Veolia Environnement Sa · EURONEXT:VIE
Veolia Environnement Sa — FY2023 Earnings Presentation
56 slides from Veolia Environnement Sa's earnings presentation, Feb 29, 2024
Slide 1: 2023 Results
2023 RESULTS February 29, 2024 Estelle Brachlianoff, CEO Claude Laruelle, CFO
Slide 2: Agenda
AGENDA 1. 2023 highlights 2. Detailed 2023 financial performance 3. Appendices
Slide 3: Very strong 2023 results, ahead of guidance
Very strong 2023 results, ahead of guidance Revenue €45 351M +9%(1) and +4.4%(1) Strictly Very strong excl. energy prices €389M efficiency gains achieved, managed 2023 results: EBITDA €6 543M, +7.8%(1) above of the year’s target of €350M Current EBIT(2) €3 346M, +13.7%(1) Group ahead of guidance Cur
Slide 4: Strong 2023 results, ahead of guidance
Strong 2023 results, ahead of guidance Solid businesses, agility and operational excellence drive profit growth In €M 2022 2023 Var. vs. 2022 Revenue 42 885 45 351 +9%(1)/4.4%(1) excl. energy price EBITDA 6 196 6 543 +7.8%(1) Current EBIT 3 062 3 346 +13.7%(1) Current net income 1 162 1 335 +14.9% S
Slide 5: Performance Driven By Strong Foundations, Agility And Operational Excellence
Performance Driven By Strong Foundations, Agility And Operational Excellence A balanced portfolio of businesses A strictly managed Group: by geography and by activity. Outstanding track record in operational efficiencies, complemented by merger synergies A powerful growth platform Impact 2023 target
Slide 6: A balanced portfolio of businesses by geography and activity
A balanced portfolio of businesses by geography and by activity. > #1 Worldwide France Water services 21% > #1 Worldwide Water Technologies 41% Water 32% Waste > #1 in Europe Circular Economy Rest of the €45.4bn World €45.4bn > #1 Worldwide Hazardous waste 37% Europe of which $5bn in the US 42% excl
Slide 7: A powerful growth platform: Hazardous Waste in the US
A powerful growth platform Depollution: a very strong year for Hazardous Waste in the US Revenues up 7.1%(1) to €1.3bn and record EBITDA of €211M, up 40%(1) Strong increase in profitability with high demand, assets operating at full capacity, enabling selectivity in the mix whilst price increase. Su
Slide 8: A powerful growth platform: Water Technologies
A powerful growth platform Resource regeneration: A record year for Water Technologies Revenues up 12.1%(1) to €4 707M and EBITDA up 17%(1) to €534M Growth in all activities: products, projects, services and chemicals Record bookings +13%(2) to €5 349M, including big wins both in VWT and VWTS ➔ Mirf
Slide 9: A powerful growth platform: Local Decarbonizing Energy
A powerful growth platform Decarbonization: An outstanding year for Local Decarbonizing Energy Revenues up 19.9%(1) to €12 260M and EBITDA up 35.3%(1) to €1 497M District Heating networks growth boosted by new decarbonizing local energy services ➔ Energy costs are passed through into tariffs with la
Slide 10: A resilient set of business
A resilient set of business 85% macro immune, fully protected against inflation Strong quarterly EBITDA growth Pricing will continue despite flat waste volumes since Sept. 2022 to fuel EBITDA in 2024 ➔ Indexed revenue base (70% of total) ✓ Municipal Water: e.g.: Spain (Agbar): price indexation of +1
Slide 11: Operational excellence: efficiency ahead of target
Operational excellence: efficiency ahead of target Efficiency: €389M delivered in 2023, above the €350M annual objective 9.7% Digital represents more than 10% of operational efficiency gains in 2023 19.2% Usage of Automated 71.1% Intelligence already in place across our value chain Providing analysi
