Veolia Environnement SA · EURONEXT:VIE
Veolia Environnement SA — H1 2021 Earnings Presentation
54 slides from Veolia Environnement SA's earnings presentation, Jul 29, 2021
Slide 1: H1 2021 Results
H1 2021 Results 29 July 2021
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
H1 2021 RESULTS AGENDA 01 Veolia-Suez have reached a historical agreement: update on the combination 02 H1 2021 key highlights : H1 delivery significantly above 2020 and 2019 03 H1 2021 Operational and Financial performance 04 Appendices H1 2021 Results 3
Slide 4: Veolia and Suez have reached a historical agreement
1- VEOLIA and Suez have reached a historical agreement Update on the VEOLIA- SUEZ combination Antoine Frérot, CEO
Slide 5: Key milestones and agenda
KEY MILESTONES AND AGENDA On October 6th, Veolia has acquired 29.9% of Suez’s capital from Engie On May 14th, agreement between Veolia and Suez’s Boards enabling the combination of the 2 Groups and the creation of a “New Suez” On June 29th, finalization of the transaction Tender Offer on the remaini
Slide 6: Acquisition of Suez: 4 key value creation pillars
ACQUISITION OF SUEZ TO CREATE THE WORLD CHAMPION OF ECOLOGICAL TRANSFORMATION : 4 KEY VALUE CREATION PILLARS Growth Impact & ESG Shareholder value Synergies Accelerate with Suez on new Complementary expertise growth priorities to shape a sustainable Strong value creation €500M synergies environment
Slide 7: Acquisition of Suez will strengthen Veolia leadership
ACQUISITION OF SUEZ WILL STRENGTHEN VEOLIA LEADERSHIP VEOLIA SUEZ COMBINED REVENUE INCREASED BY 40% Growth Impact & ESG Shareholder Value Synergies France Revenue by ~ 37 Europe excl France +~40% geography (€bn) Rest of the World Global businesses 8,1 22% Based on 2019 figures 27.2 28% 17 % 4,7 10,5
Slide 8: Merger will enhance our ESG rankings
MERGER ACCELERATES THE TRANSITION TOWARDS SUSTAINABLE GROWTH: MERGER WILL ENHANCE OUR ESG RANKINGS Growth Impact & ESG Shareholder Value Synergies General ESG Veolia • N° 1 in the Utilities sector by ISS-Oekom • Robeco SAM’s 2020 Sustainability Yearbook in the “Silver Class” category Suez “ New Ener
Slide 9: A financially compelling transaction for all Veolia shareholders
A FINANCIALLY COMPELLING TRANSACTION FOR ALL VEOLIA SHAREHOLDERS Growth Impact and ESG Shareholder Value Synergies Offer Price €19.85 per share (after detachment of the €0.65 dividend on July 6th) New Suez Sale of New Suez for an EV of €10.4bn, multiple consistent with the offer price Synergies Sign
Slide 10: W-shape process to prepare the synergy plan
WE USE A “W-SHAPE” PROCESS TO PREPARE THE SYNERGY PLAN Growth Impact and ESG Shareholder Value Synergies 2021 2022 End of July Beg. of October Mid-November Beg. of January Top-down synergy Productive challenge Consolidation of the Synergy Synergy to be finalized targets sent to from global (MMO/ syn
Slide 11: Confirmation of compelling synergy potential
CONFIRMATION OF COMPELLING SYNERGY POTENTIAL FOR THE COMBINED GROUP Growth Impact and ESG Shareholder Value Synergies By geography By cost category Synergy estimates (in €M) Synergy estimates (in €M) 44% 61% 56% 39% Europe Rest of the World Procurement Operations and internalisation 11
Slide 12: A solid merger integration process in preparation
