UPDATE 1-Veolia's target Suez says H2 revenue, profits to exceed expectations

(Adds shares, CEO comments, analyst)

PARIS, Jan 25 (Reuters) - French waste and water management firm Suez, currently fighting a takeover bid from rival Veolia, said on Monday 2020 preliminary results show sales and profitability for the second half will exceed previous outlook.

The performance notably reflected stronger-than-expected cost savings and backed the group’s “financial trajectory to 2021 and 2022”, it said in a statement.

Chief Executive Bertrand Camus told a conference call that savings for 2020 would exceed a 275-million-euro ($335 million)goal while Suez would also unveil further asset sales in the coming weeks.

Suez now expects revenue to fall by around 1% in organic terms in the second half of 2020 against its previous view of a 2%-4% decline.

The company also forecast earnings before interest and taxes (EBIT) to be in the range of 670 million euros to 680 million euros, higher than its previous target range of 600 million euros to 650 million euros.

This also reflected “a strong commercial dynamic in France and internationally and the effective deployment of the group’s asset rotation policy,” Suez said in the statement.

By 0850 GMT Suez shares were up 0.2%, after rising 2% in early trade.

Jefferies analysts said this was a “strong update” and meant full year 2020 EBIT of 750 million euros, above their expectation of 700 million euros, while net debt at 9.75 billion euros was also better than their expectations of 10.2 billion euros.

Suez will announce its annual results for 2020 on Feb.25.

Suez and Veolia, its longstanding competitor and now its top investor with a 29.9% stake, have been locked for months in a bitter dispute as Suez opposes Veolia’s takeover plans.

Suez announced earlier this month that French investment fund Ardian and U.S.-based Global Infrastructure Partners (GIP) had formulated a letter of intent proposing various investment scenarios, including possibly a bid for the whole company, in an alternative to Veolia’s takeover plan.

Camus reiterated on Monday his wish to find “a friendly solution insuring a fair treatment of (all) Suez shareholders”.

He also cited “preliminary steps” towards resuming a dialogue to break the impasse over Veolia’s takeover bid.

$1 = 0.8211 euros Reporting by Benjamin Mallet, Dominique Vidalon, ; editing by Uttaresh and Emelia Sithole-Matarise