Veolia reports strong first half results

Sustained revenue growth continues with accelerated EBITDA  progression in the second quarter for Veolia.

–          Revenue : €12,565 million, + 6.0per cent2, seven consecutive quarters of sustained growth

–          EBITDA : €1,673 million, + 5.8per cent (+6.4per cent in Q2 better than the +5.3per cent in Q1)

–          Cost savings of €148 million in line with the group’s annual objective (€78 million in Q2 in addition to the €70 million for Q1)

–          Current EBIT: €792 million, +6.8per cent

–          Current net income group share: €329 million, UP +13.3per cent excluding net capital gains. Published net income group share: €225 million

2018 objectives fully confirmed

Antoine Frérot, Veolia’s Chairman and CEO indicated: “The first half of 2018 finished once again in

a rhythm of sustained growth of both activity and results. The commercial momentum that began two

years ago continues. Revenue benefited from the additional efforts we engaged in 2017, growing 6 per cent, along with a notable increase of 4 per cent in waste volumes. Results also revealed sustained growth, with EBITDA up 5.8 per cent and current net income Group share excluding capital gains up 13 per cent, thanks to the revenue growth and the cost savings achieved during the first semester. These strong first half results demonstrate once again the relevance of the two levers of our strategy, growth and operational efficiency, and allow us to be confident in the achievement of our objectives for the full year.”

Group consolidated revenue was €12,565 million during the first half of 2018 compared to represented €12,187 million in H1 2017, up 6.0 per cent at constant exchange rates (+3.1 per cent at current rates) and +4.1 per cent at constant scope and exchange rates.

Veolia once again registered solid revenue growth in the first semester. At constant exchange rates, Q2 revenue is up +5.1 per cent, after +7.0 per cent in Q1.

Exchange rate variations had an unfavourable impact of €357 million on revenue for the semester (notably -€130M due to the weakness of the dollar, -€48M from the Australian dollar, -€44M from the Argentinian peso, and -€25M from the British Pound).

The scope effect was positive for €241M, principally the effect of small tuck in acquisitions completed in 2017. The divestiture of the Industrial Services activity in the United Stated weighed in for €91M.

The impact of energy prices (+€83M) and of recycled material prices (-€46M of which -€64M due to paper prices) reached a total of +€37M.

At constant exchange rates, the variations in revenue recorded during the first half of 2018 were as follows:

o In France, activity was relatively stable (-0.3 per cent) in the first half. Water revenue was up 0.1per cent as a result of price indexation of +0.6 per cent and good contract wins, but also a reduction in volume of -1.5 per cent due to the rainy weather in April and May. The Waste business declined by -0.7 per cent, with the effect of lower recycled material prices being only partially compensated by the increase in volumes treated.

o Europe excluding France grew by 6.8 per cent. All of the areas exhibited growth. Central and Eastern

Europe is up 4.1 per cent in spite of unfavourable weather conditions for Energy in Q2 (impact of -€33M), thanks to good water volumes (+0.7per cent), price increases, and a satisfactory commercial momentum.

Northern Europe registered strong growth (+12.8 per cent). Germany progressed by 4.7 per cent due to the strong performance in Waste activity. Benelux was up 20.5 per cent and Scandinavia up 57.4 per cent, with the impact of acquisitions completed in 2017. UK/Ireland grew by 4.4 per cent thanks to very good availability rates for PFIs, good commercial wins with industrial customers, and the increase in electricity prices.

o Rest of the World continued to drive the growth of the Group with an increase of +14.0 per cent. North America progressed by 4.9 per cent due to the good performance of the Energy activity in Q1, but also good commercial development. Latin America rose 29.1 per cent with price increases, sales development, and the integration in May 2018 of the activities of Grupo Sala, leader in toxic and municipal waste in Colombia. Asia grew by 21.8 per cent. China was up 10.9 per cent with good toxic waste volumes, benefiting from the opening of the Group’s tenth incinerator at Cangzhou, and strong energy activity. Equally solid performances came from South Korea in industrial water and from Japan with the start-up of the Hamamatsu concession. The Pacific zone progressed by 15.2 per cent thanks to good waste volumes, the commissioning of new assets, and targeted small acquisitions. Africa Middle East was up 8.9 per cent with the notably good performance of Energy Services in the Middle East.

o Global businesses increased by 1.3 per cent. Toxic waste continued to exhibit strong growth (+9.6per cent) thanks to good sales momentum, an increase in treated volumes, and a good progression in oil recycling. Veolia Water Technologies revenue declined by -10.1 per cent, due to the late start of contracts signed at the end of 2017. The order backlog is up 10.7 per cent annually, at €1,973M. Revenue is up 0.5per cent at SADE, with a particularly good performance in France.

