Veolia Environnement Sa · EURONEXT:VIE
Veolia Environnement Sa — H1 2013 Earnings Presentation
58 slides from Veolia Environnement Sa's earnings presentation, Aug 5, 2013
Slide 1: 2013 First Half Results
2013 First Half Results August 5, 2013
Slide 2: Disclaimer
Investor Relations – 1H13 Results Disclaimer Veolia Environnement is a corporation listed on the NYSE and 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 statem
Slide 3: Highlights
Highlights Antoine Frérot ENVIRONNEMENT
Slide 4: Continued progress during 1st half 2013
Investor Relations – 1H13 Results Continued progress during 1st half 2013 Improved performance in Q2 Implementation of the Company’s strategy • Further reduction in debt • Convergence Plan objectives raised • Management team reinforced by a more integrated organization • Continuing targeted commerci
Slide 5: Improved performance in Q2
Investor Relations – 1H13 Results Improved performance in Q2 Q2 revenue trend improved compared to Q1 trend (-1% vs. -3% at constant scope and FX, and despite continued decline in Construction activity) • WATER Operations: organic growth of 2.1% in Q2 (versus -2.4% in Q1) • ENVIRONMENTAL SERVICES: t
Slide 6: Further reduction in net financial debt
Investor Relations – 1H13 Results Further reduction in net financial debt In €bn (1) Adjusted net financial debt / (Operating cash flow before changes in working capital + OFA repayments) Adjusted net debt is net of loans to joint ventures 6
Slide 7: Raised Convergence Plan objectives
Investor Relations – 1H13 Results Raised Convergence Plan objectives A €750M(1) NET COST SAVINGS PLAN IN 2015 750 Net impact(1) in €M 400 (1) Net of implementation costs, of which due to the new accounting treatment of joint ventures, ~80% will benefit operating 7 income
Slide 8: Management team reinforced by a more integrated organization
Investor Relations – 1H13 Results Management team reinforced by a more integrated organization One Veolia per country One Veolia HQ Management by country Reinforcement of marketing and performance management More simple More nimble More efficient 8
Slide 9: Continuing targeted commercial business success
Investor Relations – 1H13 Results Continuing targeted commercial business success Asia Pacific • Australia: industrial contract awarded by Queensland Gas Company in the coal gas sector. Cumulative revenue of €650M over 20 years. • Singapore: contract awarded for the collection and management of hous
Slide 10: Reinforcement of position in Latin America
Investor Relations – 1H13 Results Reinforcement of position in Latin America PROACTIVA Purchase FCC’s 50% stake • Closing expected 4th quarter Presence in 8 countries 2012 revenue: €541M, 39% Water and 61% Environmental Services 2012 Adjusted operating cash flow: €95M Equity value for €150M- Acquire
Slide 11: Second half 2013 action plans (1/2)
Investor Relations – 1H13 Results Second half 2013 action plans (1/2) Cost reductions: continued execution of the plan and expectation to exceed the €170M objective Completion of the asset refocusing program • Closing divestments currently in process • Transdev • Berlin Business development: deploym
Slide 12: Second half 2013 action plans (2/2)
Investor Relations – 1H13 Results Second half 2013 action plans (2/2) Business development: new organization Priority offerings Priority markets • Recycling of materials extracted from • Energy production mines • Aluminum recycling • Mining industry • Nuclear site decommissioning • Food & beverage •
Slide 13: First half 2013 results
2 First half 2013 results Pierre-François Riolacci
Slide 14: Key figures
