Veolia Environnement Sa · EURONEXT:VIE
Veolia Environnement Sa — Investor Day (February 2020)
86 slides from Veolia Environnement Sa's investor day presentation, Feb 28, 2020
Slide 1: Strategic Program 2020-2023
Strategic Program 2020-2023 28 February, 2020
Slide 2: Disclaimer
DISCLAIMER Veolia Environnement is a corporation listed on the Euronext Paris. This document contains “forward-looking statements” within the meaning of the provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of future performan
Slide 3: Agenda
1. 2. 3. 4. 5. 6. VEOLIA’S PURPOSE: VEOLIA’S THE 2020-2023 2020-2023: GROWTH 2020-2023: 2020-2023: A VALUE FOCUSED ACHIEVEMENT STRATEGIC PROGRAM AND EFFICIENCY INNOVATION FINANCIALS MODEL FOR ALL S 2012-2019 AND FINANCIAL STAKEHOLDERS TRAJECTORY 3
Slide 4: Veolia's Purpose: A Value-Focused Model for All Stakeholders
VEOLIA’S PURPOSE: A VALUE-FOCUSED MODEL FOR ALL STAKEHOLDERS Antoine Frérot, Chairman and CEO
Slide 5: Veolia's Purpose: The Compass of Veolia's New Strategic Program
VEOLIA’S PURPOSE: THE “COMPASS” OF VEOLIA’S NEW STRATEGIC PROGRAM Veolia’s prosperity is founded upon its usefulness to all its stakeholders Planet Resourcing the world Maximizing Veolia’s impact for all its stakeholders over the 2020-2023 period Veolia’s Purpose was released in April 2019 5
Slide 6: Veolia's Achievements 2012-2019
VEOLIA’S ACHIEVEMENTS 2012-2019 Antoine Frérot, Chairman and CEO
Slide 7: Delivery 2012-2019
2012-2019 DELIVERY Phase I. 2012-2015 Phase II. 2016-2019 I II TRANSFORMATION EFFICIENCY AND GROWTH • Reducing the debt • A profitable growth, mainly organic, • Geographic refocusing and new organization completed with small acquisitions by geography • Enhanced efforts on efficiency and • Cost savin
Slide 8: 2012-2015 Years of Transformation
2012-2015 4 YEARS OF TRANSFORMATION CAGR + 5.4 % 802 2.6 2.8 3.0 + 2.4 2.4 pts 6.8% 582 5.0% 5.5% 4.4% 350 142 14.7 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 - 45 % Cumulated cost savings (€M) EBITDA (€bn) ROCE after tax (%) 10.8 8.2 7.8 8.2 CAGR 0.58 + 5.1 % 16.6 16.4 16.3 CAGR 1.
Slide 9: 2016-2019 Years of Profitable Growth
2016-2019 4 YEARS OF PROFITABLE GROWTH CAGR CAGR + 3.6 % + 1.2 10.7 27.2 + 4.6 % pts 9.0 9.6 9.3 9.3 9.7 4.0 8.8 1.7 25.9 3.4 0.5 3.2 3.2 IFRS 8.3 IFRS 24.8 16 16 23.8 7.8 9.0 3.5 2016 2017 2018 2019 2016 2017 2018 2019 2016 2017 2018 2019 2015 2016 2017 2018 2019 Revenue (€bn) EBITDA (€bn) ROCE aft
Slide 10: Delivery 2016-2019
2016-2019 DELIVERY In € millions CAGR Excluding IFRS 16 until 2017 2016 2017 2018 2019 2015-2019 Excl IFRS 16 Excl IFRS 16 Incl IFRS 16 Incl IFRS 16 At constant forex excl IFRS 16 Revenue 23 838 24 818 25 911 27 189 3.6 % EBITDA 3 158 3 217 3 843 4 022 4.6 % Current EBIT 1 442 1 497 1 644 1 730 7.0
Slide 11: 2016-2019: Increased Value Creation
2016-2019: INCREASED VALUE CREATION After tax ROCE vs. WACC(1) Dividend (€): + 37% in 4 years 9.0% €1.00 8.8% 8.3% €0.92 7.4% 7.8% €0.84 €0.80 15.9 15.8 15.6 15.8 16.2 €0.73 6.3% 6.1% 5.8% 5.5% 5.3% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019(2) Capital employed (€bn) ROCE after tax WACC Euro
Slide 12: Total Shareholder Return of +241% vs +92% for the CAC 40
2012-2019: TOTAL SHAREHOLDER RETURN(1) OF +241% vs. +92% FOR THE CAC 40 360 340 TSR VEOLIA 240.9% 320 CAC 40 91.9% 300 280 STOXX 600 75.9% 260 240 STOXX 600 57.8% 220 UTILITIES 200 180 160 140 120 100 80 60 Veolia Base 100(div. (div réinvestis) reinvested) CAC 40 Base 100 Stoxx Europe 600 Base 100 S
