(UNAUDITED IFRS FIGURES)
SUSTAINED REVENUE GROWTH AND ACCELERATED RESULTS
PROGRESSION
- REVENUE INCREASED 4.4%1
(+3.1% LIKE-FOR-LIKE) TO €18,221 MILLION
- IN THE THIRD QUARTER REVENUE
INCREASED +4.3%1
- GOOD COMMERCIAL MOMENTUM
- WASTE VOLUMES UP BY +3.3%
- EBITDA UP 1.7%1 TO
€2,359 MILLION FOR THE NINE MONTHS
- IN THE THIRD QUARTER EBITDA
INCREASED +4.8%1
- €190 MILLION IN COST SAVINGS
ACHIEVED DURING THE FIRST NINE MONTHS, INLINE WITH THE €250 MILLION
ANNUAL OBJECTIVE
- CURRENT EBIT IMPROVED
2.2%1 TO €1,049 MILLION FOR THE NINE MONTHS
- THIRD QUARTER CURRENT EBIT IMPROVED
+6.9%1
- CURRENT NET INCOME- GROUP SHARE
ALMOST STABLE AT €406 MILLION, UP 4.3%1 EXCLUDING
CAPITAL GAINS
- 2017 OBJECTIVES FULLY
CONFIRMED
Regulatory News:
Antoine Frérot, Veolia Environnement’s (Paris:VIE)
Chairman and CEO commented: “Veolia’s 9-month results
are satisfying, and support our strategy of growth and efficiency.
The solid development of our revenue is confirmed, as announced at
the beginning of the year. Good commercial momentum and revitalized
attractiveness of our offerings resulted in new contract awards
across all our businesses and geographies. For example, we have
signed a new 10-year hazardous waste treatment contract with Antero
Resources, an oil and gas producer in the United States, and
renewed the contract to operate the Le Mans wastewater treatment
plant for a period of 12 years. In addition, the successful
framework and execution of our efficiency programs allowed us to
achieve cost savings in line with our objectives. All in all, the
combination of profitable growth and cost savings translates into
an overall acceleration of EBITDA and earnings, in line with our
plan. These results allow me to fully confirm our objectives.”
Group consolidated revenue increased 3.7% (+4.4% at constant
exchange rates) from represented €17,569 million for the nine
months ended September 30, 2016 to €18,221 million for the nine
months ended September 30, 2017.
The unfavorable movement in exchange rates negatively impacted
revenue growth by 0.7% for the first nine months of 2017 (-€123
million). At constant consolidation scope and exchange rates (i.e.
like-for-like), revenue growth for the nine months amounted to
3.1%, as in the first half of 2017.
At constant exchange rates and excluding the impact of
construction and energy prices, nine-month revenue increased
4.9%.
- In France, revenue was almost stable
for the nine months (-0.7%), but grew 1.2% at constant
consolidation scope. Water was stable (+0.1%) but showed gradual
improvement due to volume growth (+1%) and price indexation which
improved to +0.4% in the third quarter after -0.3% in the first and
second quarters. The Waste business recorded a decline of 1.6%, but
at constant consolidation scope increased 2.9% due to good
commercial momentum, volumes up by 2.1% (+3.5% in Q3) and the
positive effect of higher recycled material prices.
- Europe excluding France revenue was up
sharply, +6.5% at constant exchange rates for the nine-month period
and up 8.1% during the third quarter. All regions recorded
sustained growth, with the exception of Italy (-2.8%). Germany
increased 4.9% due to good commercial performance in Waste and
higher paper prices. UK revenue improved 5.1% given continued
strong PFI performance, good commercial momentum and higher
recycled material prices. Central and Eastern Europe revenue
increased 10.3% due to good volumes in Energy given favorable
weather in the first half of 2017 and the contribution of the
Prague Left Bank district heating network, as well as good water
volumes. In addition, Nordic countries also posted good performance
with revenue up 12.2%, while the Iberian Peninsula grew revenue
11.5%.
