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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