Slide 13: The 2020-2023 Strategic Program and Financial Trajectory
THE 2020- 2023 STRATEGIC PROGRAM AND FINANCIAL TRAJECTORY Antoine Frérot, Chairman and CEO
Slide 14: Planet and society facing crucial challenges
OUR PLANET AND THE SOCIETY ARE FACING CRUCIAL CHALLENGES, ENTAILING AN OBLIGATION TO ACT CLIMATE VEOLIA IS IDEALLY POSITIONED PLASTICS SOLUTIONS MASTERED BY VEOLIA COVER 30% OF NECESSARY GHG REDUCTIONS POLLUTION 14
Slide 15: Impact 2023 in a Nutshell
❏ A particular context: the environmental priority has never been higher ❏ A high ambition: to be the reference company for the ecological transformation ❏ A priority: maximizing Veolia’s positive impact - environmental, societal, financial ❏ A consequence: clear priorities → Strong acceleration of
Slide 16: Strategic Orientations: Clear Choices on Our Businesses
IMPACT 2023 STRATEGIC ORIENTATIONS: CLEAR CHOICES ON OUR BUSINESSES I II III 1. Accelerate 2. Optimize & develop 3. Reduce → MAXIMUM IMPACT → STILL VALUE CREATION → MATURE OR COMMODITIZED → GROWING DEMAND → REINVENTION AND RENEWED → LESS IMPACT INTEREST ● Hazardous waste management ● Municipal water
Slide 17: Capital Allocation
IMPACT 2023 CAPITAL ALLOCATION €5bn €2bn net investments over 4 Industrial & financial years investments to develop new projects ~€500M /year in average (“Accelerate” and “Optimize & develop”) →Leverage ratio < €3bn →~40% in Europe (incl. France) ~60% in the rest of the world 3x →~65% for industrial
Slide 18: A Strong Commitment to Combat Climate Change
IMPACT 2023 A STRONG COMMITMENT TO COMBAT CLIMATE CHANGE 1. CONVERT ALL OUR 2. MAXIMIZE AVOIDED EUROPEAN COAL FIRED EMISSIONS FOR OUR CLIENTS I ASSETS BY 2030 II → Coal fired cogeneration plants → Target: 15 Mt of CO2 saved in 2023 (3% of total revenue) → Key contributors: → We will not sell these c
Slide 19: Creating Solutions for the Future Through Focused Innovation
IMPACT 2023 CREATING SOLUTIONS FOR THE FUTURE THROUGH FOCUSED INNOVATION “Veolia prepares for the future, protecting the environment and responding to humanity’s vital needs” (extract of Veolia’s Purpose) • Focus on 6 major global challenges for which Veolia can deliver impact through concrete innov
Slide 20: Key Financial Targets
IMPACT 2023 KEY FINANCIAL TARGETS(1) REVENUE Continued solid growth EFFICIENCY €1bn cost savings over 4 years EBITDA €4.7bn - €4.9bn in 2023 CURRENT NET INCOME GROUP ~€1bn in 2023 SHARE LEVERAGE RATIO < 3 x and well below 3 x in 2023 DIVIDEND €1.30 / share in 2023 (1) At constant FX (based on rates
Slide 21: A Dashboard to Track and Report Our Multifaceted Performance
A DASHBOARD TO TRACK AND REPORT OUR MULTIFACETED PERFORMANCE ● 5 stakeholders ● 18 KPIs ● All KPIs audited 21
Slide 22: Management Incentives and Employee Shareholding
IMPACT 2023 MANAGEMENT INCENTIVES AND EMPLOYEE SHAREHOLDING • Bonus policy for the management → 50% financial criteria: Revenue growth, Current net income, FCF, ROCE → 30% quantitative ESG criteria → 20% qualitative criteria • Annual attribution of performance shares to 500 beneficiaries → 50% finan
Slide 23: Impact 2023 in a Nutshell
❏ A particular context: the environmental priority has never been higher ❏ A high ambition: to be the reference company for the ecological transformation ❏ A priority: maximizing Veolia’s positive impact - environmental, societal, financial ❏ A consequence: clear priorities → Strong acceleration of
Slide 24: 2020-2023: Growth and Efficiency
2020-2023: GROWTH AND EFFICIENCY Estelle Brachlianoff, COO
