Veolia Environnement Sa · EURONEXT:VIE
Veolia Environnement Sa — Veolia — H1 2023 Earnings Presentation
49 slides from Veolia Environnement Sa's earnings presentation, Aug 3, 2023
Slide 1: H1 2023 Results
H1 2023 RESULTS Estelle Brachlianoff, CEO Claude Laruelle, CFO August 3rd, 2023
Slide 2: Agenda
AGENDA 1 H1, 2023 highlights 2 Detailed H1, 2023 financial and operational performance 3 Appendices H1 2023 2
Slide 3: Key H1 2023 Highlights
KEY H1 2023 HIGHLIGHTS A very strong 1st half Very strong H1 results Confirmation of the strength of our business (1) Revenue €22 755M up +14.2% model, coping with higher inflation, resilient to EBITDA €3 162M, up +8.2%(1) macro context, and strong operating leverage Current EBIT(2) €1 674M, up +13.
Slide 4: A strong 1st half at the high end of the year's objective
A STRONG 1ST HALF AT THE HIGH END OF THE YEAR’S OBJECTIVE Q2 operational trends all in line with Q1 Var. vs. H1 In €M H1 2022 Scope Forex H1 2023 2022(1) Revenue 20 196 -20 -293 22 755 +14.2% EBITDA 2 953 -12 -21 3 162 +8.2% Current EBIT(2) 1 515 -32 -11 1 674 +13.3% Current Net Income(2) 550 nd +9
Slide 5: Very strong profits growth despite uncertain environment
VERY STRONG PROFITS GROWTH DESPITE UNCERTAIN ENVIRONMENT Thanks to strong foundations and powerful growth engine H1 results at the high end of our annual guidance, despite softening economic conditions and continued flat waste volumes, thanks to: 1. A balanced geographical mix, 40% outside Europe :
Slide 6: A balanced geographical mix: Example of the US
STRONG FOUNDATIONS AND POWERFUL GROWTH ENGINE 1. A balanced geographical mix : Example of the US US performance in H1: strong profits growth delivered by all business lines A very strong H1 ● Revenue of $1 762M, up 10%(1) ● EBITDA $243M up 13%(1) Hazardous Waste : an outstanding start of the year ●
Slide 7: Strong positions in key activities: Water Technologies
STRONG FOUNDATIONS AND POWERFUL GROWTH ENGINE 2. Strong positions in key activities & countries : Example of Water Technologies Water Technologies in H1: strong profits growth delivered by all business lines A very strong H1 ● Revenue of €2183M, up 9 % at constant forex and scope ● EBITDA €233M up 1
Slide 8: A well-balanced and resilient set of business
STRONG FOUNDATIONS AND POWERFUL GROWTH ENGINE 3. A well-balanced and resilient set of business Higher indexations & price increases, started in 2021, continue successfully in 2023 Veolia fully protected against cost inflation For our indexed revenue base (70% of total) For our 30% of revenue non ind
Slide 9: Strong commercial momentum: significant new wins in Q2
STRONG FOUNDATIONS AND POWERFUL GROWTH ENGINE 4. Strong commercial momentum : significant new wins in Q2 Focus on Water Scarcity Water Resource Regeneration 2 innovative contracts in Water France Veolia will design and deliver one of the to tackle water scarcity world’s largest energy-efficient desa
Slide 10: Strong commercial momentum: significant new wins in Q2
STRONG FOUNDATIONS AND POWERFUL GROWTH ENGINE 4. Strong commercial momentum : significant new wins in Q2 Focus on Water Scarcity Water Resource Regeneration 50 “Reut box” sold in less than a year Largest drinking water plant in West in France Africa to be operated by Veolia and its to reuse wastewat
Slide 11: Strong commercial momentum: significant new wins in Q2
STRONG FOUNDATIONS AND POWERFUL GROWTH ENGINE 4. Strong commercial momentum : significant new wins in Q2 Focus on Water Scarcity Water Technologies SAMSUNG : Veolia will provide wastewater treatment engineering and equipment for the extension of their semiconductors plant in Austin, Texas ○ $177m ov
