Veolia Environnement SA · EURONEXT:VIE
Veolia Environnement SA — 9M 2020 Earnings Presentation
51 slides from Veolia Environnement SA's earnings presentation, Nov 5, 2020
Slide 1: Key Figures for the period ending September 30, 2020
Key Figures for the period ending September 30, 2020 November 5th, 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: 9M 2020 Results Agenda
9M 2020 RESULTS AGENDA 01 Status of Suez Transaction 02 9M and Q3 Highlights – 2020 Outlook 03 Detailed 9M 2020 performance Appendices 9M 2020 Results 3
Slide 4: Creating the World Champion of the Ecological Transformation
Creating the World Champion of the Ecological Transformation Status on the Veolia Suez combination Antoine Frérot, CEO
Slide 5: A transaction benefitting all stakeholders
Creating the World Champion of the Ecological Transformation A transaction benefitting all stakeholders A UNIQUE OPPORTUNITY TO CREATE THE WORLD LEADER OF THE ECOLOGICAL TRANFORMATION ✔ Climate Change emergency facing our planet and societies ✔ Become a leader of the European Green Deal and of other
Slide 6: Key steps of the transaction
Creating the World Champion of the Ecological Transformation Key steps of the transaction Progress of the operation : on schedule Strong determination to buy 100% of Suez as soon as possible 31 July 2020 : Engie announces to envisage the divestment of its stake in Suez 30 August 2020 : Veolia propos
Slide 7: Financing of the transaction
Creating the World Champion of the Ecological Transformation Financing of the transaction In order to secure its solid investment grade rating, Veolia has taken advantage of very favorable market conditions and has issued a €2bn hybrid bond on October 14th split into two tranches : 850 million beari
Slide 8: A strong value creation for all stakeholders
A STRONG VALUE CREATION FOR ALL STAKEHOLDERS Non-financial ratings & awards : “Prime” excellence status by ISS-Oekom B rating by CDP for climate change & supply chain B rating by CDP Water RobecoSAM’s 2020 Sustainability Yearbook in the “Silver Class” category Gold distinction by Ecovadis for supply
Slide 9: Q3 and 9M 2020 Highlights
Q3 and 9M 2020 HIGHLIGHTS Antoine Frérot, CEO Estelle Brachlianoff, COO
Slide 10: 9-Month Key Highlights: Q3 results ahead of target
9-MONTH KEY HIGHLIGHTS Q3 RESULTS AHEAD OF TARGET : Q4 GUIDANCE CONFIRMED Q3 Results ahead of objective : 2019 performance already recovered in Q3 Q3 Revenue = 99.9%(1) of Q3 2019 (97.7% current) Q3 EBITDA = 102.5%(1) of Q3 2019 (100.1% current) Q3 Current EBIT = 104.3%(1) of Q3 2019 (100.3% current
Slide 11: 2019 performance already recovered in Q3, ahead of plan
2019 PERFORMANCE ALREADY RECOVERED IN Q3, AHEAD OF PLAN Q3 REVENUE AND OPERATING LEVERAGE BACK TO 2019 Q1 Q2 Q3 In €M ∆ at cst ∆ at cst ∆ at ∆ at cst ∆ at ∆ at cst 2019 2020 FX scope & 2019 2020 cst FX scope 2019 2020 cst FX scope FX & FX & FX Revenue 6 785 6 675 -1.3% -0.5% 6 539 5 737 -11.0% -10.8
Slide 12: All development projects maintained to fuel future growth
ALL DEVELOPMENT PROJECTS MAINTAINED TO FUEL FUTURE GROWTH Despite sanitary crisis, commercial momentum remains strong and project pipeline full taking advantage of our technological competitive edge New developments in Central and Eastern Europe mainly in Energy Acquisition of the District Heating N
Slide 13: Q3 revenue and operating leverage back to 2019
