Veolia Environnement: 2024 Half-Year Results
Strong Growth in Half-Year Results, Reflecting the Solidity of Veolia’s Value Creation Model and the Good Start of Its GreenUp Strategic Program
- Solid revenue growth of +4.4%(1) driven by Booster activities up +6.9%(1), while Stronghold activities are up +3.4%(1)
- Robust operational performance with a strong EBITDA increase of +5.7% (2), supported by revenue growth, operational efficiency as well as synergies ahead of annual target. Current net income up +15.2%(3)to €731m
- Continued dynamic capital allocation policy contributing to value creation while preserving a solid balance sheet, with €1bn+ of non-strategic asset divestments signed in the first half, and several targeted acquisitions in priority activities
- Objectives for 2024 and GreenUp 2024-2027 fully confirmed
-
Veolia , first company to obtain double validation by SBTi and Moody's for its climate trajectory, compatible with the 1.5°C ambition
Revenues of €22,141m with solid growth of +4.4%(1):
- Strong growth in Water (+6.4%(2)) and Waste (+6.4%(2))
- Revenue increase in Energy (+1.4%(2)(4)) with sustained high levels of profitability
- After taking into account the effect of lower energy prices, total Group revenues are slightly up +0.4%(2)
EBITDA of €3,266m, a strong organic growth of +5.7%(2), within the guidance range of +5% to +6%(2):
- €194m in efficiency gains, for an annual target of €350m
- €71m in synergies, ahead of annual target
Current EBIT up +6.6%(2), to €1,730m
Current Net Income - Group Share of €731m up +15.2%(3), on track with the annual target above €1.5bn, and Net Income - Group Share up +24.6%
Net financial debt well under control, with a leverage ratio expected below 3x at end 2024
Objectives for 2024 and GreenUp 2024-27 fully confirmed
(1) At constant scope and forex excluding energy prices (2) At constant scope and forex (3) At constant forex (4) Excluding energy prices and weather impact
“At mid-year,
During this first-half, we have also pursued the transformation of our portfolio of activities according to our strategic plan, by divesting non-strategic assets for a total amount of more than
We expect these positive trends to continue in the second-half, which enables us to fully confirm all our targets for the year.”
Detailed key figures at
Group consolidated revenues amounted to
Revenue growth by effect breaks down as follows:
- The currency effect was a negative €442 million (-1.9%), mainly reflecting fluctuations in Argentinian, Chilean and Czech currencies, partially offset by an improvement in the Polish currency3.
-
The perimeter effect of -
260 million euros (-1.1%) mainly includes the impact of the disposal of SADE onFebruary 29, 2024 , the acquisition ofHofmann (Germany) in the first quarter 2024, and the entry into the perimeter ofLydec (Morocco ) onJanuary 25, 2023 . -
The commodity price effect (corresponding to changes in energy and recyclate prices) amounted to
-915 million euros (-4.0%), due to lower energy prices (-917 millions euros ), mainly in Central andEastern Europe , with an almost neutral effect of recyclate prices (+2 millions euros ). -
The climate effect amounted to
-143 million euros (-0.6%), mainly in Central andEastern Europe , where energy sales were impacted by a milder winter than in 2023. -
Intrinsic growth was driven by positive commercial and price effects. The Commerce / Volumes / Works effect amounted to
+355 million euros (+1.6%), driven by a good commercial momentum, healthy water volumes, the increase in works carried out, as well as strong growth in Water Technologies activities. Favorable price effects amounted to+790 million euros (+3.5%), mainly due to tariff indexations and price increases of +5.3% in waste and +4.2% in water.
Revenues at
Compared with
Revenues in
-
Water
France sales of1,492 million euros were up +4.5% on a like-for-like basis, mainly fueled by the +4.6% positive effect of tariff indexations, minus the impact of lower volumes, down -0.5%. -
Sales of Waste
France amounted to1,482 million euros and rose by +2.0% on a like-for-like basis due to the positive effect of tariff indexation and prices increases, and despite slight volume increase while maintaining commercial selectivity. -
Special Waste Europe sales reached
1,114 million euros , up +7.1% on a like-for-like basis, mainly due to the increase in tariffs for hazardous waste treatment and sanitation maintenance activities, which offset the impact of lower oil prices. First-half volumes were broadly resilient compared with 2023.
Revenues in
-
In Central and
Eastern Europe , sales stood at5,412 million euros , down -13.3% on a like-for-like basis, heavily impacted by lower energy prices and to a lesser extent by an unfavorable climate effect (-136 millions euros ) due to a milder winter than last year. -
In Northern
Europe , revenues of2,094 million euros rose by +3.5% on a like-for-like basis. This increase was mainly attributable to sales in theUnited Kingdom , up +4.0% on a like-for-like basis, predominantly in the waste activity, which benefited from tariff indexation and an increase in volumes processed, particularly in incineration, as a result of very good plant availability. -
In
Iberia , sales stood at1,279 million euros , up +1.1% on a like-for-like basis. Water activities mainly benefited from tariff increases, although volumes were down slightly. Energy activities were impacted by the drop in prices. -
Italy generated revenues of467 million euros , down -6.7% on a like-for-like basis, mainly due to the drop in energy prices, with no impact on margin due to a parallel decrease in energy purchase costs.