Slide 25: Strategic Orientations: Clear Choices on Our Businesses
IMPACT 2023 STRATEGIC ORIENTATIONS: CLEAR CHOICES ON OUR BUSINESSES I II III 1. Accelerate 2. Optimize & develop 3. Reduce → MAXIMUM IMPACT → STILL VALUE CREATION → MATURE OR COMMODITIZED → GROWING DEMAND → REINVENTION AND RENEWED → LESS IMPACT INTEREST ● Hazardous waste management ● Municipal water
Slide 26: Accelerate: Criteria and Priorities
ACCELERATE: CRITERIA AND PRIORITIES NEW HIGH-VALUE OPPORTUNITIES INVESTMENT ● Hazardous waste treatment CRITERIA ○ Targeting geographies with favorable regulation and strong industries ● Solid waste recycling ● Activities with a ○ Plastic recycling highly positive impact on the ○ Waste to RDF(1) env
Slide 27: Veolia's Capabilities in Hazardous Waste
VEOLIA’S CAPABILITIES IN HAZARDOUS WASTE: A COMPREHENSIVE RANGE OF HIGH ADDED VALUE SOLUTIONS WASTE PREPARATION LOGISTICS TREATMENT RECYCLING LANDFILLING SOIL TREATMENT ● Analysis ● Collection ● Shredding ● High temperature ● Regeneration/ ● Specialized landfills incineration recovery: ● Soil remedi
Slide 28: Hazardous Waste: ~€2.5bn Revenue in 2019
VEOLIA IS THE ONLY GLOBAL PLAYER IN HAZARDOUS WASTE ~€2.5BN REVENUE IN 2019, MORE THAN +10%/YEAR SINCE 2014 2019 Revenue - CAGR 2014-2019(1) Europe €1.2bn +5 % North America(2) €0.9bn +13 % Asia €0.2bn +35% Latin America €80M +26 % Africa Australia & Strong and enforced regulation Middle East New Ze
Slide 29: Hazardous Waste: Ambition to ~€4bn Revenue in 2023
HAZARDOUS WASTE: OUR AMBITION: INCREASE REVENUE TO ~€4BN IN 2023 ● A €25-30bn market growing at a solid pace, driven by the evolution of local regulations (increasingly stringent and enforced) and the growth of the industrial production ● ~20% EBITDA margin ● Double digit ROCE Veolia’s unique positi
Slide 30: Hazardous Waste: Alcoa Project in the US
HAZARDOUS WASTE ALCOA PROJECT IN THE US Market context in the USA ● Permitted sites scarce and valuable ● Veolia co-leader in hazardous waste incineration, but lacking landfill capacity Client context ● Alcoa Gum Spring (Arkansas): hazardous waste incineration and landfill, used to treat spent pot l
Slide 31: Hazardous Waste: Evonik Project in Germany
HAZARDOUS WASTE EVONIK PROJECT IN GERMANY Market context ● Few new incineration capacities in Europe for hazardous waste and existing site fully utilized ● Germany: largest hazardous waste market in Europe, with a limited presence of Veolia so far Client context ● Evonik is one of the world leaders
Slide 32: Plastic Recycling: The Value Chain
WASTE RECYCLING AND RECOVERY: PLASTIC RECYCLING THE VALUE CHAIN MECHANICAL RECYCLING OF PLASTICS MULTIPLE TYPES OF EXTRUSION RECYCLED ADDITIONAL PELLETS PLASTICS SORTING SHREDDING CLEANING/ DRYING ADDITIVES (HEATING AT ~200°C ) (PET, PP, HDPE, LDPE,...) COLLECTIO SORTING N Additional sorting and Dep
Slide 33: Plastic Recycling: Our Ambition
WASTE RECYCLING AND RECOVERY: PLASTIC RECYCLING OUR AMBITION VEOLIA’S REVENUE IN ● A €25bn market growing at a very high pace, driven by: PLASTIC RECYCLING (€BN) ○ Evolving regulations regarding plastic usage and recycling (Europe and Asia in particular) ~0.8 ○ Societal pressure ○ Commitments made b
Slide 34: PET Recycling Plant for Danone in Indonesia
WASTE RECYCLING AND RECOVERY: PLASTIC RECYCLING PET RECYCLING PLANT FOR DANONE IN INDONESIA ● Design, build and operate a plant to produce food grade recycled PET ● Supply contract with Danone and other global brands. Transformation margins secured (selling price based on transformation costs) ● Pla