Slide 12: Cost synergies: ahead of target
Cost synergies: ahead of target €168M delivered in 2023 and €315M cumulated since Day 1 merger with Suez Main contributing areas: Australia, North America, HQ, €M€M Annual Water Technologies target 24.7% 28.1% 47.2% Operational efficiency Procurement SG&A Confirmed €500m cumulated 2023 Synergies spl
Slide 13: Impact 2023 targets fully delivered
Impact 2023 targets fully delivered Despite a fast changing environment Agility & resilience: key success factor of Impact 2023 strategic program // CMD 2020: Impact 2023 Covid-19 crisis Offer on Suez Day 1: Suez War in Ukraine War in Middle East February March 2020 August January February 2022 2023
Slide 14: Impact 2023 targets fully delivered
Impact 2023 targets fully delivered > 15 MT CO2e erased (scope 4) > €500m+ invested in coal exit in Europe > 320 Mm3 Water saved thanks to drinking water systems performance >75% > Net promoter score 53 > Hazardous waste revenue growth, from €2.5bn in 2019 to €4.2bn in 2023 > 89% employees engagemen
Slide 15: Impact 2023 financial targets fully delivered
Impact 2023 financial targets fully delivered Capital Increase Acquisition of Suez Takeover shares from Engie Closing Current Net Income Net Financial Debt /EBITDA Covid-19 Suez Integration Current net income X2 in 5 years Leverage trajectory ahead of target: 2,7x end of 2023 2 years after Suez acqu
Slide 16: Impact 2023 Financial Targets Fully Delivered
Impact 2023 Financial Targets Fully Delivered ROCE after tax & WACC Euro (€) Covid Suez ROCE after tax WACC Euro * ROCE before 2019 restated to account for IFRS 16 impact 16
Slide 17: An ambitious 2024 guidance
An ambitious 2024 guidance Agenda 2024 Revenue Continued organic solid growth (1)(2) 18 April 2024: Deep dive USA (New York & Houston) EBITDA +5% to +6% organic growth(1) Autumn 2024: Deep dive Water Technology and Innovation Efficiency gains >€350m Cumulated synergies >€400m 2022-2024 Current Net i
Slide 18: 2023 Financial & Operational Performance
2023 FINANCIAL & OPERATIONAL PERFORMANCE Claude Laruelle CFO
Slide 19: Strong 2023 results, ahead of guidance
Strong 2023 results, ahead of guidance Solid businesses, agility and operational excellence drive profit growth Var. vs. 2022 at constant In €M 2022 2023 scope and FX Revenue 42 885 45 351 +9.0% EBITDA 6 196 6 543 +7.8% Current EBIT(1) 3 062 3 346 +13.7% Current Net income group share(1) 1 162 1 335
Slide 20: A strong Q4
A strong Q4 Steady revenue growth excl. energy prices and strong operating leverage Revenue growth at constant scope Q1 Q2 Q3 Q4 Var 12M and FX vs. 2022 Water +9.9% +7.1% +5.0% +8.4% +7.5% Waste +3.2% +3.3% +2.8% +4.3% +3.4% Energy +53.9% +23.8% +4.2% +0.5% +19.9% TOTAL +19.9% +8.8% +4.0% +4.7% +9.0
Slide 21: 2023 Revenue of €45 351m, up +9.0% organic
2023 Revenue of €45 351m, up +9.0% organic and +4.4% Excluding energy prices Revenue Evolution by Region vs 2022 % at constant ➔ Water Technologies: +12.1%: record commercial wins scope and FX ✓ Growth driven by Technology, services and Chemicals ✓ Bookings up +13% to €5 349M +12.1% ➔ Rest of the Wo
Slide 22: 2023 EBITDA of €6 543m, up +7.8% organic
2023 EBITDA of €6 543m, up +7.8% organic EBITDA Evolution by Region vs 2022 % at constant scope and FX ➔ Water Technologies: EBITDA up +17.0% to €534M €M Strong performance in all activities: projects, chemicals, services +17.0% ➔ Rest of the World: EBITDA up +7.1% to €1 925M ✓ Driven notably by pri
Slide 23: Water revenue of €18 409m, up 7.5%