A SOLID MERGER INTEGRATION PROCESS IN PREPARATION Merger People review Global Design of merger plans Defining key preparation already started management milestones – Multi-local approach mobilized consulting firm post-closing chosen – Clear Governance – Transversal initiatives – People engagement /
Slide 13: 30+ workstreams to manage the merger process
WE HAVE DEFINED 30+ WORKSTREAMS TO MANAGE THE MERGER PROCESS Executive Committee PMO Steering committee led by Estelle Brachlianoff Carve-out and TSAs Antitrust & regulatory approvals Base business SWAT team Merger Intent Global (incl. strategic planning convergence) coordination Communication (to a
Slide 14: H1 2021 key highlights
2- H1 2021 key highlights H1 delivery significantly above 2020 and 2019 Antoine Frérot, CEO Estelle Brachlianoff, COO
Slide 15: H1 2021 key highlights: FY 2021 guidance raised
H1 2021 KEY HIGHLIGHTS FY 2021 GUIDANCE RAISED AFTER H1 OUSTANDING DELIVERY Very strong 1st Half 2021 results, ahead of 2020 and of 2019 EBITDA up 31.4%(1) and current EBIT doubled(1) vs. H1 2020 Record H1 current Net Income of €516M In €M H1 2019 H1 2020 H1 2021 Var. vs H1 2020 (1) Var vs H1 2019(1
Slide 16: H1 2021 key highlights
H1 2021 KEY HIGHLIGHTS BACK TO A SOLID GROWTH TRAJECTORY FUELED BY RESILIENT ACTIVITIES, WASTE REBOUND AND STRONG MOMENTUM IN KEY GROWTH BUSINESSES Very strong half year results ahead of 2020 and 2019 despite 3rd wave of COVID in Europe Benefit of Veolia resilient businesses (Water, municipal waste,
Slide 17: Key operational H1 2021 highlights: performance by business
KEY OPERATIONAL H1 2021 HIGHLIGHTS PERFORMANCE BY BUSINESS PERFORMANCE BY BUSINESS vs. 2019 ❑ Municipal Water : back to normal volumes in almost all Revenue variation at constant scope and FX geographies vs. H1, 2019 Water and WW 1,8% ❑ Water Technologies and networks: higher growth in Q2 Water tech
Slide 18: H1 2021 main development projects
H1 2021 MAIN DEVELOPMENT PROJECTS ❑ Fully recovered commercial momentum and project pipeline full Good commercial momentum in municipal water France: Gain of Cholet potable water, of Colmar waste water contract and renewal of Lens/Liévin and Montauban for a total backlog of €300M Japan: Gain of the
Slide 19: €204M efficiency gains achieved in H1
€204M EFFICIENCY GAINS ACHIEVED IN H1 AHEAD OF THE ANNUAL OBJECTIVE OF €350M Significant increase vs. pre COVID 2021 annual objective raised from €250M to €350M €M 204 including sustained extra efforts in 2021 linked to Covid 120 58 Recover & Adapt 204m€ achieved in H1 (1.5% of revenue), ahead of an
Slide 20: 2021 EBITDA guidance raised
2021 EBITDA GUIDANCE(1)(2) RAISED AFTER H1 OUTSTANDING DELIVERY FY guidance raised after H1 delivery above target and excellent business momentum Revenue : above 2019 level 2021 EBITDA above €4.1bn Recovery of operating leverage More than €350M of cost cutting Net debt below €12bn, and leverage rati
Slide 21: Financial & Operational Performance
3- 2021 Financial & Operational Performance H1 delivery significantly above 2020 and 2019 Claude Laruelle, CFO
Slide 22: H1 key figures
H1 KEY FIGURES H1 REVENUE UP +11.2% AND H1 EBITDA UP +31.4% AT CONSTANT FX CURRENT NET INCOME OF €516M AND RECORD FCF GENERATION Var. Y-Y Var. at constant Var. at constant In €M H1, 2019 H1, 2020 H1, 2021 vs. H1,2020 FX vs. H1,2020 FX vs. H1,2019 Revenue 13 324 12 412 13 645 +9.9% +11.2% +4.6% EBITD
