Veolia Environnement Sa · EURONEXT:VIE
Veolia Environnement Sa — FY2021 Earnings Presentation
62 slides from Veolia Environnement Sa's earnings presentation, Mar 17, 2022
Slide 1: FY 2021 Results
FY 2021 Results 17 March 2022
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: Table of Contents
TABLE OF CONTENTS Success of the tender An outstanding 2021 An ambitious ESG 1 2 3 offer on Suez performance agenda 2022 guidance for the Detailed Veolia 2021 4 6 Appendices merged Group 5 Operational and Financial performance 2021 Results 3
Slide 4: 1- Success of the Tender Offer
1- Success of the Tender Offer Acquisition of Suez completed on January 18th, 2022 Antoine Frérot, CEO
Slide 5: Successful Tender Offer: Veolia Owns 100% of Suez
SUCCESSFUL TENDER OFFER: VEOLIA OWNS 100% OF SUEZ 18 January 2022, a historical day for Veolia Jan.7th : Tender Offer closed 86.2% of Suez shares owned by Veolia Successful Settlement of the Offer on 18/01: 1st day of ownership and consolidation Tender Offer Jan.12th-Jan 27th : Offer re-opened 95.95
Slide 6: 2022 Veolia Suez Merger Priorities
2022 VEOLIA SUEZ MERGER PRIORITIES Merger plans and first synergies 2022 Merger agenda 2022 synergy plan : €100M confirmed New Governance Detailed synergy plan in all BUs (excluding the New Veolia Governance from 1st July 2022 : Antoine UK) to get off to a good start Frérot Chairman, Estelle Brachli
Slide 7: 2- An outstanding 2021 performance
2- An outstanding 2021 performance 2021 delivery significantly above 2020 and 2019 for Veolia and Suez Antoine Frérot, CEO Estelle Brachlianoff, COO
Slide 8: Veolia Delivered Outstanding 2021 Performance at All Levels
VEOLIA DELIVERED OUTSTANDING 2021 PERFORMANCE AT ALL LEVELS 1 Strong Revenue growth of +9.6% vs. 2020(1) and +6.5% vs. 2019(1) to €28.5bn Growth acceleration in Q4 fuelled by energy prices and supportive pricing Record profitability 2 EBITDA of €4 234M, above raised guidance,+16% vs. 2020(1) , +6.9%
Slide 9: 2021 Key Highlights: Continued Revenue Growth Acceleration
2021 KEY HIGHLIGHTS : CONTINUED REVENUE GROWTH ACCELERATION Confirmed post COVID volume recovery, very supportive pricing environment and acceleration of growth in new high value solutions ❑ Revenue growth acceleration in Q4 (+10.1% after +9.4% in the 9M)(1) driven by prices: o A powerful price effe
Slide 10: Record Net FCF Generation of €1,219M
RECORD NET FCF GENERATION OF €1 219M Net financial debt sharply down to €9.5bn In € million Net debt and leverage(1) Net FCF generation Leverage 2.7x 3.6x 2.2x 122 1 219 13 217 868 10 680 9 532 507 2019 2020 2021 2019 2020 2021 Suez dividend BBB / Baa1 ratings confirmed by S&P Veolia 2021 standalone
Slide 11: Back to Strong Value Creation
BACK TO STRONG VALUE CREATION ROCE after tax up 210 bp to 8.5%, above 2019 level Capital employed in €bn ROCE after tax including IFRS 16* 20,0 9,0% 19,0 8,2% 8,4% 8,5% 17,9 8,0% 18,0 17,5 17,5 17,6 17,0 Value creation 7,0% 16,0 +330 bp 6,4% 15,0 5,5% 6,0% 5,3% 5,2% 5,2% 14,0 5,0% 13,0 12,0 4,0% 11,
Slide 12: Fully Recovered Commercial Momentum