Slide 35: RDF Energy: Significant Development Planned in Europe
WASTE RECYCLING AND RECOVERY: RDF ENERGY SIGNIFICANT DEVELOPMENT PLANNED IN EUROPE Current presence in RDF preparation and/or production of energy x Number of “RDF to energy” projects already EXAMPLE: PROJECT WITH SOLVAY IN FRANCE identified in the development plan (some of them under an AssetCo/OpC
Slide 36: Developing Energy Services for Buildings
DEVELOPING ENERGY SERVICES FOR BUILDINGS TO HELP OUR CLIENTS HARNESS ENERGY EFFICIENCY AND AVOID GHG FOCUSING ON ENERGY EXAMPLE: PERFORMANCE CONTRACTS RECENT RETROFIT BY ENOVA (MIDDLE-EAST) ● Leveraging a strong know-how in energy First-ever retrofit project awarded (in 2019) by Tarshid, National ef
Slide 37: Industrial Ecology: Neste and Borealis in Finland
INDUSTRIAL ECOLOGY: CIRCULAR ECONOMY & INDUSTRIAL PARKS NESTE AND BOREALIS IN FINLAND Client context ● The Kilpilahti complex, near Porvoo in Finland: the largest petrochemical center in Nordic countries ● Clients’ need: modernize the installations that supply steam and other process utilities to tw
Slide 38: Optimize & Develop: Criteria and Priorities
OPTIMIZE & DEVELOP: CRITERIA AND PRIORITIES BUSINESSES INVOLVED CRITERIA • Municipal water ○ Strengthen and streamline our existing portfolio: governance, digital, consumer focus, innovation ○ Seize the new opportunities which are appearing on the market: privatisations ● Traditional activities wher
Slide 39: Municipal Water: Operational Efficiency, Differentiation, Innovation
MUNICIPAL WATER OPERATIONAL EFFICIENCY, DIFFERENTIATION, INNOVATION Digital Operations At stake: Hubgrade: improved access to information, enhanced communication ● Maintain our competitive edge with clients and better control of water systems including water quality ● Renew our contracts and capture
Slide 40: Municipal Water: French Water Turnaround Successful
MUNICIPAL WATER FRENCH WATER TURNAROUND SUCCESSFUL EFFICIENCY ● Digitalization of operations, of commercial prospection, and production of offers ● Account management and renewing existing contracts with upsides ○ e.g.: + €50M additional revenue over the last 2 years on the existing portfolio ● Ener
Slide 41: Commercial Waste Collection, Solid Waste Treatment
COMMERCIAL WASTE COLLECTION, SOLID WASTE TREATMENT EFFICIENCY, DIGITALIZATION, AND GROWTH Digital Customers Customer Hub: a self-service platform C&I waste collection: a key activity to secure feedstock for customers to access their in our recycling or RDF* plants. documents electronically, get live
Slide 42: District Heating & Cooling Networks: Convert from Coal
DISTRICT HEATING & COOLING NETWORKS CONVERT FROM COAL AND INNOVATE AROUND OUR CORE ASSETS At stake: ● Reduce GHG emissions of coal-fired assets ● Growth opportunities in Central & Eastern Europe, Asia Digital Offers Key actions: Power Grid Forecast and Frequency Market: predictive ● By 2030, replace
Slide 43: Convert Coal in Germany: Braunschweig Example
DISTRICT HEATING & COOLING NETWORKS CONVERT COAL IN GERMANY: CITY OF BRAUNSCHWEIG EXAMPLE Objective ● Support the city of Braunschweig in its energy transition BRAUNSCHWEIG Veolia’s solution ● Transform the coal-fired district heating network to reduce CO2 emissions: replace 1 coal fired cogeneratio
Slide 44: Reduce: Criteria and Priorities
REDUCE: CRITERIA AND PRIORITIES CRITERIA MATURE BUSINESSES • Some geographies / activities in mature markets, with limited growth or return prospects, and with better alternative shareholders than Veolia ○ 1st example: District Heating in the US ● Mature businesses, with limited growth and OTHER BUS
