Veolia confirms 15 pct price cut in revision of major water contract for Lyon

PARIS (Thomson Financial) - Veolia Environnement confirmed it will cut the price of water supplied to greater Lyon by around 15 pct after tough negotiations for the latest 5-year revision of the long-term contract, which Veolia described as a major one.

It said the magnitude of the reduced sales has already been taken into account in the company's medium-term plan, give or take 1 mln eur, and that other factors will have to compensate for it.

Noting that prices are being renegotiated for "quite a number of contracts" that have 5-year price review clauses, it said the company aims to maintain its overall EBIT margin in the French water business "thanks to productivity and also new services." It said it is normal practice in the French market to have to "give back" some of the benefits of productivity gains when contracts are renegotiated. mjs/slj COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved.

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