- At constant exchange rates, the Rest of
the World segment continued to record strong revenue growth for the
nine-month period (+10.6%), with Q3 revenue up 9.4%. North America
revenue increased 11.6% due to the integration of Chemours’
sulfuric acid regeneration business and the benefit from higher
energy prices in the municipal business. Industrial services
revenue remains down. Revenue in Asia progressed 22%, with in
particular, 30.3% growth in China, which continues to benefit from
commercial successes. Japan and South Korea also recorded revenue
growth. Latin American revenue increased 22.4%, due to good
development in Argentina, Brazil and Columbia. Australia revenue
recovered, with third quarter revenue up 8.2%.
- Global Businesses revenue declined by
1.3% at constant exchange rates. Hazardous waste activities
continue to grow at a good pace (+4.5%). Veolia Water Technologies
construction revenue fell 8.7% during the nine-month period,
however YTD bookings increased 10%. The SADE business recorded a
good performance in France, but delays in the start-up of
international projects resulted in an overall revenue decline
(-2.9%).
Commercial reinforcement efforts launched a year ago continue
to bear fruit.
After the good commercial performance recorded during the first
half of 2017, including for example the award of several energy
services contracts in China to generate more than €860 million in
cumulative revenue, and the design, build and operation of the
largest waste-to-energy plant in Latin America, in Mexico
(cumulative revenue expected of €886 million), the Group has once
again signed several significant contracts during the third
quarter.
- In Water in France, Veolia notably was
awarded the operations contract for the Valenton wastewater
treatment plant for a 12-year period and expected cumulative
revenue of €400 million, as well as operations contracts for two
wastewater treatment plants in Lille for 5 years and Le Mans for 9
years.
- In the United States, in the oil and
gas sector, Antero Resources awarded Veolia a contract to treat
sludge generated from its West Virginia site for a period of up to
10 years and $70 million in cumulative revenue.
- In recycling, Veolia has established a
global industrial plastic recycling platform with a European
presence in France, the United Kingdom, Germany, Benelux and
Scandinavian countries, as well as an Asian presence in South Korea
and Japan.
- In addition, renewal rates for expiring
contracts remained very satisfactory across all the Group’s
businesses.
EBITDA increased 1.3% (+1.7% at constant exchange rates) to
€2,359 million for the nine months ended September 30,
2017.
- The variation in exchange rates
negatively impacted EBITDA by 0.4% (-€10 million).
- At constant exchange rates, EBITDA
growth accelerated during the third quarter with 4.8% growth, after
+0.4% growth in the first half of 2017.
- This improvement was driven by
continued solid revenue growth and cost savings which reached €190
million for the first nine months of 2017, in line with the €250
million annual objective. The weight from unfavorable transitory
and one-off items amounted to -€103 million during the nine months,
including only -€9 million for the third quarter, which made it
possible to benefit from operating leverage generated from top line
growth. The impact of movements in energy prices and recycled
material prices was not significant, (only +€1 million for the
nine-month period).
Current EBIT rose 1.3% (+2.2% at constant exchange rates) to
€1,049 million for the nine months ended September 30,
2017.
- The foreign exchange impact on current
EBIT amounted to -€9 million.
- At constant exchange rates, current
EBIT growth was driven mainly by the increase in EBITDA.
Depreciation and amortization, combined with principal payments on
operating financial assets, increased 2.4% at constant exchange
rates to €1,255 million (scope effect). The contribution from the
current net income of joint ventures and associates was €76
million, compared to €82 million for the prior year period due to
the impact of divestitures that more than offset strong growth in
China (€50 million for the first nine months of 2017 vs.
represented €38 million for the first nine months of 2016).
Current net income – Group share declined 1.6% (-0.7% at
constant exchange rates) to €406 million for the nine months ended
September 30, 2017. Excluding capital gains, current net income –
Group share increased 3.3% (+4.3% at constant exchange rates) for
the same period.