Slide 45: Veolia Water Technologies: A New Positioning
VEOLIA WATER TECHNOLOGIES: A NEW POSITIONING PROJECTS KEY FOCUS: TECHNOLOGIES AND SERVICES Design (Construction Technologies Services ) • Out of the VWT Supply of standard / scope packaged equipment • VWT to position Ex: ultrapure water itself only as a co- for laboratories - Elga contractor or a su
Slide 46: Veolia Water Technologies: Transformation Plan
VEOLIA WATER TECHNOLOGIES: TRANSFORMATION PLAN KEY ACTIONS VWT - REVENUE PROJECTIONS (€BN) 1. Projects: be highly selective, and eliminate construction risks • VWT in partnership (co-contractor or subcontractor) with civil engineering €1.6bn companies • VWT only looks at projects: o with a strong co
Slide 47: Strong Selectivity on Activities with Limited Added Value
STRONG SELECTIVITY ON ACTIVITIES WHERE VEOLIA HAS A LIMITED ADDED VALUE SELECTIVITY CRITERIA • Contracts with no direct or indirect link with waste treatment and tons destination Municipal • Contracts where investments are to be funded by Veolia waste • Contracts which combine collection and treatme
Slide 48: Strategic Orientations Summarized by Business
IMPACT 2020-2023 STRATEGIC ORIENTATIONS SUMMARIZED BY BUSINESS • Municipal water and Public Private Partnerships: continue efficiency efforts to maintain our Water competitiveness, seize new opportunities, pursue differentiation in our offers (innovation, governance, relationships with consumers) •
Slide 49: Translating Our Strategy into Profit Growth
IMPACT 2020-2023 TRANSLATING OUR STRATEGY INTO PROFIT GROWTH • Strict discipline to select growth projects and M&A o Systematic review of projects through investment committees, with HQ support functions involved o Strict investment criteria: IRR > WACC + 4%, ROCE > WACC after 3 years, payback < 7 y
Slide 50: Efficiency Plan: An Ambitious Target
EFFICIENCY PLAN: AN AMBITIOUS TARGET COST SAVINGS SINCE 2012 2020-2023 €M €250M/year 302 €1bn over 2020-2023 245 255 248 200 G&A per year 156 55% Purchasing 103 115 38 141 Operations 60 86 89 97 30% 72 102 56 51 49 15% 35 2012-2015 2016 2017 2018 2019 2020-2023 50
Slide 51: Efficiency Plan: Operations (1/2)
EFFICIENCY PLAN OPERATIONS (1/2) 1. WORK ON UNDERPERFORMING 2. PEER REVIEW CONTRACTS OR SITES • Action plans “up or out”: • Benchmark of performance on 6 priority assets o Profitability analysis Solid waste Drinkable water Heating production o Quarterly review of progress incineration distribution i
Slide 52: Efficiency Plan: Operations (2/2)
EFFICIENCY PLAN OPERATIONS (2/2) 3. DIGITALIZATION • Hubgrade: supervision centers at country/ region level, regrouping real time data on key sites and contracts Digital operations • 6 supervision centers in 2015, 56 today, ~100 by 2023 Hubgrade Example - Italy, energy efficiency: • 4 Hubgrade cente
Slide 53: Efficiency Plan: Purchasing and G&A
EFFICIENCY PLAN PURCHASING AND G&A PURCHASING G&A • Target: min 1% of purchasing savings • Target: maintain G&A constant despite (Capex and Opex on addressable cost base) in revenue growth and a challenging context all BUs (increase of compliance, legal, cybersecurity o e.g.: collection trucks, cars
Slide 54: Digital to Help Deliver Efficiency and Growth
DIGITAL TO HELP DELIVER EFFICIENCY AND GROWTH Digital Employees Digital Customers Digital Operations Digital Offers Pillar Simplifying the life of our Enhancing customer Optimising our Enhancing existing offers s employees experience operations and creating new ones • Improving sales • Monitoring KP