Water revenue of €18 409m, up 7.5%, driven by tariff indexations and technologies Revenue variation vs. 2022 2023 Key countries for M€ +7.5%(1) Water Operations Volumes /Commerce/Works +3.3% France 29% Spain 18% Weather -0.4% USA 15% Latam 11% Price effect +4.4% Czech Republic 7% Other +0.2% Growth
Slide 24: Waste revenue of €14 683m, up 3.4%
Waste revenue of €14 683m, up 3.4%, driven by tariff indexations and resilient volumes M€ +3.4%(1) Variation vs. 2022 2023 Key countries for Solid Waste Volumes -0.3% France 30% Commerce/Works +0.5% UK 21% Germany 13% Price increases +5.2% Australia 13% Recycled materials prices -2.5% Energy price i
Slide 25: Energy revenue of €12 260m, up 19.9%
Energy revenue of €12 260m(1), up 19.9%, driven by energy prices Variation vs. 2022 2023 +19.9%(1) Key countries M€ Volumes / commerce / works +1.6% District Heating Central Europe : 93% Weather -1.5% China : 4% Energy price increases +18.5% Key countries B&I Other +1.3% Energy Services Italy : 21%
Slide 26: Organic revenue growth of +9.0% vs. 2022
Organic revenue growth of +9.0% vs. 2022 Underlying revenue growth of 4.4% excluding energy prices Evolution vs 2022 In M€ Organic Revenue growth: +9.0% ▪ Forex: -€1 187M ▪ Scope: -€217M Divestment of Suez waste assets in the UK offset by 17 more days of consolidation in January and Lydec ▪ Commerce
Slide 27: Organic EBITDA growth of +7.8% vs. 2022
Organic EBITDA growth of +7.8% vs. 2022 Fueled by pricing, commerce and operational excellence Evolution vs 2022 In M€ Organic EBITDA growth: +7.8% ➔ Forex: -€133M ➔ Scope: -€4M Divestment of Suez waste assets in the UK offset by 17 more days of consolidation in January and Lydec ➔ Commerce / Volume
Slide 28: Current EBIT of €3 346m up 13.7%
Current EBIT(1) of €3 346m up 13.7% at constant scope and forex Variation at In €M 2022 2023 constant scope and FX EBITDA 6 196 6 543 +7.8% Renewal expenses -303 -303 (1) Amortizations including OFA repayment -3 025 -3 060 Industrial capital gains net of provisions and asset +68 +43 impairment and o
Slide 29: Current Net Income of €1 335m up +14.9% vs. 2022
Current Net Income(1) of €1 335m up +14.9% vs. 2022 Variation at In €M 2022 2023 constant scope and FX Current EBIT (1) 3 062 3 346 +13.7% Cost of net financial debt (1) -707 -626 Other financial income and expense -386 -350 Net financial capital gains(3) +70 +11 Income tax expense -514 -599 Non-con
Slide 30: Net Income Group share of €937m, up +31% vs. 2022
Net Income Group share of €937m, up +31% vs. 2022 In €M 2022 2023 Variation Current net income – Group share 1 162(1) 1 335 (1) +14.9% Suez acquisition and integration costs -285 -105 Restructuring charges -115 -76 Non current impairment (incl. GW) and other charges -275 -223 Non current capital gai
Slide 31: Strong FCF generation in 2023
Strong FCF generation in 2023 Lead to decrease of net financial debt of €235M to €17.9bn Strong FCF generation in 2023 In €M €3.7bn €3.1bn ➔ Improvement of Net FCF from €1 032M to €1 143M, despite higher capex, thanks to increased EBITDA, improvement of WCR, lower restructuring and Suez acquisition
Slide 32: Net financial debt of 17 903M
Net financial debt of 17 903M(1) Leverage ratio of 2.74 times at 31/12/2023 In €M Net FCF +€1 143M (1) Excluding PPA (2) including Suez earn out for +€284M 32 (3) including hybrid impact for +€198M
Slide 33: An ambitious 2024 guidance
An ambitious 2024 guidance Agenda 2024 Revenue Continued organic solid growth(1)(2) 18 April 2024: Deep dive USA (New York) EBITDA +5% to +6% organic growth(1) Autumn 2024: Deep dive Water Technology and Innovation Efficiency gains >€350m Cumulated synergies >€400m 2022-2024 Current Net income(3) >€
Slide 34: Appendices