FULLY RECOVERED COMMERCIAL MOMENTUM Strong growth of new businesses and complex solutions Treating pollutants in the air, water and soils Circular economy to help managing resource scarcity o 1st hazardous waste contract in Japan (€20M/year) o Taiwan: new waste to energy contract (LuTsao) (€510m o T
Slide 13: Activity Largely Above 2019 Pre Covid Levels
ACTIVITY LARGELY ABOVE 2019 PRE COVID LEVELS driven by waste volume rebound, supportive pricing and growth business REVENUE BY BUSINESS vs. 2019 AND 2020 ❑ Municipal Water (revenue of €5 991M) : back to normal volumes in Revenue variation at constant scope and FX almost all geographies, small impact
Slide 14: Veolia to Be Favorably Impacted in 2022 by Inflation
VEOLIA TO BE FAVORABLY IMPACTED IN 2022 BY INFLATION ….and protected by cost indexation and commodity hedging Positive impact of inflation combined with strong discipline on pricing strategy o Higher indexation formulas on most contracts, reflecting inflation of cost of factors o Systematic implemen
Slide 15: Strong Efficiency Gains, 9% Above Annual Objective
STRONG EFFICIENCY GAINS, 9% above our annual objective 550 382 450 2021 annual objective raised from €250M to €350M including €M Synergies extra specific efforts in 2021 only linked to Covid 272 100 102 Recover & Adapt €280M in efficiency gains, vs. €278M€ in 2020 278 280 350 Efficiency 248 €102M in
Slide 16: Ukraine War: Minimal Direct Exposure
UKRAINE WAR MINIMAL DIRECT EXPOSURE, AND PROTECTED MUNICIPAL ACTIVITIES IN EASTERN EUROPE 2021 Central and Eastern Europe revenue split Minimal Ukraine and Russia exposure 0% €120M revenue and less than 0.5% of capital employed 1% 2% Poland 3% 7% Czech Reublic Eastern Europe activities : municipal e
Slide 17: Veolia Re Source
VEOLIA Re SOURCE Proven Veolia’s ability to be resilient, but also react and adapt quickly o Back to pre-Covid results as soon as H2 2020, thanks to our Recover and Adapt Plan Veolia produces locally-sourced sustainable energy & materials in Europe o Green & local gas produced from the methanization
Slide 18: 3- An ambitious ESG agenda
3- An ambitious ESG agenda Estelle Brachlianoff, COO
Slide 19: Veolia's Performance and Value Creation Model
VEOLIA’S PERFORMANCE AND VALUE CREATION MODEL Measure impact for our different stakeholders 2021 Results 19
Slide 20: A Very Strong 2021 Performance on All Fronts
A VERY STRONG 2021 PERFORMANCE ON ALL FRONTS Selected key performance indicators Dimension Objective KPI 2019 2021 2023 Target Employee commitment Commitment rate of employees measured 84 % 87% Above 80 % Human SDG 8 through an independent survey Resources Increase employee shareholding Performance
Slide 21: The New Veolia Is Ideally Positioned
THE NEW VEOLIA IS IDEALLY POSITIONED to provide solutions to major environmental and societal challenges CLIMATE CHANGE SCARCITY OF RESOURCES POLLUTION THREATS TO BIODIVERSITY AND FOOD SECURITY ● Proliferation of extreme weather ● Increasing worldwide consumption ● Pollution linked to industry, ● Po
Slide 22: Climate Change Agenda
CLIMATE CHANGE AGENDA Strong commitments and positive impact for our customers OUR SERVICES HELP OUR CUSTOMERS IN THEIR 2021 Revenue split based on the green taxonomy eligibility grid 48% already eligible to potential positive impact on climate DECARBONATION AGENDA : 11.4 MT AVOIDED EMISSIONS potent