- The foreign exchange impact on current
net income – Group share amounted to -€4 million.
- The cost of net financial debt was
stable at €314 million.
- Current net income – Group share
included €14 million in financial capital gains, compared with
represented €33 million for the first nine months of 2016.
- The current tax rate was 25%.
Net financial debt declined to €8,419 million at September
30, 2017, compared with €8,883 million at September 30,
2016.
**********
Medium-term outlook*.
In view of the performance recorded during the first nine months
of 2017, the Group’s medium-term outlook is fully confirmed:
- 2017: a transition year
- Resumption of revenue growth
- Stable EBITDA, or moderate EBITDA
growth
- Increased efforts to reduce costs: more
than €250 million in cost savings
- 2018:
- Continuation of revenue growth
- Resumption of more sustained EBITDA
growth
- More than €300 million in cost
savings
- 2019:
- Continuation of revenue growth and full
impact of cost savings
- EBITDA between €3.3bn and €3.5bn
(excluding IFRIC 12)
*at constant exchange rates
Veolia group is the global leader in optimized resource
management. With over 163,000 employees worldwide, the Group
designs and provides water, waste and energy management solutions
that contribute to the sustainable development of communities and
industries. Through its three complementary business activities,
Veolia helps to develop access to resources, preserve available
resources, and to replenish them. In 2016, the Veolia group
supplied 100 million people with drinking water and 61 million
people with wastewater service, produced 54 million megawatt hours
of energy and converted 30 million metric tons of waste into new
materials and energy. Veolia Environnement (listed on Paris
Euronext: VIE) recorded consolidated revenue of €24.39 billion in
2016. www.veolia.com
Important disclaimer
Veolia Environnement is a corporation listed on the Euronext
Paris. This press release 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 performance. Actual results may differ
materially from the forward-looking statements as a result of a
number of risks and uncertainties, many of which are outside our
control, including but not limited to: the risk of suffering
reduced profits or losses as a result of intense competition, the
risk that changes in energy prices and taxes may reduce Veolia
Environnement’s profits, the risk that governmental authorities
could terminate or modify some of Veolia Environnement’s contracts,
the risk that acquisitions may not provide the benefits that Veolia
Environnement hopes to achieve, the risks related to customary
provisions of divesture transactions, the risk that Veolia
Environnement’s compliance with environmental laws may become more
costly in the future, the risk that currency exchange rate
fluctuations may negatively affect Veolia Environnement’s financial
results and the price of its shares, the risk that Veolia
Environnement may incur environmental liability in connection with
its past, present and future operations, as well as the other risks
described in the documents Veolia Environnement has filed with the
Autorités des Marchés Financiers (French securities regulator).
Veolia Environnement does not undertake, nor does it have, any
obligation to provide updates or to revise any forward looking
statements. Investors and security holders may obtain from Veolia
Environnement a free copy of documents it filed (www.veolia.com)
with the Autorités des Marchés Financiers.
This document contains "non‐GAAP financial measures". These
"non‐GAAP financial measures" might be defined differently from
similar financial measures made public by other groups and should
not replace GAAP financial measures prepared pursuant to IFRS
standards.
QUARTERLY FINANCIAL INFORMATION FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2017
A] PREFACE
Changes in concession standards
Under concession contracts with local authorities,
infrastructure is accounted, as appropriate, as an intangible
asset, a financial receivable, or a combination of the two. Veolia
may have a payment obligation vis-a-vis the grantor for the use of
the associated assets.
In July 2016, IFRIC published a verdict regarding these payments
and concluded that in the case of fixed payments required by the
operator, an asset and a liability should be recorded (intangible
model). Veolia identified the contracts concerned and has applied
the new IFRIC 12 measures retroactive to January 1, 2015. The most
significant contracts concerned are our water concessions in the
Czech Republic and Slovakia. September 30, 2016 figures have been
represented for the application of IFRIC 12. The impacts are
presented in the appendix to this press release.