Q3 REVENUE AND OPERATING LEVERAGE BACK TO 2019 Revenue: strong recovery since June confirmed Q3 2020 Revenue back up to 2019 levels: in Q3, fueled by reinforced commitment of our Month of September up 2.5% vs. 2019 sales teams 2500 102,5% 103% The major part of our activities have proven 2217 102% r
Slide 14: Resilient municipal water
RESILIENT MUNICIPAL WATER Very resilient activity ● Very good resilience with lower volumes mainly in touristic cities ● Favorable summer weather ● Cash collection under scrutiny with no major area of concern 9M 2020 Results 14
Slide 15: Construction: short-term volume shock followed by swift rebound
CONSTRUCTION A SHORT TERM VOLUME SHOCK FOLLOWED BY A SWIFT REBOUND Construction back to 100% ● Construction works stopped during lockdown but swiftly back to 100% thereafter ● Priority: Backlog for 2021 9M 2020 Results 15
Slide 16: Solid waste: recovery confirmed in Q3
SOLID WASTE A SHORT TERM VOLUME SHOCK, RECOVERY CONFIRMED IN Q3 Solid Waste recovery ● Resilient municipal waste, incineration and landfills ● C&I waste collection more sensitive to economic activity but strong adaptation measures 9M 2020 Results 16 (1) Total Veolia solid waste revenue in H1, at con
Slide 17: Hazardous waste: solid and balanced customer portfolio
HAZARDOUS WASTE : A SOLID & BALANCED CUSTOMER PORTFOLIO Good resistance of Hazardous Waste ● Resilient business - Balanced portfolio of client ● Very good performances in China with opening of capacities earlier than expected, few outages in the US and in Europe but customer volumes are back 9M 2020
Slide 18: 2020 cost cutting plan doubled to €500M
VERY SWIFT REACTION TO THE CRISIS : 2020 COST CUTTING PLAN DOUBLED TO €500M : €395M ALREADY ACHIEVED AT SEPT. 30 EFFICIENCY PROGRAM > €250M RECOVER & ADAPT PLAN TOTAL 2020 COST CUTTING ~80% achieved in 9M FROM €200M TO €250M >€500M €195M in 9M €200M in 9M 9M Efficiency split by lever 9M R&A savings
Slide 19: 2020 Outlook: Q4 guidance confirmed
2020 OUTLOOK : Q4 GUIDANCE CONFIRMED Q4 business outlook: continued improvement and expected limited impact of the COVID 2nd wave in Europe Southern hemisphere : improvement expected as is entering into summer E.g. : Australia reopening progressively all commercial activities. North America : progre
Slide 20: 2020 Outlook: Q4 guidance confirmed
2020 OUTLOOK : Q4 GUIDANCE CONFIRMED ❑ The initial 2020 objectives have been suspended due to the COVID outbreak ❑ Taking into consideration the recovery of our activities since the end of the lockdown and Q3 performance, we confirm our objective of an operational performance in Q4(1) equivalent to
Slide 21: 9M 2020 Financial & Operational Performance
9M 2020 Financial & Operational Performance Claude Laruelle, CFO
Slide 22: 9-Month key figures: sharp rebound in Q3
9-MONTH KEY FIGURES : SHARP REBOUND IN Q3 Var. at constant Var. Y-Y Var. at constant In €M Q3, 2019 Q3, 2020 scope and 9M,2019 9M,2020 vs. scope and FX vs. FX vs. 9M,2019 9M,2019 Q3,2019 Revenue 6 441 6 293 -0.1% 19 765 18 705 -5.4% -3.8% EBITDA 892 893 +2.5% 2 894 2 492 -13.9% -11.2% Current EBIT 3
Slide 23: 9M performance: sharp rebound in Q3
9M PERFORMANCE : AFTER THE COVID OUTBREAK, SHARP REBOUND IN Q3 Q3 REVENUE -0.1% AND EBITDA +2.5% AT CONSTANT SCOPE AND FX 2019 2020 Revenue growth at constant FX Q1 Q2 Q3 Q4 Year Q1 Q2 H1 Q3 France +2.8% +5.0% +0.5% +0.1% +2.0% -3.1% -16.1% -9.7% +0.8% Europe excl. France +4.7% +7.2% +4.1% +1.1% +4.