Slide 23: Q2 key highlights: better than expected post Covid rebound
Q2 KEY HIGHLIGHTS BETTER THAN EXPECTED POST COVID REBOUND 2019 2020 2021 Revenue growth at constant FX Year Q1 Q2 Q3 Q4 Q1 Q2 H1 France +2.0% -3.1% -16.1% +0.8% +2.5% +5.7% +23.5% +14.2% Europe excl. France +4.1% +1.1% -6.7% +0.8% +5.3% +9.0% +20.9% +14.2% Rest of the World +8.7% +2.1%(1) -4.4%(1) -
Slide 24: Revenue increase of +11.2% in H1 and +19.7% in Q2
REVENUE INCREASE OF +11.2%(1) IN H1 AND +19.7%(1) IN Q2 vs. 2020 DRIVEN BY VOLUME REBOUND AND STRONG PRICES In €M FX: -€160M : Latin America -€49M, North America -€69M, Central & Eastern Europe -€19M 167 13 645 SCOPE: +€108M : mostly acquisitions in Central 12 412 274 Europe partially offset by asse
Slide 25: Waste revenue up +27.1% in Q2 and +14.6% in H1
WASTE REVENUE UP +27.1% in Q2 AND +14.6% IN H1 to €5 304M VOLUME REBOUND, SOLID PRICING AND HIGH RECYCLING PRICES Q1, 2020 Q2, 2020 Q3, 2020 Q4, 2020 Q1, 2021 Q2, 2021 H1, 2021 Recycled raw materials prices -2.5% -1.4% -0.9% +0.5% +3.2% +5.7% +4.4% Volumes / activity levels -1.8% -14.7% -2.6% -1.8%
Slide 26: EBITDA increase of +31.4% in H1 and +58.8% in Q2
EBITDA INCREASE OF +31.4%(1) IN H1 AND +58.8%(1) IN Q2 vs. 2020 FULL OPERATING LEVERAGE RECOVERY BOOSTED BY EFFICIENCY FOREX: -€20M. Latam -€8M, USA -€7M, 2 081 Central and Eastern Europe -€4M 50 204 SCOPE : +€66M : mostly acquisitions in 28 119 Central Europe partially offset by divestiture of 272
Slide 27: France – H1 operational review
FRANCE – H1 OPERATIONAL REVIEW SHARP REBOUND OF REVENUE AND EBITDA VS. 2020 AND VS. 2019 ∆ vs. ∆ at constant FX ∆ at constant FX H1,2019 H1,2020 H1 2021 vs. H1, 2019 In €M H1 2020 vs. H1, 2020 Revenue, of which 2 759 2 491 2 844 +14.2% +14.2% +3.1% Water 1 455 1 361 1 449 +6.5% +6.5% -0.4% Waste 1 3
Slide 28: Rest of Europe – H1 operational review
REST OF EUROPE – H1 OPERATIONAL REVIEW A VERY STRONG H1 WITH AN OUTSTANDING EBITDA PERFORMANCE ∆ In €M ∆ ∆ at constant FX H1, 2019 H1, 2020 H1, 2021 At constant FX vs. H1, 2020 vs. H1, 2019 vs. H1, 2020 Revenue, of which 4 789 4 624 5 278 +14.2% +14.2% +11.4% Central & Eastern Europe 1 710 1 677 2 0
Slide 29: Rest of the World – H1 operational review
REST OF THE WORLD – H1 OPERATIONAL REVIEW RECOVERY CONFIRMED ∆ ∆ ∆ at constant FX In €M H1, 2019 H1, 2020 H1, 2021 At constant FX vs. H1, 2020 vs. H1, 2019 vs. H1, 2020 Revenue, of which 3 496 3 308 3 310 +0.1% +4.0% +2.6%(2) Asia 973 1 030 1 013 -1.6% +2.1% +6.8% Latin America (Latam) 424 382 395 +
Slide 30: Global Business – H1 operational review
GLOBAL BUSINESS – H1 OPERATIONAL REVIEW A VERY STRONG REBOUND ∆ ∆ ∆ at constant FX In €M H1,2019 H1,2020 H1, 2021 At constant FX vs. H1, 2020 vs. H1, 2019 vs. H1, 2020 Revenue, of which 2 276 1 988 2 211 +11.2% +17.5%(2) +2.2%(2) Construction 1 332 1 199 1 241 +3.4% +17.5%(2) +5.2%(2) Hazardous & li
Slide 31: More than doubling of current EBIT to €901M
MORE THAN DOUBLING OF CURRENT EBIT TO €901M H1 2019 H1, 2020 H1 2021 Var. vs. Var. vs. 2019 In €M 2020 at at constant constant FX FX EBITDA 2 002 1 599 2 081 +31.4% +6.2% Renewal expenses -139 -132 -143 Depreciation & Amortization (including -1 073 -1 054 -1 095 principal payments on OFAs) Provision
Slide 32: Record current net income of €516M