Figures as of September 30, 2017 discussed in this press release
include the impact of adjustments resulting from the application of
IFRIC 12. Reflecting these adjustments, EBITDA was increased in the
amount of €160.9 million, Current EBIT in the amount of €70.9
million and Current net income, Group share in the amount of €3.6
million.
Lithuania
As of September 30, 2017, the ongoing withdrawal from Lithuania,
motivated by the end of a major contract and the sales process for
other activities, led the Group to transfer its Lithuanian
activities to discontinued operations in accordance with IFRS
5.
B] KEY FIGURES
(in € million) (4)
9 months endedSeptember 30,2016
published
IFRIC 12 andIFRS 5 (3)adjustments
9 months endedSeptember
30,2016represented
9 months endedSeptember
30,2017 includingIFRIC 12
∆
∆ atconstantexchangerates
Revenue 17,708 (139) 17,569 18,221
+3.7% +4.4% EBITDA 2,206 123 2,329
2,359 +1.3% +1.7% EBITDA margin 12.5%
13.3% 12.9%
Current EBIT (1) 979 56 1,035 1,049
+1.3% +2.2% Current net income - Group share
421 (9) 412 406 -1.6% -0.7%
Current net income – Group share, excluding capital gains and
losses on financial divestitures net of tax and minority interests
388 (9) 379 392 +3.3%
+4.3% Industrial investments 902 84 986
982 Net free cash flow (2) 3 (28) (25)
(63) Net Financial Debt 8,883 - 8,883
8,419
(1) Including the share of current net income of joint ventures
viewed as core Company activities and associates.
(2) Net free cash flow corresponds to free cash flow from
continuing operations, and is equal to the sum of EBITDA, dividends
received, changes in operating working capital and operating cash
flow from financing activities, less interest expense, net
industrial investments, taxes paid, renewal expenses, restructuring
costs and other non-current expenses.
(3) Adjustments as of September 30, 2016 concern the application
of IFRIC 12 and the transfer of activities in Lithuania to
discontinued operations pursuant to IFRS 5 (see Appendix).
(4) The indicators are defined in Section 3.8.3 of the 2016
Registration Document.
The main foreign exchange impacts were as follows:
Foreign exchange impacts as of
September 30, 2017(vs September 30, 2016 represented)
% €M Revenue -0.7% -122.7 EBITDA -0.4%
-9.5 Current EBIT -0.9% -8.9 Current net income excluding capital
gains and losses -0.9% -3.5 Net financial debt (vs. September 2016
represented) -1.6% -146 Net financial debt (vs. December 2016)
-2.8% -221
C] INCOME STATEMENT
1. GROUP CONSOLIDATED
REVENUE
Group consolidated revenue for the nine months ended September
30, 2017 was €18,221 million, compared with represented €17,568.8
million for the same period in 2016, up +4.4% at constant exchange
rates. Excluding Construction revenue2 and energy price effects,
revenue increased +4.9% at constant exchange rates.
As in the first two quarters, revenue growth was marked by
favorable momentum across mainly Europe excluding France and Rest
of the world in the third quarter of 2017:
∆ at constant exchange
rates Q1 2017 Q2 2017
Q3 2017 France
-1.5% -0.4% -0.3% Europe excluding France +7.2% +4.4%
+8.1% Rest of the world +11.8% +10.8% +9.4% Global Businesses
-3.2% +1.7% -2.7%
Group
+4.5% +4.4% +4.3% Total Group
excluding the impact of Construction activities and energy
prices +5.9% +4.1%
+4.7%
By segment, the change in
revenue compared with represented figures for the nine months ended
September 30, 2016 breaks down as follows:
2016 / 2017 change (in € million)
9 months endedSeptember
30,2016represented
9 monthsendedSeptember
30,2017
∆
∆ atconstantexchangerates
∆ at constantscope andexchangerates
France 4,065.5 4,036.8 -0.7% -0.7% +1.2% Europe, excluding
France 5,830.9 6,103.8 +4.7% +6.5% +4.8% Rest of the World 4,346.8
4,815.6 +10.8% +10.6% +5.2% Global Businesses 3,304.5 3,240.0 -2.0
% -1.3% -0.4% Other 21.1 24.8 +17.9%
+17.8% +17.8%
Group 17,568.8
18,221.0 +3.7% +4.4%
+3.1%
Revenue increased +1.2% at constant scope in France:
Water revenue increased +0.1%, while Waste revenue grew 2.9% at
constant scope.