Investor Relations – 1H13 Results Key figures ∆ at H1 2012 In €M H1 2013 ∆ constant re-presented (1) FX Revenue 11,448 11,074 -3.3% -2.3% (2) Adjusted operating cash flow 1,006 930 -7.6% -6.9% Operating income (3) 335 473 +41.3% +42.2% Adjusted operating income (4) 419 539 +28.4% +29.2% Adjusted net
Slide 15: Breakdown of revenue by division
Investor Relations – 1H13 Results Breakdown of revenue by division in €M 11,448 11,074 ∆ constant ∆ excl. FX & ∆ scope FX Water -4.6% -3.4% -3.7% Environmental -5.3% -4.2% -3.0% Services Energy Services +3.0% +3.1% +4.4% Other +39.6% +39.6% +6.0% Total -3.3% -2.3% -2.0% (1) (1) See Appendix 1 15
Slide 16: Revenue resilience in the 2nd quarter
Investor Relations – 1H13 Results Revenue resilience in the 2nd quarter 1st quarter 2nd quarter 1st half In €M 2012 Δ excl. 2012 Δ excl. 2012 Δ excl. 2013 seope & 2013 seope & 2013 seope Re-presented(1) Re-presented(1) Re-presented(1) FX FX & FX Operations 1,757 1,702 -2.4% 1,679 1,695 +2.1% 3,436 3
Slide 17: Water: Revenue of €5,000M
Investor Relations – 1H13 Results Water: Revenue of €5,000M Operations : Revenue stable at constant scope & FX Revenue (in €M) • France: revenue declined by 2.5% at constant scope to €1,559M 5,244 5,000 -4,6% Slowdown in construction and lower volumes sold (-1.9%) Continuation of contractual erosion
Slide 18: Water: Adjusted operating cash flow of €430M
Investor Relations – 1H13 Results Water: Adjusted operating cash flow of €430M Adjusted operating cash flow declined 3.2% at constant FX to €430M • Operations: Limited decrease in adjusted operating cash flow due to lower contractual erosion in France, despite unfavorable price impacts in Germany •
Slide 19: Environmental Services: Improved trend in Q2 (1/2)
Investor Relations – 1H13 Results Environmental Services: Improved trend in Q2 (1/2) Revenue variation H1 2013 / H1 2012: -5.3% and -3.0% at constant scope & FX 2013 Price and volumes of recycled materials -2.3% Waste volumes/ activity levels -1.1% Service price increases +0.9% Other (including cons
Slide 20: Environmental Services: Improved trend in Q2 (2/2)
Investor Relations – 1H13 Results Environmental Services: Improved trend in Q2 (2/2) Revenue declined 3.0% at constant scope & FX to €3,985M (Q1: -4.6% / Q2: -1.4%) • France revenue declined by 4.9% at constant scope: lower volumes collected and negative impact of recycled raw materials prices • UK
Slide 21: Energy Services: Revenue growth and significant improvement in adjusted operating income
Investor Relations – 1H13 Results Energy Services: Revenue growth and significant improvement in adjusted operating income Revenue increased 3.0% (+4.4% at constant scope & FX) to Revenue (in €M) €1,972M) • Higher energy prices: positive impact ~€40M (primarily in France) 1,972 +3.0% 1,914 • Favorab
Slide 22: Adjusted operating cash flow
Investor Relations – 1H13 Results Adjusted operating cash flow ∆ H1 2012 In €M H1 2013 ∆ constant Re-presented (1) FX Water 446 430 -3.6% -3.2% Environmental Services 438 404 -7.8% -6.7% Energy Services 157 155 -1.4% -1.2% Other -35 -59 -69.4% -69.4% Total Company 1,006 930 -7.6% -6.9% Margin 8.8% 8
Slide 23: Convergence Plan: H1 2013 Results
Investor Relations – 1H13 Results Convergence Plan: H1 2013 Results Cost reductions/ Convergence (before application of IFRS 10-11): €74M in net savings in the first half 2013 Impact on Operating Income before IFRS 10 & H1 2012 H2 2012 H1 2013 11 (in €M) Gross savings 59 83 110 Implementation costs
Slide 24: Focus on Dalkia International and China Water