Slide 23: 4- Guidance for the merged Group
4- Guidance for the merged Group Antoine Frérot, CEO
Slide 24: 2021 Results of the Combined Group
2021 RESULTS OF THE COMBINED GROUP Combined 2021 Revenue(1) (€bn) Combined 2021 EBITDA(1)(2) EBITDA Margin(1)(2) (%) Combined Net Increased scale (€bn) Improved profitability Financial Debt(1) (€bn) +33% +40% +70bp Leverage 3x 5.9 38 18.2 15.5 14.8 28.5 4.2 8.7 Suez Veolia 9.5 (1) (1) (1) Veolia Veo
Slide 25: 2022 Merged Group Guidance
2022 MERGED GROUP GUIDANCE(1) CURRENT NET INCOME GROWTH OF MORE THAN 20% TO AROUND €1.1BN€ Solid organic revenue growth o Driven by higher indexation, price increases and good commercial momentum EBITDA : organic growth between +4% and +6% vs. combined 2021 driven by : o >€350M of efficiency gains o
Slide 26: 6- 2021 Financial & Operational Performance
6- 2021 Financial & Operational Performance 2021 delivery significantly above 2020 and 2019 Claude Laruelle, CFO
Slide 27: 2021 Key Figures
2021 KEY FIGURES REVENUE UP +9.6% AND EBITDA UP +16% AT CONSTANT FX CURRENT NET INCOME OF €896M AND RECORD FCF GENERATION OF €1.2BN Var. at Var. at Var. Y-Y vs. In €M 2019 2020 2021 constant FX constant FX 2020 vs. 2020 vs. 2019 Revenue 27 189 26 010 28 508 +9.6% +9.6% +6.5% EBITDA 4 022 3 641 4 234
Slide 28: Q4 2021 Key Activity Highlights
Q4 2021 KEY ACTIVITY HIGHLIGHTS 2019 2020 2021 Revenue growth at cst FX Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year France +2.0% -3.1% -16.1% +0.8% +2.5% -3.9% +5.7% +23.5% +3.4% +5.2% +8.9% Europe excl. France +4.1% +1.1% -6.7% +0.8% +5.3% +0.4% +9.0% +20.9% +13.0% +19.9% +15.6% Rest of the World +8.7%
Slide 29: Revenue Increase of +9.6% vs. 2020
REVENUE INCREASE OF +9.6%(1) VS. 2020 driven by volume rebound and strong prices In €M FX: -€4M : Latin America (-€41M), North America (-53M), Central & Eastern Europe (-€19M), partially offset by the UK (+€75M) and Australia (+€51M) 28 508 405 SCOPE: +€234M : acquisitions of energy assets in 904 Ce
Slide 30: Waste Revenue Up +15.5% to €11,228M
WASTE REVENUE UP +15.5% TO €11 228M Volume rebound, solid pricing and high recyclate prices Q1, 2020 Q2, 2020 Q3, 2020 Q4, 2020 Q1, 2021 Q2, 2021 Q3, 2021 Q4, 2021 FY 2021 Volumes / activity levels -1.8% -14.7% -2.6% -1.8% -0.8% +14.9% +3.2% +4.8% +5.3% Price increases +2.4% +1.9% +1.6% +2.3% +1.7%
Slide 31: EBITDA Increase of +16% vs. 2020
EBITDA INCREASE OF +16%(1) vs. 2020 FULL OPERATING LEVERAGE RECOVERY BOOSTED BY EFFICIENCY FOREX: +€9M. Latam -€8M, USA -€6M, UK+€13M 4 234 SCOPE : +€78M : mostly acquisitions in Central Europe and Osis partially offset by 11 35 382 divestiture of Sade Telecom 199 277 COMMERCE/VOLUMES/WORKS +€277M 3
Slide 32: France – 2021 Operational Review
FRANCE – 2021 OPERATIONAL REVIEW SHARP REBOUND OF REVENUE AND EBITDA VS. 2020 AND VS. 2019 ∆ vs. ∆ at constant FX ∆ at constant FX In €M 2019 2020 2021 vs. 2019 2020 vs. 2020 Revenue, of which 5 612 5 390 5 868 +8.9% +8.9% +4.6% Water 3 004 2 937 2 971 +1.2% +1.2% -1.1% Waste 2 608 2 453 2 897 +18.1
Slide 33: Rest of Europe – 2021 Operational Review