Slide 24: Q3 revenue of €6,293M, -0.1% at constant scope and FX
Q3 REVENUE AND OPERATIONAL LEVERAGE BACK TO 2019 Q3 REVENUE OF €6 293M, -0.1% AT CONSTANT SCOPE AND FX FX: -€108M : Latin America -€23M, US dollar In €M -€25M, Polish zloty, Hungarian forint and Czech koruna for -€17M SCOPE: -€36M : mostly divestiture of US Municipal Energy closed in Dec. 2019 (-€67
Slide 25: 9M revenue of €18,705M, -3.8% at constant scope and FX
9M PERFORMANCE : AFTER THE COVID OUTBREAK, REBOUND IN Q3 9M REVENUE OF €18 705M, -3.8% AT CONSTANT SCOPE AND FX FX: -€214M, o/w: Argentinian Peso -€36M, Australian In €M dollar -€26M, Polish zloty, Hungarian forint and Czech koruna for -€59M SCOPE: -€101M : divestiture of US Municipal Energy closed
Slide 26: Waste revenue: volume improvement in Q3 with solid pricing
WASTE REVENUE MARKED VOLUME IMPROVEMENT IN Q3, COMBINED WITH SOLID PRICING Q1, 2020 Q2, 2020 Q3, 2020 Recycled raw materials prices -2.5% -1.4% -0.9% Volumes / activity levels -1.8% -14.7% -2.6% Price increases +2.4% +1.9% +1.6% Other +1.9% -0.4% -1.5% Growth at constant scope & +0.2% -14.6% -3.4% e
Slide 27: Q3 EBITDA of €893M, up 2.5%
Q3 REVENUE AND OPERATIONAL LEVERAGE BACK TO 2019 Q3 EBITDA OF €893M, UP 2.5% AT CONSTANT SCOPE AND FX FOREX: -€14M. Latam -€5M, US$ -€2M, Polish zloty, Hungarian forint and Czech koruna for -€3M SCOPE : -€7M : mostly divestiture of US Municipal Energy -€16M COMMERCE/VOLUMES/WORKS : -€2M, -1.6 % -0.8
Slide 28: 9M EBITDA of €2,492M, down 11.2%
9M PERFORMANCE : AFTER THE COVID OUTBREAK, REBOUND IN Q3 9M EBITDA OF €2 492M, DOWN 11.2% AT CONSTANT SCOPE AND FX FOREX: -€33M : o/w Latam -€14M; Australian dollar -€3M; Polish zloty, Hungarian forint and Czech koruna for -€12M SCOPE : -€44M : mostly divestiture of US Municipal Energy -€61M COMMERC
Slide 29: France: 9M and Q3 operational review
FRANCE - 9M AND Q3 OPERATIONAL REVIEW RESILIENT WATER – STRONG WASTE VOLUMES RECOVERY IN Q3 ∆ at ∆ at constant In €M 9M,2019 9M,2020 ∆ constant FX Q3,2019 Q3,2020 ∆ FX Revenue, of which 4 175 3 918 -6.2% -6.2%(1) 1 416 1 428 +0.8% +0.8%(2) Water 2 228 2 142 -3.9% -3.9% 773 781 +1.0% +1.0% Waste 1 94
Slide 30: Rest of Europe: 9M and Q3 operational review
REST OF EUROPE - 9M AND Q3 OPERATIONAL REVIEW VERY RESILIENT CENTRAL EUROPE - RECOVERY IN ALL OTHER REGIONS ∆ ∆ In €M 9M,2019 ∆ Q3, 2019 ∆ 9M,2020 At constant FX Q3,2020 At constant FX Revenue, of which 6 870 6 702 -2.4% -1.5%(1) 2 080 2 078 -0.1% +0.8%(2) Central & Eastern Europe 2 330 2 330 0.0% +
Slide 31: Rest of the World: 9M and Q3 operational review
REST OF THE WORLD - 9M AND Q3 OPERATIONAL REVIEW CONFIRMED RECOVERY IN Q3 In €M 9M,2019 9M,2020 ∆ ∆ at constant FX Q3,2019 Q3,2020 ∆ ∆ at constant FX Revenue, of which 5 288 4 921 -6.9% -4.5%(1) 1 792 1 613 -10.0% -6.0%(2) Asia 1 456 1 471 +1.0% +1.5% 483 441 -8.6% -5.1% Latin America (Latam) 621 57