Investor Relations – 1H13 Results Focus on Dalkia International and China Water Dalkia International (at 75.8%) Chinese Water concessions (Veolia share) In €M H1 2012 H1 2013 In €M H1 2012 H1 2013 re-presented re-presented Revenue 1,919 1,847* Revenue 247 262 Adjusted Adjusted Operating Cash 116 238
Slide 25: Reconciliation of adjusted operating cash flow to adjusted operating income
Investor Relations – 1H13 Results Reconciliation of adjusted operating cash flow to adjusted operating income H1 2012 ∆ In €M re- H1 2013 ∆ constant presented(1) FX Adjusted operating cash flow 1,006 930 (2) -7.6% -6.9% Depreciation & amortization -561 -563 Net capital gains +3 +17 Provisions, fair
Slide 26: Adjusted operating income
Investor Relations – 1H13 Results Adjusted operating income (1) H1 2012 ∆ constant In €M H1 2013 ∆ Re-presented (2) FX Water 238 231 -3.2% -3.2% Environmental Services 166 158 -4.8% -3.3% Energy Services 65 177 +171.1% +172.2% Others -50 -27 +46.8% +46.8% Total Company 419 539 +28.4% +29.2% (1) Incl
Slide 27: Reconciliation of adjusted operating income to operating income
Investor Relations – 1H13 Results Reconciliation of adjusted operating income to operating income En M€ H1 2012 re-presented (1) H1 2013 Adjusted operating income (2) 419 539 Impairment Environmental Services Germany - -49 Non-recurring charges related to VDP (VE SA) - -17 Impairment non-regulated U
Slide 28: Net finance costs
Investor Relations – 1H13 Results Net finance costs In €M H1 2012 H1 2013 ∆% Cost of net financial debt (including costs to repurchase -296.7 (1) -305.6 debt of €43M in 2013) Cost of net financial debt re-presented (2) -303.7 4.74% -263.8 5.16% +0.42% Impact of active debt management and debt amorti
Slide 29: Taxes
Investor Relations – 1H13 Results Taxes After adjusting for one-time items, the company tax rate at June 30, 2013 was 53%. The effective tax rate at June 30, 2013 is derived: Income Tax base Tax rate In €M expense before taxes Adjusted for one-time items -84 159 53% Cost of repurchasing debt - -43 G
Slide 30: Reconciliation of operating income to net income
Investor Relations – 1H13 Results Reconciliation of operating income to net income H1 2012 re-presented (1) H1 2013 In €M Adjusted Adjustment Total Adjusted Adjustment Total Operating income (2) 419.3 -84.6 334.7 538.6 -65.6 473.0 Cost of net financial debt (3) -273.2 - -273.2 -249.2 -43.0 -292.2 In
Slide 31: Divestments
Investor Relations – 1H13 Results Divestments Divestments completed during the first half 2013 In €M H1 2012 H1 2013 Industrial divestments 26 30 Financial divestments (1) 1,557 261 Increase in minority capital 2 1 Total divestments 1,585 292 (1) Including net financial debt of divested companies an
Slide 32: Transdev update
Investor Relations – 1H13 Results Transdev update Transdev: joint venture owned at 50% maintained in discontinued operations (excluding SNCM) • Confirmation of recovery at Transdev: Stable revenue Adjusted operating cash flow improvement of 24% • Extension of the agreement with la Caisse des Dépôts
Slide 33: Gross investments by division
Investor Relations – 1H13 Results Gross investments by division Growth In €M Financial, New Maintenance Industrial operating Total including Δ financial scope* assets Water 61 11 145 21 238 Environmental Services 115 10 110 23 258 Energy Services 20 1 71 31 123 Others 11 - 3 1 15 Total H1 2013 207 2
Slide 34: Statement of cash flows
Investor Relations – 1H13 Results Statement of cash flows In €M H1 2012 H1 2013 Operating cash flow before changes in working capital (1) 1,154 989 Reimbursement of operating financial assets 95 95 Total cash generation 1,249 1,084 Gross investments -944 -634 Variation working capital -500 -749 Taxe
Slide 35: Net financial debt