REST OF EUROPE – 2021 OPERATIONAL REVIEW A VERY STRONG GROWTH WITH AN OUTSTANDING EBITDA PERFORMANCE ∆ ∆ ∆ at constant In €M 2019 2020 2021 At constant FX vs. 2020 FX vs. 2019 vs. 2020 Revenue, of which 9 501 9 411 10 942 +16.3% +15.6% +16.0% Central & Eastern Europe (incl. Germany) 5 175 5 251 6 26
Slide 34: Rest of the World – 2021 Operational Review
REST OF THE WORLD – 2021 OPERATIONAL REVIEW RECOVERY CONFIRMED ∆ ∆ at constant FX ∆ at constant In €M 2019 2020 2021 vs. 2020 vs. 2020 FX vs. 2019 Revenue, of which 7 325 6 760 7 067 +4.5% +5.4% +2.6%(1) Asia 2 135 2 131 2 132 +0.1% +1.1% +1.7% Latin America (Latam) 853 771 839 +8.7% +14.1% +23.1% N
Slide 35: Global Business – 2021 Operational Review
GLOBAL BUSINESS – 2021 OPERATIONAL REVIEW A VERY STRONG REBOUND ∆ ∆ ∆ at constant FX In €M 2019 2020 2021 At constant FX vs. 2020 vs. 2019 vs. 2020 Revenue, of which 4 734 4 444 4 629 +4.2% +4.4%/+6.5%(1) +0.3%(1) Construction 2 823 2 748 2 504 -8.9% +2.8%(1) +0.8%(1) Hazardous & liquid waste Europe
Slide 36: Current EBIT to €1,766M, Up 41.7% at Constant Forex
CURRENT EBIT TO €1 766M UP 41.7% AT CONSTANT FOREX 2019 2020 2021 Var. vs. 2020 at Var. vs. 2019 at In €M constant FX constant FX EBITDA 4 022 3 641 4 234 +16.0% +6.9% Renewal expenses -280 -275 -292 Depreciation & Amortization (including -2 192 -2 190 -2 349 principal payments on OFAs) Provisions,
Slide 37: Record Current Net Income of €896M
RECORD CURRENT NET INCOME OF €896M (+20.9% AT CONSTANT FX VS. 2019) 2019 2020 2021 Var. vs. 2020 Var. vs. 2019 at In €M at constant FX constant FX Current EBIT(1) 1 709 1 242 1 766 +41.7% +5.3% Cost of net financial debt -440 -414 -343 Other financial income and expense -179 -166 -145 Suez dividend
Slide 38: Net Income Group Share of €404M
NET INCOME GROUP SHARE OF €404M Non current items mostly due to SUEZ operation and covid costs 2019 2020 2021 Variation vs. 2020 In €M at constant FX Current net income Group share (1) 738 382 896 +132.9% Non current impairment and other charges(2) -188 -168 -207 Restructuring charges -127 -107 -68
Slide 39: Outstanding Improvement in FCF of +€712M to €1,219M
OUTSTANDING IMPROVEMENT IN FCF OF +€712M TO €1 219M due to EBITDA growth, controlled capex and strict cash discipline 2 151 Net Capex (€M) 2 212 Discretionary Controlled net industrial Capex : €2 212M vs. €2 151M growth capex 435 456 o Optimization of maintenance and contractual capex 455 483 Contra
Slide 40: Evolution of Net Financial Debt
EVOLUTION OF NET FINANCIAL DEBT In €M 223 382 298 286 558 472 4 234 64 3 136 2 212 292 236 13 217 9 532 2021 Results 40
Slide 41: 2022 Merged Group Guidance
2022 MERGED GROUP GUIDANCE(1) CURRENT NET INCOME GROWTH OF MORE THAN 20% TO AROUND €1.1BN€ Solid organic revenue growth o Driven by higher indexation, price increases and good commercial momentum EBITDA : organic growth between +4% and +6% vs. combined 2021 driven by : o >€350M of efficiency gains o
Slide 42: 7. Appendices
7. Appendices
Slide 43: Appendix 1: Main Represented Figures for Nine Months to Dec 2019 & 2020
APPENDIX 1: MAIN REPRESENTED FIGURES FOR THE NINE MONTHS- ENDED DECEMBER 31, 2019 & DECEMBER 31, 2020 Impact of personnel costs share-based payments (IFRS2) reclassification as a current item 31 Dec 2019 IFRS 2 31 Dec 2019 31 Dec 2020 IFRS 2 31 Dec 2020 (in million euros) published impact represente