Slide 32: Global Business: 9M and Q3 operational review
GLOBAL BUSINESS - 9M AND Q3 OPERATIONAL REVIEW VERY STRONG RECOVERY IN Q3 : CONSTRUCTION +10% AND HAZARDOUS BACK TO 2019 LEVEL ∆ ∆ In €M 9M,2019 9M,2020 ∆ At constant FX Q3,2019 Q3,2020 ∆ At constant FX Revenue, of which 3 427 3 160 -7.8% -7.2%(1) 1 152 1 172 +1.7% +3.1%(2) Construction 2 016 1 936
Slide 33: 9M current EBIT of €771M
9M CURRENT EBIT OF €771M, -29.9% AT CONSTANT SCOPE AND FX Q3 CURRENT EBIT UP 4.3% AT CONSTANT SCOPE AND FX 9M 2019 9M, 2020 Var. vs. 2019 Var. vs. 2019 In €M Published at constant at constant FX scope and FX EBITDA 2 894 2 492 -12.8% -11.2% Renewal expenses -209 -225 Depreciation & Amortization (inc
Slide 34: 9M current net income of €149M
9M CURRENT NET INCOME OF €149M Q3 CURRENT NET INCOME OF €142M, UP 6.2% AND UP 10.6% AT CONSTANT SCOPE AND FX 9M 2019 9M, 2020 Variation Var. vs. 2019 In €M Published vs. 2019 at at constant constant FX scope and FX Current EBIT(1) 1 190 771 -34.1% -29.9% Cost of net financial debt -333 -315 Other fi
Slide 35: Solid financials as of Sept. 30, 2020
SOLID FINANCIALS AS OF SEPT. 30, 2020 BETTER THAN EXPECTED WCR - NET FINANCIAL DEBT DOWN BY €742M Net industrial Capex of €1 334M, vs. €1 455M, -8% vs. Sept. 2019 Net Capex (in €M) Lower net maintenance capex (including IFRS16 and net of industrial divestments): €607M vs. €731M 1 455 1 334 241 Discr
Slide 36: Evolution of net financial debt
EVOLUTION OF NET FINANCIAL DEBT 9M 2020 Results 36
Slide 37: A solid financing structure: strong cash position and robust balance sheet
A SOLID FINANCING STRUCTURE : A VERY STRONG CASH POSITION AND ROBUST B/S Strong cash position Large Group liquidity o Net Financial debt of €11 745M o €13.1bn including €4.2bn in undrawn o €9bn of cash at 30 September 2020 confirmed credit lines without disruptive o January issuance of €500M bond: 0
Slide 38: 2020 Outlook: Q4 guidance confirmed
2020 OUTLOOK : Q4 GUIDANCE CONFIRMED ❑ The initial 2020 objectives have been suspended due to the COVID outbreak ❑ Taking into consideration the recovery of our activities since the end of the lockdown and Q3 performance, we confirm our objective of an operational performance in Q4(1) equivalent to
Slide 39: 9M 2020 Key Figures Appendices
9M 2020 Key Figures Appendices
Slide 40: Appendix 1: Currency movements
APPENDIX 1: CURRENCY MOVEMENTS For 1€ 9M, 2019 9M, 2020 ∆ 2020 vs. 2019 US dollar Average rate 1.124 1.124 0.0% Closing rate 1.089 1.171 -7.5% UK pound sterling Average rate 0.883 0.884 -0.1% Closing rate 0.886 0.912 -3.0% Australian dollar Average rate 1.607 1.663 -3.5% Closing rate 1.613 1.644 -1.