APPENDICES
Slide 35: Impact 2023 ESG targets fully achieved (1/2)
APPENDIX 1 Impact 2023 ESG targets fully achieved (1/2) Dimension Objective KPI 2019 2023 2023 Target Customer and consumer satisfaction NPS 53 with 82% of >30 with 75% of the Net Promoter Score NA SDG 8 revenue covered revenue covered Commercial Development of innovative solutions # innovations inc
Slide 36: Impact 2023 ESG targets fully achieved (2/2)
APPENDIX 1 Impact 2023 ESG targets fully achieved (2/2) Dimension Objective KPI 2019 2023 2023 Target Employee commitment Commitment rate of employees measured through an independent survey 84 % 89% Above 80 % SDG 8 Workplace Safety SDG 8 Lost time injury frequency rate 8.12 4.95 <5 Human Employee t
Slide 37: Impact 2023 financial targets fully delivered
APPENDIX 2 Impact 2023 financial targets fully delivered All financial objectives met Impact 2023 targets Performance 2020-2023 Continued solid revenue Revenue CAGR above 5% excl. Suez organic growth (2-3% p.a.) Efficiency gains: Savings of €1.7 billion cumulated €1bn€ 2020-2023 2023 EBITDA between
Slide 38: 2019-2023: Years of profitable growth
APPENDIX 3 2019-2023: 4 Years of profitable growth Revenue (€bn) EBITDA (€bn) ROCE after tax (%) Net Financial Debt(1) (€bn) CAGR CAGR +20.4 % + 1.9 pt +21.6 % Current EBIT (€bn) Capital employed (€bn) Current net income (€bn) Cumulated cost savings (€m) CAGR CAGR +51.6 % + 39.1% (1) 38 Including hy
Slide 39: Leading ESG rankings in 2023
APPENDIX 4 Leading ESG rankings in 2023 GENERAL ESG ✓ S&P Global: N°1 in the Multi ✓ Moody’s Analytics: ✓ ISS-ESG: Prime and Water Utilities industry*, Leader in Waste & Water and 1st decile selection in the DJSI World and utilities industry with a (B rating) in the Multi Europe, “Top 1%” Utilities
Slide 40: Green taxonomy: 40% activities already aligned
APPENDIX 5 Green taxonomy: 40% activities already aligned Increase of the eligibility up to nearly 58% in 2023, above what was anticipated 1 year ago ➔ 57,8% activities eligible in 2023, i.e. recognized as very contributive to the environment* 2023 ➔ vs 54,9% anticipated in 2022 consolidated - 47,4%
Slide 41: Net Zero Strategy
APPENDIX 6 Net Zero Strategy “With this Climate Report, I hope to be able to show all our stakeholders, in particular the economic players – companies and financial institutions alike – that a realistic and ambitious climate strategy is possible. We offer a simple equation: 50% fewer Scopes 1 and 2
Slide 42: Detailed Revenue & EBITDA by business
APPENDIX 7 Detailed Revenue & EBITDA by business 2023 - in m€ Revenue EBITDA Municipal non regulated (*) 11,259 1,873 Municipal regulated 1,367 665 Water Technologies 4,707 534 Construction 1,075 51 Total Water excluding BVAG 18,409 3,122 Solid waste and industrial services 10,533 1,307 Hazardous an
Slide 43: Analysis by geography: France and Hazardous Waste Europe
APPENDIX 8: Analysis by geography France and Hazardous Waste Europe €M Δ at constant Dec 2022 Dec 2023 scope and FX Revenue of which 9 666 9 726 +1.4% Water France 3 000 3 006 +1.0% Waste France 2 916 2 909 +0.7% Hazardous Waste Europe 2 128 2 125 -0.8% Construction (SADE) 1 028 1 075 +5.2% Other 59
Slide 44: Analysis by geography: Rest of Europe
APPENDIX 8: Analysis by geography Rest of Europe: Strong growth €M Δ at constant scope Dec 2022 Dec 2023 and FX Revenue of which 17 850 19 000 +11.6% Central and Eastern 9 401 11 360 +19.1% Europe Northern Europe 4 900 4 043 +5.2% Southern Europe 3 550 3 597 +0.5% EBITDA 2 373 2 599 +13.7% Comments
Slide 45: Analysis by geography: Rest of the world