Slide 55: 2020-2023: Innovation
2020-2023: INNOVATION Olivier Brousse, EVP, Strategy & Innovation
Slide 56: Veolia's Purpose: To Contribute to Human Progress
VEOLIA’S PURPOSE: “TO CONTRIBUTE TO HUMAN PROGRESS” Climate change Resource depletion • Through its activities Rising demand in water, waste, and for energy energy, Veolia is having a positive impact on the planet and its inhabitants • How to contribute Pollution more? Population growth & urbanizati
Slide 57: Veolia Can Help Address 6 Global Challenges
VEOLIA CAN HELP TO ADDRESS 6 GLOBAL CHALLENGES HEALTH & NEW NEW LOOPS NEW ENERGY POLLUTANTS OF MATERIALS SERVICES ADAPTATION TO NEW DIGITAL CLIMATE CHANGE FOOD CHAIN OFFERS INNOVATION WILL ENRICH & BOOST THE CURRENT PORTFOLIO, AND CREATE NEW SOLUTIONS TO MEET ESSENTIAL NEEDS 57
Slide 58: Future Essential Needs: Health & New Pollutants
CREATING SOLUTIONS FOR FUTURE ESSENTIAL NEEDS HEALTH & NEW POLLUTANTS CHALLENGE: ENABLING PEOPLE TO LIVE IN A HEALTHY ENVIRONMENT (CLEAN AIR, WATER, SOIL) POLLUTION, A MAJOR AND INCREASING HEALTH ISSUE... ...THAT VEOLIA IS TACKLING • Environmental pollution: 9 million premature deaths Example: Indoo
Slide 59: Future Essential Needs: Food Chain
CREATING SOLUTIONS FOR FUTURE ESSENTIAL NEEDS FOOD CHAIN CHALLENGE: CONTRIBUTING TO FEEDING AN EXTRA ~1.5BN PEOPLE WITHIN 20 YEARS WITH LESS WATER, ENERGY AND SOIL THE GLOBAL FOOD EXAMPLE OF SOLUTIONS CHALLENGE • Population growth: 1 more “China equivalent” by 2040 From organic waste to fertilizers
Slide 60: Future Essential Needs: Adaptation to Climate Change
CREATING SOLUTIONS FOR FUTURE ESSENTIAL NEEDS ADAPTATION TO CLIMATE CHANGE CHALLENGE: HELPING OUR MUNICIPAL AND INDUSTRIAL CLIENTS ANTICIPATE AND MANAGE ENVIRONMENTAL DISORDERS THE NEW CLIMATE REALITY EXAMPLES OF SOLUTIONS ▪ Flood control Hurricane Sandy (2012) ▪ Crisis management $65bn damage in th
Slide 61: 2020-2023: Financials
2020-2023: FINANCIALS Claude Laruelle, CFO
Slide 62: Veolia Business Mix: 11 Geographies in 4 Reporting Segments
VEOLIA BUSINESS MIX 11 GEOGRAPHIES ORGANIZED IN 4 REPORTING SEGMENTS CENTRAL EUROPE GLOBAL BUSINESSES €3 296M €4 734M NORTHERN EUROPE €2 738M UK & IRELAND €2 298M FRANCE NORTH AMERICA WASTE: €2 608M €2 168M WATER: €3 004M ITALY & IBERIA €1 169M ASIA €2 135M LATIN AMERICA €853M 2019 Revenue €27.2bn 1
Slide 63: Veolia 2016-2019 Business Mix Evolution
VEOLIA 2016-2019 BUSINESS MIX EVOLUTION 2016-2019: CONTINUED SOLID REVENUE GROWTH DRIVEN BY INTERNATIONAL AND INDUSTRIAL CLIENTS BY GEOGRAPHY BY MARKET CAGR at constant CAGR at constant FX FX CAGR 2015-2019 CAGR 2015-2019 +3.6% +3.6% 27.2 25.9 Revenue, €bn 27.2 24.8 25.9 23.8 23.8 24.8 4.8 4.7 -0.8%
Slide 64: Veolia 2014-2019 Business Mix Evolution
VEOLIA 2014-2019 BUSINESS MIX EVOLUTION CONTINUED INCREASE OF INTERNATIONAL SHARE OF REVENUE AND EBITDA IN 5 YEARS 2014 REVENUE €24.4bn 2019 REVENUE €27.2bn 17% 21% 20% 23% 22% • Continued increase of International 35% 27% Revenue and EBITDA 35% from 2014 to 2019 2014 EBITDA €2 762M 2019 EBITDA €4 0
Slide 65: Veolia 2011-2019 Business Mix Evolution
VEOLIA 2011-2019 BUSINESS MIX EVOLUTION TRIPLING OF HAZARDOUS WASTE SHARE OF REVENUE IN 8 YEARS 2011 REVENUE 2014 REVENUE 2019 REVENUE €29.6bn €24.4bn €27.2bn 19% 22% 25% 31% 30% 31% 6% 3% 9% 10% 12% 29% 15% 30% 28% Water & Waste water Technology & Construction 2019 EBITDA: Waste Hazardous Waste €4