Revenues in Rest of the world reached
-
Revenue stood at
945 million euros inLatin America , up +25.9% on a like-for-like basis. This was mostly supported by high waste volumes, particularly inBrazil andColombia , the effect of tariff reviews on water activities inChile , and the impact of hyperinflation inArgentina (offset by the devaluation of the Argentine peso). -
In
Africa Middle-East , revenues totaled1,102 million euros , up +4.1% on a like-for-like basis, mainly driven by the growth of energy services in theMiddle East and the increase in activity inMorocco . -
In
North America , revenues reached1,683 million euros , up +2.6% on a like-for-like basis. The Hazardous Waste activity performed strongly, boosted by price increases and strong commercial activity. The Water activity benefited from tariff increases, with higher volumes in the “regulated water” activity. -
Sales in
Asia amounted to1,202 million euros , down -1.3% on a like-for-like basis, mainly due to lower activity at hazardous waste treatment plants inChina andIndia . These effects were partially offset by strong commercial momentum in energy efficiency inHong Kong and water inJapan . -
In the Pacific region, sales of
1,025 million euros were up +6.5% on a like-for-like basis, mainly driven by tariff revisions and higher volumes of waste processed, as well as good commercial momentum in industrial maintenance.
The Water Technologies activity reported sales of
The organic growth of revenues by business compared to
-
Sales in the Water activity rose by +6.4% on a like-for-like basis to
8,798 million euros , driven by an increase in Water operations (+3.6% on a like-for-like basis) and growth in Technology and Construction (+12.6% on a like-for-like basis).-
Water Operation revenues rose by +3.6% on a like-for-like basis, to
6,236 million euros , with tariff increases across all geographies, a good level of construction activity and increasing volumes, mainly in Central andEastern Europe (+2.6%),the United States (+1.3%) andChile (+0.9%), offsetting falls inFrance (-0.5%), due to a wet spring, andSpain (-0.6%) due to drought-related restrictions. -
Technology and Construction sales rose by +12.6% on a like-for-like basis, to
2,563 million euros , driven mainly by Water Technologies.
-
Water Operation revenues rose by +3.6% on a like-for-like basis, to
-
Sales for Waste activity revenues increased by +6.4 % on a like-for-like basis, to
7,728 million euros . It benefited from favorable price revisions (+5.0%). The price of recyclate began to rise again inApril 2024 (mainly paper) and is stable overall compared with the first half of 2023. The Commerce/Volume/Works effect was positive (+1.4%), with an increase in volumes, particularly in theUnited Kingdom andAustralia , and an increase in hazardous waste activity outsideAsia . -
Revenues of Energy activity amounted to
5,615 million euros and varied by -14.4% on a like-for-like basis, owing to the drop in energy prices, impacted by the price of electricity, while heating tariffs rose. The unfavorable weather impact in the first half of 2024 accounted for -2.2% of Energy revenues due to a milder winter. Energy services sales benefited from a solid commercial activity inBelgium , theMiddle East andHong Kong . Excluding energy prices and weather impact, Energy sales were up +1.4%.
Strong EBITDA growth, to €3,266m compared with €3,162m at
The currency impact on EBITDA amounted to
The perimeter impact of
External factors negativelyimpacted EBITDA:
-
Changes in commodity prices (energy and recycled materials) had a net unfavorable impact on EBITDA of -
39 million euros (-1.2%), mainly due to lower energy prices net of lower energy purchasing costs, for -44 million euros , partially offset by an increase in recycled materials prices (+5 million euros ). -
The climate impact was -
42 million euros (-1.3%), mainly in Central andEastern Europe , affected by a milder winter than in 2023.
Intrinsic growth was driven by favorable Commerce/Volumes/Works effects, by efficiency gains generated by the Group, of which 44% have been retained, and by synergies generated following the integration of Suez.
-
The Commerce/Volumes/Works effect was favorable at
+105 million euros (+3.3%) and resulted from its positive effect on sales. -
The net efficiency gains, net of gains shared with customers, contract renegotiations and time-lag effects on passing-on of costs generated an additional
86 million euros (+2.7%) in EBITDA in first-half 2024. This represents a retention rate of 44% of the gains generated by the Group under the efficiency plan.
The gains generated by the efficiency plan contributed
Synergies generated by the integration of Suez amounted to
Current EBIT growth of +6.6% at €1,730m, at constant scope and forex
The increase in current EBIT compared with
-
a strong growth in EBITDA (
+180 million euros at constant scope and forex); -
a rise in amortization5 (including the repayment of operating financial assets) of -
68 millions euros on a like-for-like basis, mainly related to Central andEastern Europe (notablyUzbekistan ); -
the positive impact of “provisions net of capital gains on disposals, and others” of
+6 million euros at constant scope and forex); -
a decrease in the share of net income from joint ventures of -
7 million euros at constant scope and forex, due to a non recurring item in first quarter 2023.
