High degree of diversity among the parent's four major activities: European energy, international energy, water, and waste services. Suez's strategic plan for 2003-2004 aimed at rapid improvement in credit quality, including targeted debt reduction of about one-third. Resilience of cash flow generation in water and waste activities, together with relatively low risk European energy utility activities. Suez's rather weak financial profile (in particular when deconsolidating Electrabel); positive free cash flow (after dividend payments and before divestments) not expected until 2005, in combination with continued high dividend pay-out levels. Degree of exposure to industrial activities and high-risk international energy projects; strategy to exit from low-risk, stable, capital-intensive and regulated activities, although decreasing exposure to emerging markets in general. The ratings on