At constant exchange rates and excluding works and energy prices, revenue is up 5.0per cent with an acceleration in Q2 to +5.3per cent after growth of +4.6per cent in Q1.

By activity, at constant exchange rates, Water revenue increased by 1.3 per cent. Waste exhibited strong growth of 10.9 per cent for the first half with volumes up 4.9 per cent in Q2 after a growth of +3 per cent in Q1. Energy rose 7.5 per cent with favourable volumes, a price effect of +2.2 per cent with the increase in heating and electricity prices in North America, and a negative weather impact (-0.9 per cent) in Central and Eastern Europe in Q2.  

EBITDA improved by 5.8per cent at constant exchange rates to €1,673M compared to represented €1,614M in H1 2017. (+3.7per cent at current exchange rates).

o Exchange rate variation had a negative impact of -€34M on EBITDA, but was compensated by a scope effect of +35 M€.

o At constant exchange rates, sustained activity growth combined with stronger cost savings (€148M with €78M in Q2 and €70M in Q1) resulted in EBITDA growth of 5.8per cent for the semester. With the reintegration of Gabon, EBITDA growth would have been +3.7per cent at constant exchange rates. Energy and recyclate prices weighed in for -€42M in the growth of EBITDA, with a squeeze effect on fuel of -€20M in Q1, a negative impact from paper prices of -€12M and an increase in diesel prices of -€10M.

o EBITDA variances at constant exchange rates break down as follows: In France, EBITDA was nearly stable (-0.5 per cent), in line with revenue evolution. Water EBITDA grew thanks to sustained cost savings. Waste EBITDA decreased as a result of lower recycled paper prices. In Europe outside of France, EBITDA rose +2.6 per cent, penalized by the fuel squeeze of €20M in Central and Eastern Europe where EBITDA was down. All other geographies registered sustained growth. Rest of the World posted strong EBITDA growth, up +18.4 per cent alongside solid revenue progression. In Global Businesses, EBITDA was up 2.0 per cent with double digit growth for hazardous waste business but a decline in works (Veolia Water Technologies and SADE).

Current EBIT reached €791.7 million compared to represented €759.9 million in H1 2017, up 6.8 per cent at constant exchange rates (and +4.2per cent at current exchange rates).

o Exchange rate variation had a negative impact of -€20M on Current EBIT.

o Current EBIT growth is a result of EBITDA growth and stable depreciation (including principal repayment on operating financial assets) expense of €825M vs. €826M in represented H1 2017 (D&A increased by +34 M€ at constant exchange rates). Provision reversals are down, and the aggregate provisions balance, fair value adjustments, and capital gains on industrial disposals reached €20M vs. €54M in represented H1 2017. The contribution of equity-accounted joint ventures and associates to current net income increased by €10M to €58M.

Current Net Income Group share was €329 million compared to represented €290 million in H1 2017, an increase of 19per cent at constant exchange rates (and +13.3per cent at constant exchange rates and excluding net capital gains).

o Cost of net financial debt was down, at -€199M. The gross cost of borrowing decreased by 37 basis points, to 2.80 per cent.

o Other current financial expenses and income were -€65M vs. -€73.7M in H1 2017 represented.

o Capital gains on financial disposals were €18.8M vs. €4.5M in H1 2017 represented.

o The current tax rate was stable at 26 per cent.

o Non-controlling interests increased to €87.6M vs. €79.9M in H1 2017 represented.

o The current net income Group Share progressed by 13.6 per cent to €328.9M and by +9.7 per cent excluding net capital gains.

o Published net income Group share was €225M compared to represented €198M in H1 2017 (growth of +13.5 per cent).


Net Financial Debt reached €10,609M on June 30, 2018 (and €9,157M before repayment of hybrid debt), vs. €8,553M for June 30, 2017 represented.

Net financial Debt increased as a result of :

o Higher industrial investments of €712M vs. €593M in H1,2017

o Net financial investments of €303M, and

o An unfavorable seasonal Working Capital variation of €790M.




Fully confirmed objectives —

  • 2018 (at constant exchange rates):


• Continuation of sustained revenue growth

• EBITDA growth greater than that of 2017

• Cost reductions of more than €300M


  • 2019* :

• Continuation of revenue growth and full effect of cost savings

• EBITDA between €3.3bn and €3.5bn (excluding IFRIC 12), and between €3.5bn and €3.7bn including IFRIC 12


  • Dividend growth in line with that of current net income



* At constant exchange rates (based on rates at the end of 2016)