Veolia Environnement Sa · EURONEXT:VIE
Veolia Environnement Sa — Q3 2023 Earnings Presentation
37 slides from Veolia Environnement Sa's earnings presentation, Nov 9, 2023
Slide 1: Q3 2023 Results
Q3 2023 RESULTS Estelle Brachlianoff, CEO Claude Laruelle, CFO November 9, 2023
Slide 2: Agenda
AGENDA 1 9M 2023 highlights 2 Detailed 9M 2023 financial performance 3 Appendices 9M 2023 2
Slide 3: Strong 9M results and solid FCF generation
STRONG 9M RESULTS AND SOLID FCF GENERATION Driven by strong operational and financial discipline Continued strong organic growth and results Confirmation of the strength of our business Revenue €33 161M up +10.7%(1) and +4.6%(1) excl. model and of our strategic choices, coping with energy prices, si
Slide 4: Key 9M financial highlights
KEY 9M FINANCIAL HIGHLIGHTS Revenue growth excl. energy prices comparable to H1 EBITDA growth at the high end of the annual guidance range Var. vs. 9M In €M 9M 2022 Scope Forex 9M 2023 2022(1) Revenue 30 713 -183 -664 33 161 +10.7%/4.6%(2) EBITDA 4 533 -23 -65 4 793 +7.7% Current EBIT 2 278 -54 -31
Slide 5: Key operational highlights
KEY OPERATIONAL HIGHLIGHTS Strong foundations and powerful growth engine Unique positioning as worldwide leader in a €2 500bn growing market of Decarbonation, Depollution, Resource Regeneration, and in the TOP 3 of our businesses in all our key countries 1. A balanced geographical mix, around 40% ou
Slide 6: A powerful growth platform: decarbonization and resource regeneration
1. A POWERFUL GROWTH PLATFORM Accelerated development of our decarbonizing solutions Decarbonization and Resource Regeneration New Waste contract in Hong Kong Coal exit plan in Europe: new biomass-RDF facility in Prerov (Czech Republic) ○ €2bn cumulated revenues over 20 years, 90MT of non recyclable
Slide 7: A powerful growth platform: energy efficiency contracts in Italy
1. A POWERFUL GROWTH PLATFORM Accelerated development of our decarbonizing solutions Decarbonization : new Energy Efficiency contracts in Italy New O&M energy efficiency contract for New energy efficiency contract for the municipality the Healthcare buildings of Cosenza of Trieste ○ €153M revenues o
Slide 8: A powerful growth platform: Water Technologies
1. A POWERFUL GROWTH PLATFORM Accelerated development of Water Technologies Water Technologies Record Bookings of €3.1bn, up 20% vs. 2022 Design of one of the world’s largest energy-efficient desalination plant in Abu Dhab i ○ €300m revenue Sludge incineration for the city of St Louis in the US ○ $1
Slide 9: A well-balanced and resilient set of business
2. A WELL-BALANCED AND RESILIENT SET OF BUSINESS 85% macro immune, fully protected against inflation, with results de-risked from commodity prices Higher indexations & price increases continue successfully in 2023 Veolia fully protected against cost inflation For our indexed revenue base (70% of tot
Slide 10: Balance sheet discipline
3. BALANCE SHEET DISCIPLINE Resumption of tuck-ins/ asset rotation policy of non strategic assets after 2 years dedicated to Suez acquisition, to enhance value creation ● Continuous improvement in cash generation ○ €435M FCF generated in Q3 vs. €337M in Q3 2022 ● Strict Balance sheet discipline ○ In
Slide 11: Accelerated synergy delivery
4. ACCELERATED SYNERGY DELIVERY Annual target of more than €280M cumulative almost achieved at 30 September Synergies: €131M delivered in 9M and €277M cumulated since the closing of the merger with Suez 9M synergies split Confirmed €500M cumulated cost synergies Main contributing areas: Australia, N
Slide 12: Sustained efficiency delivery
4. SUSTAINED EFFICIENCY DELIVERY In advance of annual schedule Efficiency : €284M delivered in 9M, 80% of the €350M annual objective 9M 2023 Savings by category 9M 2023 Savings by activity 9M 2023 12
