500m maturing in 2025 at 1.0% - €700m maturing in 2029 at 1.5% A strategic acquisition financed via a well balanced structure which: Preserves SUEZ strong investment grade profile (rating A3 confirmed Moody's) Maintains the Group’s financial flexibility to support development ambitions 92 2017 Education Day - December 13 th , 2017
Overview of 2016 pro-forma figures for WTS 2016 revenue (1) ($bn) 2016 EBITDA (1) ($m) 2.7 3,0 3.0 0.5 8 281 300 273 2.1 2,0 2.0 200 1,0 1.0 100 0,0 0.0 0 GE Water SUEZ IS WTS GE Water SUEZ IS WTS (1) Based on unaudited pro forma, combining GE Water and SUEZ Industrial Solutions; including best estimates of US GAAP conversion into IFRS 93 2017 Education Day - December 13 th , 2017
Key 2016 unaudited pro forma indicators (1) Revenue EBITDA Others Others -4% Water Technologies Water Technologies 1% & Solutions & Solutions 9% Water Europe 14% Water Europe 27% 42% €2.90bn €17.3bn 28% 23% International International Recycling & 25% Recycling & 35% Recovery Europe Recovery Europe EBIT CAPEX Others Others Water Technologies -10% 1% Water Technologies & Solutions & Solutions 11% Water Europe Water Europe 11% 30% 39% €1.44bn €0.80bn 32% International International 39% 21% Recycling & 26% Recycling & Recovery Europe Recovery Europe (1) Based on unaudited pro forma, combining GE Water and SUEZ Industrial Solutions; including best estimates of US GAAP conversion into IFRS 94 2017 Education Day - December 13 th , 2017
WTS: already fully integrated to the Group and ready to deliver synergies Management teams already Brand transition in place, leveraging on both from GE Water to GE and Suez talents WT&S well ongoing GE WATER Joint go-to-market already Functional processes in motion, leveraging and systems integration INTEGRATION GE Water expertise on track MILESTONES ACHIEVED 95 2017 Education Day - December 13 th , 2017
Confirmed revenue and cost synergies Sources of synergies Run-rate identified Significant revenue synergies from cross-selling industrial water €200m of revenues p.a., activities leveraging on SUEZ representing more than €25m Revenue synergies geographical footprint EBITDA contribution by 2022 Additional cross-selling opportunities to be derived from waste activities (1) Manufacturing €65m of EBITDA p.a. by 2022 Engineering Cost synergies of which 80% by 2020 Service operations Purchasing SG&A €65m over 2017 -19 Implementation costs Synergies to contribute €90m to EBITDA by 2022 (1) Not factored in synergy figures 96 2017 Education Day - December 13 th , 2017
Full benefit of cost synergies by end 2022 COST SYNERGIES DELIVERY TIMELINE 100% 80% of target c. 5% of target c. 25-30% of target of €65m target Q4 2017 2018 2020 2022 Full benefit of costs & revenue synergies realized by 2022 c. 80% of cost synergies to be generated by 2020 COST SYNERGIES IMPLEMENTATION AREAS Purchasing SG&A Service operations Manufacturing Engineering • Systematic SUEZ • Function by • Best in class global • Combination • Best in class global volume consolidation function blueprint mobile and field of manufacturing projects engineering towards good service sites of CMS network • Accelerate product practice • Align products • Leverage management / Design to • Leverage Group Costs initiatives & portfolio & supply manufacturing leverage across entire scale chain excellence portfolio 97 2017 Education Day - December 13 th , 2017
Key early wins support mid-term targets Amount Status Sourcing Categories reviews ongoing $5m p.a. Achieved Supply chain Sites restructuring c. $1m p.a. Achieved (e.g. joint offices in China and South East Asia) Manufacturing - capacity sharing & insourcing opportunities (Canada) c. $1m p.a. Achieved Service operations Mobile assets managed as single pool, leading to increased utilization Achieved & optimized investments Optimize number of sites in ES c. $5m In-progress 98 2017 Education Day - December 13 th , 2017
Confirmation of mid-term guidance for WTS Reach >$3.1bn revenue by 2020 Expected mid-single Topline growth Revenue synergies phasing included digit revenue growth in the top line growth EBITDA to grow EBITDA margin EBITDA to improve gradually faster than revenue Attractive Cash conversion cash conversion Low capital intensity profile (>70%) 99 2017 Education Day - December 13 th , 2017
Confirmation of value creation objectives for the Group Double-digit accretion based on run-rate cost synergies EPS EPS accretion in 2018 (1) ROCE WTS ROCE above SUEZ WACC in 2020 FCF Positive FCF as soon as 2018 (1) (1) Excluding integration costs 100 2017 Education Day - December 13 th , 2017
Compelling valuation confirmed by peers multiples Acquisition multiples Peers multiples EV/EBITDA FY+1 (2016) Today (2017e) 20 Synergies 15 15 10 10 12.5x 17.0x 5 16.0x 16.0x 10.0x 5 9.0x 0 0 2016 EBITDA 2016 EBITDA + cost Xylem Ecolab Kurita Evoqua synergies EV/Op Cash flow FY+1 (2016) Today (2017e) 25 20 Synergies 20 15 15 10 21.9x 22.1x 21.5x 10 17.4x 18.1x 5 12.8x 5 0 0 2016 Op CF 2016 Op CF + cost Xylem Ecolab Kurita Evoqua synergies 101 2017 Education Day - December 13 th , 2017
2018: dedicated to the implementation of the value capture program (1) WTS contribution in Q4 2017: Revenue: $550-600m EBIT: > $50m Full-year 2017: Transaction costs of €40m , below EBIT WTS contribution in 2018: Revenue: c. $2,800m (+3-4% gross variation), supported by 4% growth in orders in 2017 EBITDA: c. $290m, including $20m of transitory costs EBIT: c. $200m, including $20m of transitory costs (2) c. $80m of integration costs booked below EBIT (1) Combination of GE Water and SUEZ Industrial Solutions, including best estimates of US GAAP conversion into IFRS (2) Excluding purchase price allocation, to be set by the end of H1 2018 102 2017 Education Day - December 13 th , 2017
WTS: a unique platform to boost value creation WTS, a new business unit to enhance growth and financial profile of the Group 1 Confirmation of attractive mid-term guidance (revenue, margin, cash) 2 WTS already fully integrated to the Group and ready to deliver 3 Significant revenue and cost synergies confirmed 4 5 Compelling valuation confirmed by further increase in sector multiples Strong value creation for SUEZ shareholders at EPS, 6 ROCE and FCF level 103 2017 Education Day - December 13 th , 2017
ACCELERATING OUR TRANSFORMATION JEAN-LOUIS CHAUSSADE CEO of SUEZ
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