Investor Relations – 1H13 Results Net financial debt In €Bn POST IFRS 10, 11 & 12 (2) Net financial debt post IFRS 10 & 11 (1) Net financial debt / (Operating cash flow before changes in working capital + OFA repayments) 35 (2) Adjusted net financial debt / (Operating cash flow before changes in wor
Slide 36: Mid-term objectives confirmed
Investor Relations – 1H13 Results Mid-term objectives confirmed • €6 billion in divestments (1) • 2013 net financial debt, under new IFRS standards: 2012-2013: Net Financial Debt between €8bn and €9bn(2) Transformation Adjusted Net Financial Debt between €6bn and €7bn(2) Period • Cost reductions: in
Slide 37: Appendices
3 Appendices ENVIRONNEMENT
Slide 38: Summary of appendices
Investor Relations – 1H13 Results Summary of appendices Main H1 2012 re-presented figures for IFRS 5, 10 & 11 Appendix 1 Currency movements Appendix 2 Breakdown of revenue by geography Appendix 3 Environmental Services: Revenue in key countries Appendix 4-1 Environmental Services: Revenue by activit
Slide 39: Main H1 2012 figures re-presented for IFRS
Investor Relations – 1H13 Results Main H1 2012 figures re-presented for IFRS 6M ended IFRS5 IFRS 10 & 11 IAS 19R 6M ended June In €M June 30, 2012 Adjustment Adjustment Adjustment 30, 2012 (1) published Re-presented Revenue 14,781 -4 -3,329 11,448 Adjusted operating cash flow 1,384 23 -401 1,006 Ope
Slide 40: Appendix 2: Impact of exchange rate variations
Investor Relations – 1H13 Results Appendix 2: Impact of exchange rate variations Appreciation of the euro 6M 2013 / 6M 2012 Average rate Closing rate • Australian dollar -3.2% -14.8% • U.K. pound sterling -3.5% -6.2% • U.S. dollar -1.3% -3.9% • Czech koruna -2.1% -1.2% • Chinese renmimbi yuan +0.7%
Slide 41: Appendix 3: Breakdown of revenue by geography
Investor Relations – 1H13 Results Appendix 3: Breakdown of revenue by geography in €M 11,448 11,074 Δ Δ excl. Δ constant scope & FX FX Central & Eastern Europe -2.7% -1.7% +0.5% France -2.1% -2.1% -2.1% Europe excl. France & -3.8% -2.5% -1.0% Central & Eastern Europe United States -1.7% -0.4% +0.5%
Slide 42: Appendix 4-1: Environmental Services – Revenue in key countries
Investor Relations – 1H13 Results Appendix 4-1: Environmental Services – Revenue in key countries Var. at % of constant 1H13 scope & FX revenue 1H13/1H12 France 41% -4.9% Lower raw materials prices and volumes (paper / cardboard / scrap metal) Lower volumes collected Germany 12% -10.9% Lower prices
Slide 43: Appendix 4-2: Environmental Services - revenue by activity
Investor Relations – 1H13 Results Appendix 4-2: Environmental Services - revenue by activity First Half 2012* First Half 2013 * Re-presented for IFRS 10 & 11 43
Slide 44: Appendix 4-3: Environmental Services - Revenue versus Industrial Production
Investor Relations – 1H13 Results Appendix 4-3: Environmental Services - Revenue versus Industrial Production Industrial Production and Veolia Environmental Services Organic Growth Quarterly Y-Y Growth Rate (%) 15% 10% 5% 0% -5% -10% -15% Veolia Environmental Services Organic Growth Industrial Produ
Slide 45: Appendix 4-4: Evolution of recycled raw materials prices
Investor Relations – 1H13 Results Appendix 4-4: Environmental Services – Evolution of recycled raw materials prices (paper, cardboard, scrap metals) Evolution of raw materials prices (€/t) 45
Slide 46: Appendix 5: Efficiency Plan (1/2)
Investor Relations – 1H13 Results Appendix 5: Efficiency Plan (1/2) €83M in gross savings* in H1 2013 from 302 projects 46
Slide 47: Appendix 5: Convergence Plan (2/2)
