Global regulation and strong corporate earnings

Regulatory trends: Governments set the course

Global water issues dominated discussions in August. At World Water Week 2025 (Stockholm, August 24–28), experts from politics, utilities, and finance emphasized the close link between water and climate, as well as the financing of UN Sustainable Development Goal SDG6 (clean water and sanitation). In Europe, new research funding and political priorities are emerging: for example, the EU LIFE program supported several pilot projects for the remediation of PFAS- and micropollutant-contaminated water supplies. At the same time, EurEau and Water Europe (two organizations that promote sustainable water management and innovation in Europe) continue to call for a ‘water resilience’ strategy in the face of increasing droughts, following Commissioner Roswall’s call for an integrated water and climate policy. In addition, the EU has announced new funding for innovations in reuse and sensor technology to support the planned water resilience strategy.

In the US, measures taken by the Environmental Protection Agency (EPA) reflected growing concerns about pollutants. The EPA announced plans to extend the deadlines for compliance with PFOA/PFOS drinking water regulations and to expand the “PFAS OUT” campaign to smaller suppliers. The agency also allocated approximately USD 1 billion in grants for PFAS reduction and launched new cybersecurity guidelines for water utilities. Other topics in focus included the “cross-border wastewater crisis” between the US and Mexico, which led to a bilateral agreement on the construction of a wastewater treatment plant near Tijuana.

In addition, there were important regulatory signals from global networks. UN-Water continues to advocate for the role of water in climate protection, and international bodies (World Water Council, WaterAid) emphasized the investment needed to achieve SDG6.

Focus on company results

Recent reports indicate generally healthy demand in the water sector:

• Watts Water(plumbing systems) achieved record sales of USD 644 million in the second quarter (+8% year-on-year), with operating income up 21% and earnings per share up 23%. Management raised its full-year forecast, citing price increases and strong order intake in the US, which was partially offset by weak performance in Europe. The company also completed its acquisition of EasyWater (water filtration systems) in June, strengthening its water treatment portfolio.
• Stantec (Engineering/Environmental Services) generated revenue of CAD 1.6 billion (+6.9% year-on-year), driven by solid growth in all regions. The water business in particular grew organically by 12.4%, outperforming other business segments. Stantec’s CEO pointed to diversified demand (water, energy/infrastructure) and also raised the forecast for 2025.
• Advanced Drainage Systems (ADS) (Rainwater/drainage solutions) achieved mixed results: Total sales declined slightly, but the Infiltrator segment (decentralized wastewater treatment) grew by +10.6% year-on-year, reflecting strong demand for modular solutions. ADS’s adjusted EBITDA margin remained stable at 31.4%. Management confirmed its forecast for 2025 against the backdrop of ongoing infrastructure spending.
• York Water (utility company) recorded moderate growth. Revenue rose in the first half of the year, but profits declined due to higher operating and maintenance costs. York plans to invest USD 23.8 million in water infrastructure (pipelines, new treatment plants) in 2025.
• Mueller Water (manufacturer of fittings/meters) raised its sales forecast for 2025, citing healthy pricing and lower supply chain costs.

Results in Europe were stable:

• Wienerberger (brick and drainage manufacturer) saw its revenue rise by 6% to EUR 2.3 million, while EBITDA declined slightly. The forecast for the year as a whole was maintained (EBITDA of EUR 800 million).
• The GEA Group (German process/filtration technology) recorded a 1.5% increase in orders and organic sales growth of 1.5% in the second quarter, with EBITDA up 8% (EUR 217 million, margin 16.5%), leading to an upward revision of its full-year forecast.
• Geberit (sanitary systems) reported sales of CHF 1.67 billion (+1.7%) for the first half of the year. EBIT margins remained stable, apart from a one-off charge due to the closure of a plant. Management confirmed its forecast for 2025 with sales growth of 4% and an EBITDA margin of 29%.

The results of Japanese industrial companies were more mixed:

• Kuraray (activated carbon) reported weaker-than-expected sales and profits due to currency effects and declining demand.
• Toray missed expectations due to one-off factors (delayed deliveries). The stock fell by almost 10%, which we considered an overreaction and used to expand our position.
• Ebara (pumps/water treatment systems) bucked the trend with record orders and sales, driven by its Environmental Solutions division.

In Brazil, Sabesp (water utility in São Paulo) reported solid figures due to tariff increases, higher sales volumes, and cost reductions. Within three months, the utility connected 161,000 new water/sewage connections, underscoring the rapid expansion of its network.

In summary, companies reported solid demand and disciplined cost control, particularly in the US markets. Where Europe lagged behind (e.g., Watts Europe, Geberit), companies pointed to emerging private and public infrastructure spending as compensation. There were no obvious weak points in the outlook. Most agree that investment in water infrastructure will continue, albeit with caution given rising input costs and geopolitical uncertainty.

Climate and ESG

Environmental, social, and governance issues remained a key topic. In the social sphere, high-profile philanthropic campaigns continued to focus on access to water: YouTubers MrBeast and Mark Rober supported WaterAid’s #TeamWater campaign, which aims to raise $40 million by the end of the month to provide clean water to 2 million people in need.

The importance of governance and regulatory oversight was underscored by the Thames Water case in the UK (review of special administration), which heightened investor interest in the financial health and sustainability practices of utilities. Meanwhile, companies continued to pursue projects aligned with ESG goals. For example, ADS is expanding plastic recycling with a new facility in Georgia, while Suzano, the world’s largest paper manufacturer, has partnered with Veolia to introduce advanced water treatment at its new pulp mill in Brazil to improve efficiency, sustainability, and environmental responsibility. Meanwhile, Sabesp reported that its investments and privatization efforts have provided an additional 1.3 million people with water and 1.4 million people with wastewater services.

In this context, investors should consider both the growth potential of “green” water technologies (PFAS remediation, reuse, recycled water) and the political risks (strict new standards, such as the PFAS Regulation or UK supply regulations) that influence corporate strategies.

Stay flexible

Geopolitical uncertainties, rumors surrounding central banks, potential interest rate cuts, and tariff conflicts continue to cause unrest in the markets, so we remain disciplined and selective. September can be a difficult month for the stock markets. We are therefore keeping some powder dry in order to take advantage of opportunities that may arise from fears. Our focus remains on fundamentals, true to our mantra: in the water sector, we must think long term but act cyclically.

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