Slide 12: Strong commercial momentum: lithium recovery water technologies
STRONG FOUNDATIONS AND POWERFUL GROWTH ENGINE 4. Strong commercial momentum : significant new wins in Q2 Focus on Water : Resource Regenenaration Water technologies for lithium recovery market LITHIUM : Veolia will design and supply its flagship HPD ® technology to two battery-grade lithium hydroxid
Slide 13: Merger with Suez: synergies delivered
STRONG FOUNDATIONS AND POWERFUL GROWTH ENGINE 5. Delivery track record, operational excellence and benefits of the merger with Suez Synergies: €84M delivered in H1 and €230M cumulated, in advance of our objective of +€280M end 2023 H1 synergies split Confirmed €500M cumulated cost synergies Main con
Slide 14: Efficiency: €187M delivered in H1
STRONG FOUNDATIONS AND POWERFUL GROWTH ENGINE 5. Delivery track record, operational excellence and benefits of the merger with Suez Efficiency : €187M delivered in H1, 53% of the €350M annual objective H1 2023 Savings by category H1 2023 Savings by Geography H1 2023 14
Slide 15: Veolia: the reference ESG company
VEOLIA : THE REFERENCE ESG COMPANY Acceleration of decarbonization : 1/3 of coal exit program already delivered NetZero 10-year reduction trajectory already Veolia the 2050 committed and under delivery: reference ESG commitment company ● Coal exit in Europe by 2030 ○ MASSIVE €1.5bn investment progra
Slide 16: H1 confirms our capacity to deliver strong earnings growth
H1 CONFIRMS OUR CAPACITY TO DELIVER STRONG EARNINGS GROWTH Regardless of the macro context 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 Resilience: A very resilien
Slide 17: Fully confirmed 2023 guidance
FULLY CONFIRMED 2023 GUIDANCE(1) EBITDA growth at the top end of the guidance range Revenue: solid organic growth Net debt: leverage ratio ~3x EBITDA: organic growth at the top end Dividend policy: dividend to grow in line of the range of +5% to +7% vs. 2022, with current EPS driven by: ○ €350M of e
Slide 18: H1 2023 Financial & Operational Performance
H1 2022 Financial & Operational Performance Claude Laruelle, CFO H1 2023
Slide 19: H1 2023 Results
H1 2023 RESULTS A strong 1st half, at the top end of the year’s objectives Var. vs. H1 2022 at In €M H1 2022 H1 2023 constant scope and FX Revenue 20 196 22 755 +14.2% EBITDA 2 953 3 162 +8.2% Current EBIT(1) 1 515 1 674 +13.3% Current net income group share(1) 550 662 +18.7%(2) Net income group sha
Slide 20: Q2 2023 Results
Q2 2023 RESULTS Continued solid delivery in Q2, despite softening economic environment In €M Q1 Var. vs. Q1 Q2 Q2 Var. vs. Q2 H1 H1 Var. vs H1 2023 2022(1) 2022 2023 2022(1) 2022 2023 2022(1) Revenue 12 007 +19.9% 10 261 10 748 +8.8% 20 196 22 755 +14.2% EBITDA 1 574 +8.0% 1 498 1 588 +8.4% 2 953 3
Slide 21: Revenue of €22,755M, up 14.2% at constant scope and forex
REVENUE OF €22 755M, UP +14.2% AT CONSTANT SCOPE AND FOREX Strong revenue growth outside France Revenue Evolution by Region vs H1 2022 ❏ Water Technologies: +9% ✓ +11.4% at WTS driven by Products, Projects, Services and Chemicals €M % at constant scope and FX +12% (o/w +9% pricing). Very strong pipe
Slide 22: Water revenue of €8,834M, up 8.4%
WATER REVENUE OF €8 834M, UP +8.4% AT CONSTANT SCOPE AND FX Growth driven by tariff indexations and strong Water Technologies +8.4%(1) Key countries for M€ Variation vs. H1 2022 H1 2023 Water Operations France 28% Volumes /Commerce/Works +4.3% Spain 17% Price effect +4.4% USA 15% Latam 11% Other -0.