Slide 66: Financial Trajectory: Continued Solid Revenue Growth
FINANCIAL TRAJECTORY 2020-2023 CONTINUED SOLID REVENUE GROWTH 1. CONTINUED SOLID ORGANIC GROWTH ✔ High level of contract renewal ✔ Pursuit of good commercial momentum ✔ Capital allocation focused on fast growing activities, mostly outside France 2. COMPLEMENTED BY SMALL AND MID SIZE ACQUISITIONS ✔ S
Slide 67: Financial Trajectory: Continued Solid Revenue Growth
FINANCIAL TRAJECTORY 2020-2023 CONTINUED SOLID REVENUE GROWTH TRENDS BY CLIENT TRENDS BY GEOGRAPHY TRENDS BY BUSINESS 2019 2019 2019 REVENUE REVENUE REVENUE €27.2bn €27.2bn €27.2bn 4.7 - 5.9 + 52% 48% 2.5 7.3 + ++ 7.7 + 9.6 + 2.8 - 48% 52% 8.3 + 5.6 = 2019 2023 France Water & Waste water Technology
Slide 68: No Major Contract Renewals Before 2022
FINANCIAL TRAJECTORY 2020-2023 NO MAJOR CONTRACT RENEWALS BEFORE 2022 • The Group’s 38 largest contracts represent €4.1 billion in revenue, or 15% of revenue ✔ Average duration: 10 years Contract expiration schedule (>€50M annual revenue) 699 572 497 357 300 211 165 185 167 111 113 108 107 114 111 1
Slide 69: EBITDA Target of €4.7-4.9bn in 2023
FINANCIAL TRAJECTORY 2020-2023 EBITDA TARGET OF €4.7-4.9BN(1) IN 2023 KEY DRIVERS EBITDA GROWTH • Continued solid revenue growth €4.7- 4.9bn(1) • €250M of cost cutting annually o Target retention rate: ~40% €4bn • EBITDA growth to come: o 50% from revenue growth and asset rotation o 50% from efficie
Slide 70: A Regular Bond Repayment Schedule
FINANCIAL TRAJECTORY 2020-2023 A REGULAR BOND REPAYMENT SCHEDULE 1400 RATING 1200 Moody’s: P-2/ Baa1 stable outlook Standard & Poor’s: A-2 / BBB stable 1000 outlook 800 600 400 200 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 EUR GBP USD CNY 70
Slide 71: Cost of Financing Expected to Decrease by 2023
FINANCIAL TRAJECTORY 2020-2023 COST OF FINANCING EXPECTED TO DECREASE BY 2023 • Scheduled bond redemption to contribute to decrease cost of debt in euro o 40% of Euro bonds to be refinanced by end-2023 o 2021 & 2022 bond refinancing to generate significant savings • …partly offet by non euro cost of
Slide 72: Taxes: Full Benefit of Tax Loss Carry Forwards
FINANCIAL TRAJECTORY 2020-2023 TAXES : FULL BENEFIT OF TAX LOSS CARRY FORWARDS • Tax efficiency taken into consideration to structure new projects and tuck in acquisitions • Favorable resolution of the tax litigation in the US: o Additional potential recognition of more than $2bn of tax loss carry f
Slide 73: Continued Strong Current Net Income Growth
FINANCIAL TRAJECTORY 2020-2023 CONTINUED STRONG CURRENT NET INCOME GROWTH: ~€1BN(1) TARGET IN 2023 KEY DRIVERS CURRENT NET INCOME GROWTH • EBITDA growth leads to current EBIT ~€1bn(1) growth with D&A slightly up over time • Cost of financing expected to decrease: €760M lower euro financing cost part
Slide 74: Capital Allocation 2020-2023: Key Takeaways
CAPITAL ALLOCATION 2020-2023 KEY TAKEAWAYS €5bn €2bn net investments over 4 years Industrial & financial investments to develop new projects ~€500M (“Accelerate” and “Optimize & develop”) /year in average →Leverage ratio < 3x €3bn →~40% in Europe (incl. France) ~60% in the rest of the world →~65% fo
Slide 75: Continued Strict Financial Discipline
CAPITAL ALLOCATION 2020-2023 CONTINUED STRICT FINANCIAL DISCIPLINE STRICT INVESTMENT FINANCIAL HEADROOM CRITERIA • BUs must submit to the Group Investment • Leverage at 2.66 end 2019 including IFRS 16 Committee all projects above/ below €10M EV impact and €20M capex • Small and mid size M&A • Tighte