Slide 41: Appendix 2: Revenue analysis by segment
APPENDIX 2: REVENUE OF €18 705M, -3.8% AT CONSTANT SCOPE AND FX ANALYSIS BY SEGMENT 19 765 In €M 18 705 3 427 3 160 ∆ ∆ 5 288 Variations vs. 4 921 Variation At constant At constant scope 9M,2019 and FX FX Global business -7.8% -7.2 % -7.9% Rest of the World -6.9% -4.5% -1.7% Europe excl. France -2.4
Slide 42: Appendix 3: Quarterly revenue by segment
APPENDIX 3: QUARTERLY REVENUE BY SEGMENT 1st quarter 2019 2nd quarter 2019 3rd quarter 2019 In €M 2018 2019 ∆ at cst FX ∆ at cst 2018 ∆ at cst ∆ at cst 2018 2019 ∆ at cst FX ∆ at cst repr scope & FX repr 2019 FX scope & FX Repr. scope & FX France 1 311 1 347 +2.8% +2.1% 1 345 1 412 +5.0% +4.7% 1 409
Slide 43: Appendix 4: Quarterly revenue by business
APPENDIX 4: QUARTERLY REVENUE BY BUSINESS 1st quarter 2019 2nd quarter 2019 3rd quarter 2019 In €M ∆ at cst ∆ at cst ∆ at cst ∆ at cst ∆ at ∆ at cst 2018 2019 FX scope & 2018 2019 FX scope & 2018 2019 cst FX scope & represented FX represented FX represented FX Water 2 562 2 645 +1.8% +2.7% 2 625 2 7
Slide 44: Appendix 5: Revenue analysis by business (1/2)
APPENDIX 5 : REVENUE OF €18 705M, -3.8% AT CONSTANT SCOPE AND FX ANALYSIS BY BUSINESS (1/2) In 19 765 €M 18 705 4 103 3 725 ∆ ∆ Variations vs. 9M, 2019 Variation At constant At constant FX scope and FX Energy -9.2% -7.8% -2.2% 7 568 7 090 Waste -6.3% -5.1% -6.1% Water -2.0% -1.4% -1.9% Technology &
Slide 45: Appendix 5: Revenue analysis by business (2/2)
APPENDIX 5 : REVENUE OF €18 705M, -3.8% AT CONSTANT SCOPE AND FX ANALYSIS BY BUSINESS (2/2) WATER : Revenue -1.4% at constant FX to €5 954M France :resilient. Volumes +0.8% ytd (flat at June end, followed by a very good summer). Tariff increases: +1.5%: unchanged. Works recovering and a few commerci
Slide 46: Appendix 6: Quarterly waste revenue and volumes
APPENDIX 6: QUARTERLY WASTE REVENUE AND VOLUMES Quarterly revenue growth at constant scope & FX 6,1% 4,3% 6,0% 4,1% 5,4% 4,9% 4,2% 4,9% 1,2% -0,8% 1,3% -1,0% 5,6% 2,1% 4,9% 0,9% 0,2% -3,4% -14,6% Y-Y Quarterly volume trends 1,6% 0,9% 0,3% 0,2% 1,2% 0,0% 3,1% 3,0% 3,0% 4,9% 4,1% 2,5% 2,6% 1,1% 2,0% 0
Slide 47: Appendix 7: Waste breakdown of revenue by activity
APPENDIX 7: WASTE – BREAKDOWN OF REVENUE BY ACTIVITY 2020 9M Revenue : €7 090M 2019 9M Revenue : €7 568M Municipal collection & Street cleaning 8% 13% 9% 13% Commercial & Industrial collection Sorting & Recycling & MBT 25% 24% 18% 19% Energy recovery (incineration) Landfill Hazardous and Liquid Wast
Slide 48: Appendix 8: Recycled paper market prices (1/2)
APPENDIX 8: RECYCLED PAPER : MARKET PRICES (1/2) 9M 2020 Results 48
Slide 49: Appendix 8: Evolution of raw materials prices (2/2)
APPENDIX 8: WASTE – EVOLUTION OF RAW MATERIALS PRICES (PAPER & CARDBOARD) (2/2) 9M 2020 Results 49
Slide 50: Appendix 9: Debt profile
APPENDIX 9: DEBT PROFILE (AT SEPTEMBRE 30, 2020) RATING • Moody’s : P-2/ Baa1 • stable outlook • Standard & Poor’s : A-2 / BBB stable outlook Bond maturity schedule well spread out with €500M due in November 2020, €431M in December 2020 and €638M in January 2021 fully covered by net cash position Av
Slide 51: Contacts
CONTACTS Analyst & Investor Relations Media Relations Ronald Wasylec Deputy CFO, Senior Vice President, Investor Relations Laurent Obadia Telephone : +33 1 85 57 84 76 Telephone : +33 1 85 57 89 43 e-mail : [email protected] e-mail: [email protected] Ariane de Lamaze Vice President,