- Water revenue was €2,198.7 million,
impacted by higher volumes (+1%) and stable commercial activity,
slightly offset by a reduction in tariff indexation (-0.2%);
- Waste revenue declined -1.6% compared
to the represented figures for the nine months ended September 30,
2016, but grew 2.9% at constant scope (adjusted for the impact of
the sale of Bartin Recycling on November 30, 2016) to €1,838.1
million. Continued good commercial momentum with significant
contract wins was accompanied by increased volumes and higher
recyclate prices.
Europe excluding France (excluding Lithuania which is
classified in discontinued operations) grew +6.5% at constant
exchange rates compared to the represented prior-year period, with
solid momentum in all key countries:
- In the United Kingdom, revenue
increased +5.1% at constant exchange rates to €1,497.7 million,
thanks to good waste performance driven by the contribution of
integrated contracts, the favorable impact of recyclate prices
(paper and ferrous and non-ferrous scrap metals) and contract wins
(St Albans, Southend on Sea, Army 2020);
- In Central and Eastern Europe, revenue
increased +10.3% at constant exchange rates compared to the
represented nine months ended September 30, 2016 to €2,050.2
million, boosted by:
- In Energy, a favorable weather impact
(+€35 million), an increase in heating and electricity volumes sold
in Poland and the contribution of the Prague heating network;
- In Water, increased volumes and new
extended Armenia contract;
- In Northern Europe, revenue increased
+4.6% at constant exchange rates compared to the represented prior
year period to €1,764.4 million. Germany, the main contributor
(€1,298.6 million) benefited from higher paper prices, a positive
price impact on industrial waste collection activities and new
contract wins in the Waste sector. In addition, acquisitions,
mainly in Sweden in the Waste sector, further contributed to the
improvement in revenue.
Strong revenue growth (+10.6% at constant exchange rates
compared to the represented nine months ended September 30, 2016)
in the Rest of the world segment, with strong growth
reported across most regions:
- Revenue rose +11.6% at constant
exchange rates to €1,520.8 million in North America, benefiting
from the integration of Chemours' Sulfur Products division assets
(+€106.9 million) and the acquisition of a building energy services
company (Enovity: +€26.4 million) in January 2017. Additionally,
robust Municipal and Commercial activities were boosted by higher
electricity and gas prices and volumes, offset by a contraction in
industrial services;
- Revenue growth was robust in Latin
America (+22.4% at constant exchange rates) thanks to tariff
increases in Argentina, the positive impact of the acquisition of
the Pedreira landfill site in Brazil in May 2016 and the start-up
of the Santa Marta contract (drinking water distribution) in
Colombia in April 2017;
- Asia reported significant revenue
growth of +22% at constant exchange rates. In China, strong revenue
growth (+30.3%) was due to new contracts (Sinopec, Hongda, Heijian
Biomass and Hangzhou WEE) in the Industrial Water and industrial
services sectors, and growth in volumes sold in the Municipal
Energy and Waste sectors. Revenue growth in Japan was also driven
by the development of Municipal Water activities and the
contribution of plastic recycling activities purchased in August
2016. In Korea, the acquisition of Uniken in Industrial Waste had a
favorable impact on revenue;
- Revenue increased in the Pacific zone
(+2.9% at constant exchange rates for the nine months ended
September 30, 2017). In the Waste business, increased volumes
following the opening of new processing sites (Banksmeadow and MBT
Woodlawn) were partially offset by a decrease in industrial
services (loss of Rio Tinto contract);
- In Africa and the Middle East, revenue
declined by -1.9% at constant exchange rates.