Investor Relations – 1H13 Results Appendix 5: Convergence Plan (2/2) € 110M in gross savings in H1 2013 for 358 projects* * Net impact of €74M before IFRS 10-11 (and +€55M after)- Breakdown on the basis of gross savings 47
Slide 48: Appendix 6: Debt management (1/2)
Investor Relations – 1H13 Results Appendix 6: Debt management (1/2) Issuance at the beginning of January 2013 of subordinated perpetual hybrid debt in euros and pound sterling: €1 billion at a 4.5% yield and £400M at a 4.875% yield Financing of international activities of Dalkia International: issua
Slide 49: Appendix 6: Debt management (2/2)
Investor Relations – 1H13 Results Appendix 6: Debt management (2/2) 49
Slide 50: Appendix 7: Loans granted to joint ventures 2012 - 2013
Investor Relations – 1H13 Results Appendix 7: Loans granted to joint ventures 2012 - 2013 Detail of loans granted by the Company to main joint ventures: In €M December 2012 June 2013 Dalkia International 2,008 2,229 VTD 901 909 Others 76 164 TOTAL 2,985 3,302 50
Slide 51: Appendix 8: Net liquidity
Investor Relations – 1H13 Results Appendix 8: Net liquidity In €M Year ended December 31, 2012 H1 2013 re-presented Veolia Environnement 2012 Syndicated loans 2,607.3 3,000.0 Bilateral credit lines 925.0 825.0 Lines of credit 473.7 377.8 Cash and cash equivalents 4,349.6 3,145.6 Total Veolia Environ
Slide 52: Appendix 9: Consolidated statement of financial position
Investor Relations – 1H13 Results Appendix 9: Consolidated statement of financial position In €M As of As of June December 30, 2013 31, 2012 re-presented Intangible assets (concessions) 2,373 2,318 Property, Plant & Equipment 4,706 4,526 Other non-current assets 11,824 11,135 Operating financial ass
Slide 53: Appendix 10: Executive Committee composition
Investor Relations – 1H13 Results Appendix 10: Executive Committee composition Antoine Frérot • Chairman & CEO of Veolia Environnement Laurent Auguste • Director of Innovation and Markets François Bertreau • Chief Operating Officer Estelle Brachlianoff • Director of Northern Europe Régis Calmels • D
Slide 54: Appendix 11: CSR Commitments (1/4)
Investor Relations – 1H13 Results Appendix 11: CSR Commitments (1/4) Assure the safety and healthy of employees 48% of employees trained in safety Promote diversity and Encourage skills development and combat discrimination upward mobility 88% 2 5.5 Of courses courses on million hours of taken by av
Slide 55: Appendix 11: CSR Commitments (2/4)
Investor Relations – 1H13 Results Appendix 11: CSR Commitments (2/4) Management Control risks and impacts related to our activities and operational entities Combating climate change Propose solutions and services that avoid or reduce greenhouse gas emissions Conservation and development of biodivers
Slide 56: Appendix 11: CSR Commitments (3/4)
Investor Relations – 1H13 Results Appendix 11: CSR Commitments (3/4) Pollution abatement and protecting health Resource conservation • Saving water resources • Conserving energy resources • Reduce raw material consumption 56
Slide 57: Appendix 11: CSR Commitments (4/4)
Investor Relations – 1H13 Results Appendix 11: CSR Commitments (4/4) Contribute to local economic and social development • Provide public services 101 71 54 11 million people million people million people million people benefit from benefit from benefit from benefit from drinking water wastewater wa
Slide 58: Investor Relations contact information
Investor Relations – 1H13 Results Investor Relations contact information Ronald Wasylec, Senior Vice President, Investor Relations Téléphone +33 1 71 75 12 23 e-mail ronald.wasylec@veolia.com Ariane de Lamaze Téléphone +33 1 71 75 06 00 e-mail ariane.de-lamaze@veolia.com 38 Avenue Kléber – 75116 Par