APPENDIX 8: Analysis by geography Rest of the world: continued solid growth €M Δ at constant Dec 2022 Dec 2023 scope and FX Revenue of which 11 196 11 907 +10.0% Asia - Pacific 4 579 4 515 +5.4% o/w Asia 2 587 2 540 +4.6% o/w Pacific 1 992 1 975 +6.4% Latin America 1 716 1 832 +30.3% North America 3
Slide 46: Analysis by geography: Water Technologies
APPENDIX 8: Analysis by geography Water Technologies: continued solid growth €M Δ at constant scope Dec 2022 Dec 2023 and FX Revenues o/w 4 561 4 707 +12.1% VWT 1 612 1 599 +7.1% WTS 2 948 3 108 +14.8% EBITDA 496 534 +17.0% Comments Water Technologies: record bookings in 2023: €5 349M +13% - Very st
Slide 47: Waste – breakdown waste revenue by activity
APPENDIX 9 Waste – breakdown waste revenue by activity 2023 Waste Revenue €14 683M 47
Slide 48: Forex
APPENDIX 10 FOREX December 2023 December 2022 Variance 1€ = xxx foreign currency closing rate average rate closing rate average rate closing rate % | average rate % US Dollar 411 1,08 1,07 1,05 4% 3% Pound Sterling 0,87 0,87 0,89 0,85 -2% 2% Australian Dollar 1,63 1,63 257 1,52 4% 7% Chinese Renminb
Slide 49: Net financing rate
APPENDIX 11 In €M 2023 2022 Net financing rate Average gross debt (1) 26 449 27 052 ➔ Cost of net financial debt of €626M Gross cost of borrowing 3.55% 2.78% Average cash balance 9 717 9 512 ➔ €30M of favorable one off including a non recurring income (+€17M) generated by the extension at the Intere
Slide 50: Cost of debt stable at constant debt
APPENDIX 12 Cost of debt stable at constant debt Cost of debt under control Solid investment grade rating Smooth debt repayment schedule: Moody’s: €750M reimbursed on Jan.15 and €461M to be P-2/ Baa1, stable outlook repaid in July 2024 Standard & Poor’s: €5.9bn net cash position at Dec 2023 A-2 / BB
Slide 51: Debt management
APPENDIX 13 Debt management NFD after hedges at December 31st, 2023 ➔ Repayment in October 2023 of €376M bearing a coupon of 2.75%. Fixed rate: 87% ➔ Repayment in October 2023 of €600M bearing a Variabilized rate: 7% coupon of 0.314%. Inflated rate: 6% ➔ Repayment in June 2023 of CNY1500M bearing a
Slide 52: Combined debt profile
APPENDIX 14 Combined debt profile (at December 31, 2023) Rating • Moody’s: P-2/ Baa1 stable outlook • Standard & Poor’s: A-2 / BBB stable outlook 52
Slide 53: Net liquidity
APPENDIX 15 Net liquidity December 2023 December 2022 Syndicated credit lines 4 500.0 5 500.0 Bilateral credit lines 801.8 910.3 Lines of credit - Cash and cash equivalents 8 344.4 8 072.3 Total Veolia 13 646.2 14 482.6 Subsidiaries Bilateral credit lines 688.7 - Cash and cash equivalents(1) 2 244.1
Slide 54: Statement of cash flows
APPENDIX 16 In €M Dec 2023 Dec 2022 Statement of cash flows EBITDA(1) 6 543 6 197 Net industrial investments -3 730 -3 089 (1) Including principal payments on operating WCR variation +195 +48 financial assets Dividends received 161 129 (2) In 2023: dividends paid to shareholders Renewal expenses -30
Slide 55: Consolidated statement of financial position
APPENDIX 17 Consolidated statement of financial position December December in €M 2022 2023 Intangible Assets 20 071 20 056 Property, Plant & Equipment 16 569 17 134 Other non-current assets 6 757 6 292 Operating financial assets (current and non-current) 1 377 1 393 Cash and cash equivalents 9 012 8
Slide 56: Contacts
CONTACTS Analyst & Investor Relations Media Relations Ronald Wasylec Laurent Obadia Deputy CFO, Senior Vice President, Telephone: +33 1 85 57 89 43 Investor Relations e-mail: laurent.obadia.@veolia.com Telephone: +33 1 85 57 84 76 e-mail: ronald.wasylec@veolia.com Ariane de Lamaze Evgeniya Mazalova