Slide 13: ESG commitments: Veolia Cares program
5. ESG COMMITMENTS : “VEOLIA CARES” program A new illustration of our ambition to become the employer of choice The "Veolia Cares" programme aims to guarantee a common base level of social protection for the Group's 213,000 employees, even in countries where there are no such legal requirements. 9M
Slide 14: Fully confirmed 2023 guidance
6. FULLY CONFIRMED 2023 GUIDANCE(1) EBITDA growth at the top end of the guidance range and leverage ratio now targeted below 2.9x(2) Revenue: solid organic growth Net debt: Leverage ratio below 2.9x(2) EBITDA: organic growth at the top end Dividend policy: dividend to grow in line of the range of +5
Slide 15: 9M 2023 Financial & Operational Performance
9M 2023 Financial & Operational Performance Claude Laruelle, CFO 9M 2023
Slide 16: 9M 2023 results
9M 2023 RESULTS A strong delivery, at the top end of the year’s objectives Var. vs. 9M 2022 at In €M 9M 2022 9M 2023 constant scope and FX Revenue 30 713 33 161 +10.7% EBITDA 4 533 4 793 +7.7% Current EBIT(1) 2 278 2 518 +14.2% Net industrial CAPEX 2 125 2 532 +20.5% Net FCF 33 357 Net Financial Deb
Slide 17: Continued solid delivery in Q3 despite adverse weather
Q3 2023 Continued solid delivery in Q3, despite adverse weather and softening economic environment Revenue growth at constant scope and Q1 Q2 Q3 Var 9M YTD FX vs. 2022 Water +9.9% +7.1% +5.0% +7.2% Waste +3.2% +3.3% +2.8% +3.1% Energy +53.9% +23.8% +4.2% +30.4% TOTAL +19.9% +8.8% +4.0% +10.7% Total
Slide 18: 9M revenue of €33,161M, up 10.7%
9M REVENUE OF €33 161M, UP +10.7% AT CONSTANT SCOPE AND FOREX Strong revenue growth outside France ❏ Water Technologies: +6.3% : Strong increase in backlog Revenue Evolution by Region vs 9M 2022 ✓ WTS : €2 230M, up 9.1%, driven by Engineering Services (+7.9%) and Chemicals +9.4% fueled by pricing. E
Slide 19: Water revenue growth driven by tariff indexations
WATER REVENUE GROWTH DRIVEN BY TARIFF INDEXATIONS +7.2%(1) Key countries for M€ Variation vs. 9M 2022 9M 2023 Water Operations France 29% Volumes /Commerce/Works +3.4% Spain 17% Weather -0.5% USA 15% Latam 11% Price effect +4.2% Czech Republic 7% Other +0.1% Water Technologies Growth at constant sco
Slide 20: Continued resilient waste volumes
CONTINUED RESILIENT WASTE VOLUMES Waste revenue up 6.1% excl. recyclate prices, driven by pricing and resilient volumes +3.1%(1) Variation vs. 9M 2022 9M 2023 M€ Key countries for Volumes -0.1% Solid Waste Commerce/Works +0.7% France 30% UK 21% Price increases +4.6% Germany 13% Recycled materials pr
Slide 21: Energy revenue growth driven by energy prices
ENERGY REVENUE GROWTH DRIVEN BY ENERGY PRICES M€ +30.4%(1) Variation vs. 9M2022 9M 2023 Key countries Volumes / commerce / works +2.6% District Heating Central Europe : 94% Weather -0.7% China : 4% Energy price increases +27.3% Other +1.2% Key countries B&I Services Growth at constant scope & FX +30
Slide 22: Organic revenue growth of +10.7% vs. 9M 2022
ORGANIC REVENUE GROWTH OF +10.7% vs. 9M 2022 Underlying organic revenue growth of +4.6% excluding energy prices Evolution vs 9M 2022 Organic revenue growth : +10.7% ▪ FOREX: -€664M Argentinian peso, sterling pound, Australian $, USD In M€ ▪ SCOPE: -€183M Divestment of Suez waste assets in the UK off
Slide 23: Organic EBITDA growth of +7.7% vs. 9M 2022
ORGANIC EBITDA GROWTH OF +7.7% vs. 9M 2022 Fueled by pricing, commerce and operational excellence Evolution vs 9M 2022 ▪ FOREX: -€65M. Argentinian peso, Organic EBITDA growth : +7.7% sterling pound, Australian $, USD. ▪ SCOPE: -€23M . Divestment of Suez In M€ waste assets in the UK offset by 17 more
Slide 24: Current EBIT of €2,518M up 14.2%