Slide 76: Capex Trajectory: €2bn of Discretionary Capex
CAPITAL ALLOCATION 2020-2023 CAPEX TRAJECTORY: €2BN OF DISCRETIONARY CAPEX Average Average In €bn Variation 2018-2019(1) 2020-2023(1) Maintenance Capex including IFRS 16 1.1 1.0 - 1.1 Stable Contractual Capex 0.7 0.7 - 0.8 Stable Coal conversion capex 0 0.1 New Discretionary Growth Capex 0.3 0.5 - 0
Slide 77: Continued Working Capital Optimization
FREE CASH FLOW GENERATION 2020-2023 CONTINUED WORKING CAPITAL OPTIMIZATION WCR TRACK RECORD 2016-2019 KEY ACTIONS 2020-2023 • Cash Flow generation monitored by Business WCR improvement Unit / Business Line (cash resource) o Focus on DSO improvement 268 209 • New initiative on Working capital 112 o N
Slide 78: Continued Strong Free Cash Flow Generation
CONTINUED STRONG FREE CASH FLOW GENERATION FCF GENERATION OVER 2020-2023 • Discretionary capex of €270M per year >€4bn on average from 2016 to 2019 ~€500M per year from 2020 to 2023 FCF before discretionary capex Net FCF after discretionary capex >€2bn • FCF before discretionary capex > €4bn cumulat
Slide 79: Strong Value Creation: Continued Improvement of ROCE by 2023
STRONG VALUE CREATION CONTINUED IMPROVEMENT OF ROCE BY 2023 AFTER TAX ROCE KEY DRIVERS 9.0% 8.8% • Operational efficiency 8.4% 8.4% IFRS 16 7.9% 7.4% • Current EBIT growth IFRIC 12 • Focus on capital 6.8% efficiency 5.5% 5.0% • Low tax rate 2013 2014 2015 2016 2017 2018 2019 2019 post 2023 IFRS16 79
Slide 80: Dividend: €1.30 in 2023
DIVIDEND: €1.30 IN 2023 +80% €1.30 in 8 years €1.00 • 37% growth of dividend from 2016-2019 €0.92 €0.84 €0.80 €0.73 • A sustainable and disciplined dividend policy 2015 2016 2017 2018 2019 (1) 2023e (1) Subject to approval of the AGM of April 22, 2020 80
Slide 81: Impact 2023 Key Financial Targets
IMPACT 2023 KEY FINANCIAL TARGETS(1) REVENUE Continued solid growth EFFICIENCY €1bn cost savings over 4 years EBITDA €4.7bn - €4.9bn in 2023 CURRENT NET INCOME GROUP ~€1bn in 2023 SHARE LEVERAGE RATIO < 3 x and well below 3 x in 2023 DIVIDEND €1.30 / share in 2023 (1) At constant FX (based on rates
Slide 82: Impact 2023 in a Nutshell
❏ A particular context: the environmental priority has never been higher ❏ A high ambition: to be the reference company for the ecological transformation ❏ A priority: maximizing Veolia’s positive impact - environmental, societal, financial ❏ A consequence: clear priorities → Strong acceleration of
Slide 83: Appendix
APPENDIX 83
Slide 84: Veolia's Multi-Faceted Performance Dashboard (1/2)
VEOLIA’S MULTI-FACETED PERFORMANCE DASHBOARD KEY PERFORMANCE INDICATORS (1/2) Dimension Objective KPI Baseline (2019) Target 2023 Revenue growth Revenue growth Rev. : €27.2bn Annual target SDG 8 Profitability Economic & Current net income €760M €1bn SDG 8 financial performance Return on capital empl
Slide 85: Veolia's Multi-Faceted Performance Dashboard (2/2)
VEOLIA’S MULTI-FACETED PERFORMANCE DASHBOARD KEY PERFORMANCE INDICATORS (2/2) Dimension Objective KPI Baseline (2019) Target 2023 Employee commitment Rate of engagement of employees in the 10 largest BUs, 84 % Above 80 % SDG 8 measured through an independent survey Safety at work Frequency rate 8.1
Slide 86: Contacts
CONTACTS ANALYST & INVESTOR RELATIONS MEDIA RELATIONS Ronald Wasylec Laurent Obadia Deputy CFO, Senior Vice President, Investor Telephone: +33 1 85 57 89 43 Relations e-mail: laurent.obadia.@veolia.com Telephone: +33 1 85 57 84 76 e-mail: ronald.wasylec@veolia.com Sandrine Guendoul Ariane de Lamaze