Slide 23: Waste revenue of €7,344M, up 3.3%
WASTE REVENUE OF €7 344M, UP +3.3% AT CONSTANT SCOPE AND FX Growth of +6.3% excl. recyclate prices, driven by strong pricing and resilient volumes +3.3%(1) Variation vs. H1 2022 H1 2023 M€ Key countries for Volumes -0.2% Solid Waste Commerce/Works +0.7% France 30% UK 21% Price increases +4.9% German
Slide 24: Energy revenue of €6,578M, organic growth of 41.3%
ENERGY REVENUE OF €6 578M, AN ORGANIC GROWTH OF +41.3% Driven by energy price increases M€ +41.3%(1) Key countries Variation vs. H1 2022 H1 2023 District Heating Volumes / commerce / works +3.9% Central Europe : 94% China : 4% Weather -0.7% Energy price increases +37.3% Key countries B&I Other +0.8%
Slide 25: Organic revenue growth of +14.2% vs. H1 2022
ORGANIC REVENUE GROWTH OF +14.2% vs. H1 2022 Underlying organic revenue growth of +5.2% excluding energy prices Evolution vs H1 2022 ▪ FOREX: -€293M (Argentinian peso, sterling pound, Australian $, Chinese Organic revenue growth : +14.2% Yuan) In M€ ▪ SCOPE: -€20M Divestment of Suez waste assets in
Slide 26: Organic EBITDA growth of +8.2% vs. H1 2022
ORGANIC EBITDA GROWTH OF +8.2% vs. H1 2022 Fueled by pricing, commerce and operational excellence Evolution vs H1 2022 ▪ FOREX: -€21M (Argentinian peso, sterling pound, Australian $, Chinese Yuan) Organic EBITDA growth : +8.2% ▪ SCOPE: -€12M Divestment of Suez In M€ waste assets in the UK offset by
Slide 27: Current EBIT of €1,674M up 13.3%
CURRENT EBIT(1) OF €1 674M UP 13.3% AT CONSTANT SCOPE AND FOREX Variation at In €M H1 2022 H1 2023 constant scope and FX EBITDA 2 953 3 162 +8.2% Renewal expenses -147 -153 Amortizations(1) including OFA repayment -1 490 -1 481 Industrial capital gains net of provisions and asset +139 +93 impairment
Slide 28: Current net income of €662M up 18.7%
CURRENT NET INCOME(1) OF €662M UP +18.7%(4) VS. JUNE 2022 In €M H1 2022 H1 2023 Variation Before PPA Current EBIT (1) 1 515 1 674 13.3% (2) Cost of net financial debt -320 -312 Other financial income and expense -199 -120 Net financial capital gains(3) -8 -3 Income tax expense -266 -332 Non-controll
Slide 29: Net income group share of €523M, up 118%
NET INCOME GROUP SHARE OF €523M, UP +118% VS. JUNE 2022 In €M H1 2022 H1 2023 Variation Current net income – Group share before PPA 550 (1) 662 (1) +18.7%(2) Suez acquisition and integration costs -154 -55 Restructuring charges -32 -37 Non current impairment (incl. GW) and other -128 -47 charges inc
Slide 30: Strong improvement of net FCF of +€226M
STRONG IMPROVEMENT OF NET FCF of +€226M Despite usual WCR seasonality Comments Gross capex evolution (€M) ■ Gross industrial capex of €1 820M include accelerated 1 820 decarbonization capex 1 624(3) ✓ Maintenance capex of €879M, including renewal of HQ lease (IFRS 16) ✓ Contractual capex of €656M st
Slide 31: Net financial debt of €19.2bn
NET FINANCIAL DEBT OF €19.2bn(1) Leverage ratio of 3 times at June 30 (despite WCR seasonality) In €M Net FCF -€78M (1) Excluding PPA H1 2023 (2) including Suez earn out for +€284M 31
Slide 32: Fully confirmed 2023 guidance
FULLY CONFIRMED 2023 GUIDANCE(1) EBITDA growth at the top end of the guidance range Revenue: Net debt: solid organic growth leverage ratio ~3x EBITDA: organic growth at the top end Dividend policy: dividend to grow in line of the range of +5% to +7% vs. 2022, with current EPS driven by: ○ €350M of e
Slide 33: Appendices
Appendices
Slide 34: Appendix 1: Forex
APPENDIX 1: FOREX Focus on the main currencies H1 2023 34
Slide 35: Appendix 2: Detailed revenue by business
APPENDIX 2: DETAILED REVENUE BY BUSINESS In M€ 2022 Revenue H1 2022 H1 2023 Water published 18,260 8,556 8,834 Municipal non regulated (*) 9,765 4,572 5,096 Municipal regulated 1,285 591 685 Water Technologies 4,561 2,075 2,183 Construction 1,028 514 529 Water - Other 599 316 342 Total Water excludi
Slide 36: Appendix 3: Analysis by geography – France and Hazardous Waste Europe