Slide 44: Appendix 2: Currency Movements
APPENDIX 2: CURRENCY MOVEMENTS For 1€ 2020 2021 ∆ 2021 vs. 2020 US dollar Average rate 1.141 1.183 -3.7% Closing rate 1.227 1.133 +7.7% UK pound sterling Average rate 0.889 0.860 +3.3% Closing rate 0.899 0.840 +6.5% Australian dollar Average rate 1.655 1.575 +4.9% Closing rate 1.590 1.562 +1.8% Chin
Slide 45: Appendix 3: Revenue by Segment
APPENDIX 3: REVENUE OF €28 508M, +9.6% AT CONSTANT FX Analysis by SEGMENT In €M 28 508 27 189 26 010 4 629 4 734 4 444 ∆ ∆ 7 067 Variations vs. 2020 Variation At constant At constant scope and FX 7 325 FX 6 760 Global business +4.2% +4.4% +6.5% Rest of the World +4.5% +5.4% +5.0% Europe excl. France
Slide 46: Appendix 4: Quarterly Revenue by Segment
APPENDIX 4: QUARTERLY REVENUE BY SEGMENT 1st quarter 2021 2 nd quarter 2021 3 rd quarter 2021 In €M 2019 2020 ∆ at cst ∆ at cst 2020 2021 ∆ at cst ∆ at cst 2020 2021 ∆ at cst ∆ at cst FX scop & FX FX scope FX FX scopeFX France 1 305 1 379 +5.7% +5.7% 1 185 1 464 +23.5% +23.5% 1 428 1 476 +3.4% +3.4%
Slide 47: Appendix 5: Quarterly Revenue by Business
APPENDIX 5: QUARTERLY REVENUE BY BUSINESS 1st quarter 2021 2st quarter 2021 3rd quarter 2021 In €M 2020 2021 ∆ at cst ∆ at cst 2020 2021 ∆ at cst ∆ at cst 2020 2021 ∆ at cst ∆ at cst FX scope FX FX scope FX FX scope FX Water 2 645 2 503 -3.4% -0.1% 2 451 2 712 +11.7% +15.4% 2 794 2 595 -7.6% -3.1% W
Slide 48: Appendix 6: Revenue Analysis by Business (1/2)
APPENDIX 6 : REVENUE OF €28 508M, +9.6% AT CONSTANT FX VS. 2020 Analysis by business (1/2) In €M 28 508 27 189 26 010 6 492 ∆ ∆ 5 880 5 437 Variations vs. 2020 Variation At constant At constant FX scope and FX Energy +19.4% +19.9% +12.3% 10 167 9 673 11 228 Waste +16.1% +15.5% +14.2% Water +1.6% +1.
Slide 49: Appendix 6: Revenue Analysis by Business (2/2)
APPENDIX 6 : REVENUE OF €28 508M, +9.6% AT CONSTANT FX VS. 2020 Analysis by business (2/2) WATER : Revenue +1.9% at constant scope and FX to €8 284M o France : Revenue of €2 971M, up 1.2%. Volumes down -1.3% due to rainy summer, and offset by good commercial and works momentum Tariff increases: +0.9
Slide 50: Appendix 7: Revenue and EBITDA by Business
APPENDIX 7: REVENUE AND EBITDA BY BUSINESS 2021 Revenue and EBITDA by business Energy Water Revenue : €28 508M 23% services 29% Water Techno Waste 9% 39% Energy EBITDA : €4 234M 17% Water services 38% Water Waste Techno 41% 4% 2021 Results 50
Slide 51: Appendix 8: Quarterly Waste Revenue and Volumes
APPENDIX 8: QUARTERLY WASTE REVENUE AND VOLUMES Quarterly revenue growth at constant scope & FX 25,8% 14,4%+13,8% 5,6% 2,1% 4,9% 6,1% 4,3% 6,0% 4,1% 5,4% 4,9% 4,2% 4,9% 1,6% 4,0% 0,9% 0,2% -14,6% -3,4% Y-Y Quarterly volume trends 14,9% 3,2% +4,8% 1,2% 0,0% 3,1% 3,0% 3,0% 4,9% 4,0% 2,5% 2,6% 1,1% 4,1
Slide 52: Appendix 9: Waste – Breakdown of Revenue by Activity
APPENDIX 9: WASTE – BREAKDOWN OF REVENUE BY ACTIVITY 2020 Revenue : €9 673M 2021 Revenue : €11 228M Municipal Collection & Street 8% 13% cleaning 8% 12% C&I collection 25% 18% 26% 17% Sorting Recycling MBT 8% 16% Energy recovery (WTE) 7% 19% 12% 11% Landfills Hazardous & Liquid Waste Industrial Wast