RECORD CURRENT NET INCOME OF €516M (+49% AT CONSTANT FX VS. H1 2019) H1 2019 H1, 2020 H1, 2021 Var. vs. 2020 Var. vs. 2019 at In €M at constant FX constant FX Current EBIT(1) 857 438 901 +108.1% +7.8% Cost of net financial debt -222 -216 -152 Other financial income and expense -91 -84 -64 Suez divid
Slide 33: Net income group share of €301M
NET INCOME GROUP SHARE OF €301M NON CURRENT ITEMS MOSTLY DUE TO SUEZ OPERATION AND SPECIFIC COVID COSTS H1 2019 H1, 2020 H1, 2021 Variation vs. H1 In €M 2020 at constant FX Current net income – Group share 352 7 516 na Specific COVID costs - -33 -31 Non current impairment and other charges -22 -74 -
Slide 34: Outstanding improvement in FCF of +€785M
OUTSTANDING IMPROVEMENT IN FCF OF +€785M DUE TO EBITDA GROWTH, CONTROLLED CAPEX AND VERY STRICT CASH DISCIPLINE 873 Net Capex (€M) 834 Discretionary Controlled net industrial Capex : €834M vs. €873M 128 122 growth capex Optimization of maintenance 337 346 Contractual growth capex Growth contractual
Slide 35: Evolution of net financial debt
EVOLUTION OF NET FINANCIAL DEBT 145 74 In €M 504 245 30 381 135 2 081 253 834 143 95 13 767 13 217 H1 2021 Results 35
Slide 36: 2021 EBITDA guidance raised
2021 EBITDA GUIDANCE(1)(2) RAISED AFTER H1 OUTSTANDING DELIVERY FY guidance raised after H1 delivery above target and excellent business momentum Revenue : above 2019 level 2021 EBITDA above €4.1bn Recovery of operating leverage More than €350M of cost cutting Net debt below €12bn, and leverage rati
Slide 37: Appendices
H1, 2021 Key Figures Appendices
Slide 38: Appendix 1: Currency movements
APPENDIX 1: CURRENCY MOVEMENTS For 1€ H1, 2020 H1, 2021 ∆ H1, 2021 vs. H1, 2020 US dollar Average rate 1.102 1.205 -9.4% Closing rate 1.120 1.188 -6.1% UK pound sterling Average rate 0.874 0.868 +0.7% Closing rate 0.912 0.858 +6.0% Australian dollar Average rate 1.677 1.563 +6.8% Closing rate 1.634
Slide 39: Appendix 2: Revenue analysis by segment
APPENDIX 2: REVENUE OF €13 465M, +11.2% AT CONSTANT FX ANALYSIS BY SEGMENT In €M 13 465 13 324 12 412 2 211 2 276 1 989 ∆ ∆ Variations vs. H1, Variation At constant scope 3 310 2020 At constant 3 496 FX and FX 3 308 Global business +11.2% +12.4% +17.5% Rest of the World +0.1% +4.0% +3.8% Europe excl
Slide 40: Appendix 3: Quarterly revenue by segment
APPENDIX 3: QUARTERLY REVENUE BY SEGMENT 1st quarter 2020 2nd quarter 2020 3rd quarter 2020 In €M 2019 2020 ∆ at cst FX ∆ at cst 2019 2020 ∆ at cst ∆ at cst 2019 2020 ∆ at cst ∆ at cst scop & FX FX sco & FX FX sc & FX France 1 347 1 305 -3.1% -3.1% 1 412 1 185 -16.1% -16.1% 1 416 1 428 +0.8% +0.8% E
Slide 41: Appendix 4: Quarterly revenue by business
APPENDIX 4: QUARTERLY REVENUE BY BUSINESS 1st quarter 2020 2nd quarter 2020 3rd quarter 2020 In €M 2019 2020 ∆ at cst ∆ at cst 2019 2020 ∆ at cst ∆ at cst 2019 2020 ∆ at cst ∆ at cst FX scope & FX scope FX scope & FX & FX FX Water 2 637 2 645 +0.0% -0.4% 2 705 2 451 -8.8% -9.5% 2 752 2 794 +3.4% +2.
Slide 42: Appendix 5: Revenue analysis by business (1/2)
APPENDIX 5 : REVENUE OF €13 465M, +11.2% AT CONSTANT FX VS. H1 2020 ANALYSIS BY BUSINESS (1/2) In €M 13 324 13 645 12 412 2 945 3 126 ∆ ∆ 2 648 Variation Variations vs. H1, 2020 At constant At constant FX scope and FX Energy +18.0% +19.5% +10.3% 5 037 5 304 Waste +13.6% +14.6% +13.7% 4 668 Water +2.
