The ratings on United Waterworks reflect its relationship with ultimate parent, French company Suez S.A. The ratings on Suez reflect the strengths of its diversified business profile and recurring utility cash flows, as well as the top-tier European market positions of its European energy (50%-owned Belgian Electrabel and Distrigaz/Fluxys ), water (Ondeo), and waste (Sita) activities. A refocused investment strategy limiting higher-risk international activities and improved credit metrics further support the ratings. These strengths outweigh Suez's weaknesses, including its higher-risk, international power-generation operations and lower-margin service and engineering activities, and shareholder-focused policy. Suez's 2004 preliminary results have exceeded Standard&Poor's expectations, with organic EBITDA growth reaching an impressive 10.5%, in part thanks to substantial cost reductions. Together with reduced