CURRENT EBIT(1) OF €2 518M UP 14.2% AT CONSTANT SCOPE AND FOREX Variation at In €M 9M 2022 9M 2023 constant scope and FX EBITDA 4 533 4 793 +7.7% Renewal expenses -222 -223 Amortizations(1) including OFA repayment -2 243 -2 271 Industrial capital gains net of provisions and asset +106 +129 impairmen
Slide 25: €435M of net FCF generation in Q3
€435M OF NET FCF GENERATION IN Q3 Lead to decrease of net financial debt of €352M vs. 30 June 2023 Comments ■ Net industrial capex of €2 532M vs. €2 125M(1) Strong increase of net FCF generation (€M) ✓ Gross capex of €2 721M vs. €2 437M(1) up 13% at constant FX due to sharp increase of discretionary
Slide 26: Net financial debt of €18.9bn
NET FINANCIAL DEBT OF €18.9bn(1) Leverage ratio of 2.9 times at Sept. 30, 2023 In €M Net FCF +€357M (1) Excluding PPA 9M 2023 (2) including Suez earn out for +€284M 26
Slide 27: A smooth debt repayment schedule
A SMOOTH DEBT REPAYMENT SCHEDULE Veolia financial model self-financed: Annual FCF Bond repayment schedule* generation to fuel B/S headroom ○ Solid FCF delivery ○ Cost of debt under control ○ Strong €6bn net cash position at Sept. 30 => no new debt issuance in the coming quarters ○ 80% of debt at fix
Slide 28: Fully confirmed 2023 guidance
FULLY CONFIRMED 2023 GUIDANCE(1) EBITDA growth at the top end of the guidance range and leverage ratio now targeted below 2.9x(2) Revenue: solid organic growth Net debt: Leverage ratio below 2.9x(2) EBITDA: organic growth at the top end Dividend policy: dividend to grow in line of the range of +5% t
Slide 29: Appendices
Appendices
Slide 30: Appendix 1: Forex
APPENDIX 1: FOREX Focus on the main currencies 9M 2023 30
Slide 31: Appendix 2: Detailed revenue by business
APPENDIX 2: DETAILED REVENUE BY BUSINESS In M€ 2022 Revenue 9M 2022 9M 2023 Water published 18,260 13,307 13,538 Municipal non regulated (*) 9,765 7,104 7,834 Municipal regulated 1,285 944 1,038 Water Technologies 4,561 3,317 3,336 Construction 1,028 757 798 Water - Other 599 485 532 Total Water exc
Slide 32: Appendix 3: Analysis by geography - France and Hazardous Waste Europe
APPENDIX 3: ANALYSIS BY GEOGRAPHY France and Hazardous Waste Europe €M Sept 2022 Sept 2023 Δ at constant scope and FX Revenue of which 7 135 7 244 +2.2% Water France 2 196 2 231 +2.4% Waste France 2 193 2 183 +0.3% Hazardous Waste Europe 1 566 1 579 -0.1% Other (Industrial services and SADE) 1 180 1
Slide 33: Appendix 4: Analysis by geography - Rest of Europe
APPENDIX 4: ANALYSIS BY GEOGRAPHY Rest of Europe: Strong growth in the 9M €M Sept 2022 Sept 2023 Δ at constant scope and FX Revenue of which 12 498 13 708 +16.3% Central and Eastern Europe 6 185 8 099 +29.4% Northern Europe 3 760 3 000 +5.1% Southern Europe 2 553 2 609 +1.3% Comments ❏ Central and E
Slide 34: Appendix 5: Analysis by geography - Rest of the world
APPENDIX 5: ANALYSIS BY GEOGRAPHY Rest of the world: continued solid growth €M Δ at constant Sept 2022 Sept 2023 scope and FX Revenue of which 8 156 8 861 +10.9% Asia - Pacific 3 328 3 329 +7.0% o/w Asia 1 834 1 844 +7.1% o/w Pacific 1 495 1 485 +6.9% Latin America 1 237 1 406 +28.2% North America 2
Slide 35: Appendix 6: Water Technologies
APPENDIX 6: ANALYSIS BY GEOGRAPHY Water Technologies: continued solid growth €M Δ at constant scope and Sept 2022 Sept 2023 FX Water Technologies 3 317 3 336 +6.3% o/w VWT 1 180 1 106 +1.1% o/w WTS 2 138 2 230 +9.1% Comments Water Technologies: +6.3% : Strong increase in backlog ❏ WTS : €2 230M, up
Slide 36: Appendix 7: Waste revenue by activity
APPENDIX 7 Waste – breakdown waste revenue by activity 9M 2023 Waste Revenue €10 992M 9M 2023 36
Slide 37: Contacts
CONTACTS Analyst & Investor Relations Media Relations Ronald Wasylec Laurent Obadia Deputy CFO, Senior Vice President, Investor Relations Telephone: +33 1 85 57 89 43 Telephone: +33 1 85 57 84 76 e-mail: laurent.obadia.@veolia.com e-mail: ronald.wasylec@veolia.com Ariane de Lamaze Evgeniya Mazalova