Slide 43: Appendix 5: Revenue analysis by business (2/2)
APPENDIX 5 : REVENUE OF €13 465M, +11.2% AT CONSTANT FX VS. H1 2020 ANALYSIS BY BUSINESS (2/2) WATER : Revenue +3.5% at constant scope and FX to €3 974M France : Revenue of €1 449M, up 6.5% boosted by works recovery. Volumes +0.6%. Tariff increases: +0.7%. Good commercial momentum : end of Toulouse
Slide 44: Appendix 6: Quarterly waste revenue and volumes
APPENDIX 6: QUARTERLY WASTE REVENUE AND VOLUMES Quarterly revenue growth at constant scope & FX +25,3% 5,6% 2,1% 4,9% 6,1% 4,3% 6,0% 4,1% 5,4% 4,9% 4,2% 4,9% 1,6% 3,4% 0,9% 0,2% -14,6%-3,4% Y-Y Quarterly volume trends 14,5% 1,2% 0,0% 3,1% 3,0% 3,0% 4,9% 4,0% 2,5% 2,6% 1,1% 4,1% 0,4% -1,8% -2,6% -1,8
Slide 45: Appendix 7: Waste breakdown of revenue by activity
APPENDIX 7: WASTE – BREAKDOWN OF REVENUE BY ACTIVITY 2020 H1 Revenue : €4 668M 2021 H1 Revenue : €5 304M Municipal collection & Street cleaning 8% 14% 8% 13% Commercial & Industrial collection Sorting & Recycling & MBT 23% 18% 24% 18% Energy recovery (incineration) Landfill 9% 7% Hazardous and Liqui
Slide 46: Appendix 8: Waste revenue vs. industrial production
APPENDIX 8: WASTE – REVENUE VS. INDUSTRIAL PRODUCTION Industrial Production and Waste Organic Growth Quarterly Y-Y Growth Rate (%) 30% 20% 10% 0% -10% Waste organic growth Industrial production -20% -30% Weighted average industrial production indices for 4 key countries including SARP/SARPI: France,
Slide 47: Appendix 9: Evolution of raw materials prices
APPENDIX 9: WASTE – EVOLUTION OF RAW MATERIALS PRICES (PAPER & CARDBOARD) 180 160 140 120 100 80 60 40 20 0 Cardboards (ref. 1.05) Paper (Ref. 1.11) H1 2021 Results 47
Slide 48: Appendix 10: Net financing rate
APPENDIX 10: NET FINANCING RATE H1 2021 H1 2020 In €M o Cost of net financial debt down by €63.2M due the euro Average gross debt (1) 18 259 15 857 denominated debt management (-€10M), combined with non euro-denominated debt (+€30M). Active cash portfolio Gross cost of borrowing 1.65% 2.76% manageme
Slide 49: Appendix 11: Debt management
APPENDIX 11: 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%. ✔ Group liquidity : €10.4bn including €4bn in undrawn confirmed credit lines (without disruptive covenants) ✔ Net
Slide 50: Appendix 12: Debt profile
APPENDIX 12 : DEBT PROFILE (AT JUNE 30, 2021) 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 H1 2021 Results 50
Slide 51: Appendix 13: Net liquidity
APPENDIX 13: NET LIQUIDITY June 2021 December 2020 Syndicated credit lines 3 000.0 3 000.0 Bilateral credit lines 1 000.0 1 000.0 Lines of credit 22.3 21.6 Cash and cash equivalents 5 259.1 5 542.2 Total Veolia 9 281.4 9 563.8 Subsidiaries Cash and cash equivalents(1) 1 165.8 1 132.9 Total Subsidiar
Slide 52: Appendix 14: Net industrial investments by segment
APPENDIX 14: NET INDUSTRIAL INVESTMENTS BY SEGMENT Maintenance Contractual Discretionary Of which new TOTAL Gross Industrial TOTAL Net June 2021 (in €M) including IFRS 16 Capex Growth Capex OFAs CAPEX Divestments CAPEX France 123 88 8 19 218 23 195 Europe excluding France 163 167 37 25 367 55 311 Re
Slide 53: Appendix 15: Consolidated statement of financial position
APPENDIX 15: CONSOLIDATED STATEMENT OF FINANCIAL POSITION June 2021 December 2020 Intangible Assets 10 936 10 805 Property, Plant & Equipment 8 342 8 217 Other non-current assets 8 543 7 524 Operating financial assets (current and non-current) 1 316 1 371 Cash and cash equivalents 5 454 5 840 Other
Slide 54: 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,