The currency effect on current EBIT was negative by -
Current net income of €731m, sharply up +15.2% at constant forex
Current net income Group share (before PPA of -
-
The cost of net financial debt amounted to
-331 million euros compared with -312 million euros atJune 30, 2023 . This increase is mainly due to a non-recurring product in first-half 2023 and to changes in the balance of variable financial expenses and income from deposits. The Group financing rate6 was therefore 3.83%; -
Other current financial income and expenses totaled -
177 million euros compared with -120 million euros in first-half 2023 which benefited from exceptional favorable effects partially reversed during the second-half; -
Capital gains and losses on financial disposals reached
+53 million euros compared with -3 million euros and mainly included capital gains on the disposal of SADE; -
The current income tax expense reached -
321 million euros and reflected the increase in current income before tax. This represented a current income tax rate of 26.2%, versus 28.0% for the first-half 2023; -
Minority interests amounted to
-223 million euros compared with -245 million euros atJune 30, 2023 .
Net income Group Share up +24.6%
The very strong increase in net income Group share at
Well controlled net financial debt
Net free cash-flow before financial investments and dividends stood at -
The change in net free cash-flow compared to
- EBITDA growth driven by organic growth and operational and commercial efficiency gains, as well as synergies;
-
Net capital expenditure of -
1,722 million euros , which remained roughly stable compared withJune 30, 2023 (+1.6%). This includes in particular the on-going decarbonation projects in Central andEastern Europe , as well as investments in hazardous waste projects; -
The change in operating working capital of
-998 million euros , which deteriorated by -177 million euros compared toJune 30, 2023 , impacted by advances received in 2023 in connection with Water Technologies projects and projects inGermany , as well as greater disbursements than in 2023 for CO2 allowance purchases; -
The change in financial expenses of -
157 million euros compared withJune 30, 2023 , which stems mainly from a non-recurring income in first-half 2023.
Net financial debt stood at
-
net
free cash-flow for the first-half of -
284 million euro ; -
net financial
investments of -
168 million euros following the acquisition ofGroupe Hofmann GmbH and the disposal of subsidiary SADE; -
repayment of hybrid debt for -
209 million euros , including coupons; -
payment of the dividends voted by the Annual Shareholders’ Meeting of
April 25, 2024 to the amount of -895 million euros .
Net financial debt is also impacted by foreign exchange gains and losses and fair value variation adjustments of -
2024 Guidance fully confirmed
In view of the excellent results achieved in the first half 2024, guidance for 2024 is fully confirmed:
- Solid organic growth of revenue(1) (2)
- Efficiency gains above €350m complemented by additional synergies for a cumulated amount of more than €400m end 2024, in line with the €500m cumulated objective
- Organic growth(1) of EBITDA between +5% and +6%
- Current net income Group share above €1.5bn(3)
- Leverage ratio expected below 3x(3)
- Dividend growth in line with Current EPS growth
(1) at constant scope and forex / (2) excluding energy prices / (3) excluding Suez PPA
GreenUp 2024-2027 targets fully confirmed
- Solid revenue growth7
- €350m savings per year
- Over €8bn of EBITDA in 2027
- ~ 10% annual growth8 in current net income over 2023-2027
- Leverage ratio ≤ 3x
- Dividend growth in line with current EPS
- €4bn of growth investments, of which €2bn are prioritized on 3 growth boosters
- Decarbonization: 18m tons of CO2 erased in 2027 (scope 4) & emission reduction trajectory compatible with 1.5°C warming (scope 1&2)
- Regeneration: 1.5 bn m3 of fresh water saved in 2027
- Depollution: 10m tons of hazardous waste and pollutants treated in 2027
Agenda
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October 17 : Deep dive Water Technologies and Innovation inHungary -
November 7 : 2024 third quarter results publication
ABOUT
IMPORTANT DISCLAIMER
This document contains "non‐GAAP financial measures". These "non‐GAAP financial measures" might be defined differently from similar financial measures made public by other groups and should not replace GAAP financial measures prepared pursuant to IFRS standards.
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1 At constant scope and forex
2 At constant forex
3Main currency impacts: Argentine peso (-327 million euros), Chilean peso (-68 million euros), Czech koruna (-59 million euros) and Japanese yen (-35 million euros), compensated by Polish zloty (+107 million euros) and British pound (+38 million euros)
4 Main currency impacts : Argentine peso (-47 million euros), Chilean peso (-29 million euros), Czech koruna (-16 million euros), offset by Polish zloty (+14 million euros)
5Excluding Suez PPA
6 Hors impact IFRS 16.
7Excluding energy prices
8At constant exchange rates
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