Slide 53: Appendix 10: Waste – Revenue vs. Industrial Production
APPENDIX 10: WASTE – REVENUE VS. INDUSTRIAL PRODUCTION Weighted average industrial production indices for 4 key countries including SARP/SARPI: France, U.K, Germany, and North America Source: OECD 2021 Results 53
Slide 54: Appendix 11: Waste – Evolution of Raw Materials Prices
APPENDIX 11: WASTE – EVOLUTION OF RAW MATERIALS PRICES (PAPER & CARDBOARD) 200 180 160 140 120 100 80 60 40 20 0 Cardboards (ref. 1.05) Paper (Ref. 1.11) 2021 Results 54
Slide 55: Appendix 12: Net Financing Rate
APPENDIX 12: NET FINANCING RATE 2020 2021 In €M o Cost of net financial debt down by €71.9M due the euro Average gross debt (1) 17 119 18 392 denominated debt management (+€36M), combined with non euro-denominated debt (+€19M). Active cash portfolio Gross cost of borrowing 2.44% 1.84% management sli
Slide 56: Appendix 13: Debt Management
APPENDIX 13: DEBT MANAGEMENT ✔ Issuance in January 2021 of €700M bonds maturing in January 2027 (6 years) at zero coupon ✔ Repayment in January 2021 of €638M bearing a coupon of 4.427%. ✔ Issuance in November of €500M hybrid debt bond bearing a coupon of 2% ✔ Share capital increase in October 2021 o
Slide 57: Appendix 14: Debt Profile
APPENDIX 14 : DEBT PROFILE RATING • Moody’s : P-2/ Baa1 • stable outlook • Standard & Poor’s : A-2 / BBB stable outlook Only one bond repayment in 2021 of €638M took place on Jan.6 2021 2021 Results 57
Slide 58: Appendix 15: Net Liquidity
APPENDIX 15: NET LIQUIDITY December 2020 December 2021 Syndicated credit lines 3 000.0 3 000.0 Bilateral credit lines 1 000.0 1 000.0 Lines of credit 21.6 22.9 Cash and cash equivalents 5 542.2 10 333.8 Total Veolia 9 563.8 14 356.7 Subsidiaries Cash and cash equivalents(1) 1 132.9 1 156.7 Total Sub
Slide 59: Appendix 16: Net Industrial Investments by Segment
APPENDIX 16: NET INDUSTRIAL INVESTMENTS BY SEGMENT Maintenance and Of which new Discretionary TOTAL Gross Industrial TOTAL Net contractual (1) OFAs growth capex CAPEX divestitures CAPEX 2020 (in €M) requirements France 447 68 34 481 -63 418 Europe excluding France 742 75 167 910 -102 808 Rest of the
Slide 60: Appendix 17: Statement of Cash Flows
APPENDIX 17: STATEMENT OF CASH FLOWS In €M 2020 2021 EBITDA(1) 3 641 4 234 Net industrial investments -2151 -2 212 WCR variation +233 +382 Dividends received +75 +223 Renewal expenses -261 -292 Restructuring and other non current charges -230 -236 Operating Free Cash Flow 1 308 2 099 (1) Including p
Slide 61: Appendix 18: Consolidated Statement of Financial Position
APPENDIX 18: CONSOLIDATED STATEMENT OF FINANCIAL POSITION December 2020 December 2021 In €M Intangible Assets 10 805 11 236 Property, Plant & Equipment 8 217 8 702 Other non-current assets 7 524 8 504 Operating financial assets (current and non-current) 1 371 1 320 Cash and cash equivalents 5 840 10
Slide 62: Contacts
CONTACTS Analyst & Investor Relations Media Relations Ronald Wasylec Deputy CFO, Senior Vice President, Investor Laurent Obadia 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 Mazalo