APPENDIX 3: ANALYSIS BY GEOGRAPHY France and Hazardous Waste Europe €M June 2022 June 2023 Δ at constant scope and FX Revenue of which 4 754 4 795 +1.5% Water France 1 429 1 432 +0.8% Waste France 1 479 1 459 -0.6% Hazardous Waste Europe 1 047 1 060 +0.3% Other (Industrial services and SADE) 799 844
Slide 37: Appendix 4: Rest of Europe
APPENDIX 4: ANALYSIS BY GEOGRAPHY Rest of Europe: Very strong growth in H1 €M June 2022 June 2023 Δ at constant scope and FX Revenue of which 8 505 9 883 +23.2% Central and Eastern Europe 4 301 6 127 +41.5% Northern Europe 2 511 1 989 +5.2% Southern Europe 1 693 1 763 +3.3% EBITDA 1 217 1 341 +16.2%
Slide 38: Appendix 5: Rest of the world
APPENDIX 5: ANALYSIS BY GEOGRAPHY Rest of the world: continued solid growth €M Δ at constant June 2022 June 2023 scope and FX Revenue of which 5 256 5 883 +12.1% Asia - Pacific 2 217 2 268 +7.2% o/w Asia 1 250 1 280 +7.0% o/w Pacific 966 988 +7.5% Latin America 815 955 +28.1% North America 1 538 1 6
Slide 39: Appendix 6: Water Technologies
APPENDIX 6: ANALYSIS BY GEOGRAPHY Water Technologies: a strong start to the year €M Δ at constant scope and June 2022 June 2023 FX Water Technologies 2 075 2 183 +9.0% o/w VWT 740 731 +4.6% o/w WTS 1334 1 452 +11.4% EBITDA 212 233 +13.0% EBITDA margin 10.2% 10.7% Comments Water Technologies Revenue
Slide 40: Appendix 7: Waste revenue by activity
APPENDIX 7 Waste – breakdown waste revenue by activity H1 2023 Waste Revenue €7 344M H1 2023 40
Slide 41: Appendix 8: Net financing rate
APPENDIX 8 In €M June 2022 June 2023 Net financing rate Average gross debt (1) 26 627 26 230 Gross cost of borrowing 2.51% 3.47% o Cost of net financial debt of €312M Average cash balance 10 268 9 496 o Net financing rate remains stable, from 3.65% in June Interest rate 0.62% 3.17% 2022 to 3.67% in
Slide 42: Appendix 9: Debt management
APPENDIX 9 Debt management NFD after hedges at June 30, 2023 ✔ Repayment in June 2023 of the “PANDA BOND” for Fixed rate : 80% Variabilized rate: 14% an amount of €197M bearing a coupon of 3.85%. Inflated rate: 6% ✔ Group liquidity : €15.4bn including €5.5bn in Currency breakdown of gross debt undra
Slide 43: Appendix 10: Combined debt profile
APPENDIX 10 Combined debt profile (at June 30, 2023) RATING • Moody’s : P-2/ Baa1 stable outlook • Standard & Poor’s : A-2 / BBB stable outlook H1 2023 43
Slide 44: Appendix 11: Net liquidity
APPENDIX 11 Net liquidity June 2022 June 2023 Syndicated credit lines 3 000.0 4 500.0 Bilateral credit lines 1 000.0 801.4 Lines of credit 10.1 - Cash and cash equivalents 4 235.1 7 281.5 Total Veolia 8 245.2 12 582.9 Subsidiaries Bilateral credit lines 2 500.0 224.9 Cash and cash equivalents(1) 4 4
Slide 45: Appendix 12: Net industrial investments by segment
APPENDIX 12 Net industrial investments by segment Maintenance Contractual Discretionary Total gross Industrial Total net June 30, 2022 (in € million) including IFRS16 Capex Growth Capex CAPEX divestitures CAPEX France and Special Waste Europe 224 95 17 336 -70 267 Europe excluding France 222 190 127
Slide 46: Appendix 13: Statement of cash flows
APPENDIX 13 Statement of cash flows In €M June 2022 June 2023 EBITDA(1) 2 953 3 162 (1) Including principal payments on operating financial assets Net industrial investments -1 310 -1 695 WCR variation -821 -821 (2) Improvement linked to negative one off forex charges in H1 2022 Dividends received +
Slide 47: Appendix 14: Consolidated statement of financial position
APPENDIX 14 Consolidated statement of financial position June 2022 June 2023 Intangible Assets 21 452 20 148 Property, Plant & Equipment 15 898 16 958 Other non-current assets 6 866 6 342 Operating financial assets (current and non-current) 1 456 1 368 Cash and cash equivalents 7 175 7 900 Other cur
Slide 48: Appendix 15: 2022 current EBIT and net income redefined
APPENDIX 15 2022 Current EBIT and Current Net Income redefined June 2022 Suez PPA June 2022 (in € millions) published impact redefined Current EBIT 1 475 -40 1 515 Financial result -527 -527 Income tax -256 9 -266 Non controlling interests -164 8 -172 Current Net result - Group share 528 -22 550 H1
Slide 49: 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