Veolia Environnement, the world's biggest listed water supplier, missed analysts forecasts with a 11.1 percent rise in 2007 recurring operating profit on Friday, sending its shares nearly 10 percent lower.
The French firm said it expected revenue, cash flow from operations and net income to rise by at least 10 percent in 2008 despite a "challenging economic environment" and proposed a dividend of 1.21 euros per share, up 15 percent.
Senior Executive Vice President Jerome Contamine told reporters that he did not expect a significant impact from a recession in the United States.
"So far we have not seen any impact of the downturn of the U.S. economy on our operations.... We don't expect a significant impact from any downturn," Contamine said on a conference call.
He also said Veolia had limited exposure to the dollar's record weakness.
Veolia shares were down 9.9 percent at 49.50 euros, underperforming a European utilities sector down only 1.6 percent, amid disappointment over the group's headline numbers missing forecasts.
"Veolia reported full-year results which were quite sobering and don't generate a new trigger which would justify a higher valuation," WestLB analyst Sebastian Zank said in a note.
Its 2007 recurring operating profit of 2.469 billion euros ($3.78 billion) rose from 2.222 billion a year earlier while recurring net profit jumped 22.5 percent to 933.2 million euros.
But the numbers were below the average forecasts of analysts polled by Reuters Estimates, who had estimated operating profit at 2.536 billion euros and net income at 960 million euros.
The company last month reported full-year sales up 14 percent at 32.63 billion euros.
Veolia has said it would invest 15 to 20 billion euros between 2007 and 2009 on internal projects and acquisitions.
Contamine said Veolia would spend at least 5 billion euros this year, including 4 billion on internal growth projects.
The waste, water and transport services group said it has no plan to take a stake in the Suez Environnement unit which Suez will spin off for its merger with Gaz de France.
"Suez Environnement is a French group we can't touch because of obvious competition reasons, and therefore we have no plan to become a financial investor in this company," Chairman and Chief Executive Henri Proglio told a news conference.
Veolia's waste management business drove earnings growth helped by the acquisition of Germany's Sulo and Cleanaway UK.
The division's recurring operating profit rose 26.4 percent at constant exchange rates to 803.5 million euros.
Water made a recurring operating profit of 1.266 billion euros, up 9.3 percent, as new contracts helped offset a fall in demand during a cooler-than-usual summer.
The smaller energy division posted recurring operating profit up 1.8 percent at 388.2 million euros. Transport made 115.1 million, up 13.9 percent.
Net debt rose to 15.1 billion euros from 14.7 billion after the acquisition of Sulo in April, Italy's TMT in May, and Thermal NorthAmerica in June.