Global Businesses: -1.3% decline in revenue at constant
exchange rates compared to the represented nine months ended
September 30, 2016:
- Solid growth in Hazardous Waste
activities (+4.5% at constant exchange rates), mainly due to an
improvement in the oil recycling business;
- Design & Build activities remain
down by -8.7% at constant exchange rates, in line with the Veolia
Water Technologies business restructuring, although bookings
improved (+10%). Growth in SADE activities in France, however,
partially offset international delays.
The increase in revenue between the nine months ended 2016
and 2017 breaks down by main impact as
follows:
The foreign exchange impact on revenue was -€122.7
million (-0.7% of revenue) and mainly reflects fluctuations in the
UK pound sterling (-€139.9 million), the Argentine peso (-€15.2
million), the Chinese renminbi (-€12.8 million), the Australian
dollar (+€26.1 million), the Czech crown (+€13.5 million) and the
Brazilian real (+€13.1 million).
The consolidation scope impact (+€225.2 million) mainly
concerns developments in 2016 and 2017: in 2016, the integration of
Chemours’ Sulfur Products division assets in the United States
(+€106.9 million), Prague Left Bank, renamed Veolia Energie Praha,
in the Czech Republic (+€20.5 million) and the Pedreira landfill
site in Brazil (+€16.5 million), as well as the sale of Bartin
Recycling in the Waste business in France (-€104.9 million); in
2017, the acquisition of Enovity in the United States (+€26.4
million), Uniken in South Korea (+€18.0 million), the takeover of
Ta-ho in Taiwan (+€28.7 million) and Corvara and Hans Andersson in
Sweden (+€19.2 million), which offset the sale of the FM AB
business in Sweden (-€8.1 million). At constant scope and exchange
rates, revenue grew +3.1%.
Construction revenue contracted by -€67 million (-€8
million in Q3 2017, compared with +€15 million in Q2 2017 and -€74
million in Q1 2017) following a decrease in Construction activity
under concession agreements, slightly offset by the recovery of
SADE activities in France.
Energy and recyclate prices had an impact of €72 million
(versus -€119 million for the nine months ended September 30,
2016).
Commercial momentum improved significantly
(Commerce/Volumes impact) contributing +€423 million
(compared with +€110 million for the nine months ended September
30, 2016):
- A volume effect of +€207 million in
line with higher volumes sold in Central Europe (particularly
electricity and heating sales), good waste volumes in France, the
United Kingdom and Germany, and further growth in energy volumes in
China;
- A commercial effect of +€186 million,
encompassing the development of new industrial assets in Europe and
Asia (Sinopec contract: €63 million);
- A weather impact of +€30 million:
highly favorable impact in Central Europe (+€35 million) partially
offset by North America (-€6 million).
Favorable price effects (+€119 million) are tied to
positive tariff indexation in Germany in Waste, in Central Europe
in Water and the significant impact of higher prices in
Argentina.
By business, the increase
in revenue for the nine months ended September 30, 2017 compared to
the represented period for the prior year breaks down as
follows:
(in € million)
9 months endedSeptember 30,2016
represented
9 months endedSeptember
30,2017
∆
∆ atconstantexchangerates
∆ at constant FXand excludingconstruction
&energy prices
∆ at constantscope andexchange rates
Water 8,036.2 8,058.9 +0.3% +0.6% +1.8%
+0.8% Waste 6,316.4 6,641.6 +5.1% +6.7% +6.8% +4.2% Energy
3,216.2 3,520.5 +9.5% +9.4%
+8.9% +6.9%
Group 17,568.8
18,221.0 +3.7% +4.4%
+4.9% +3.1%
WATER
Water revenue increased slightly by +0.6% at constant exchange
rates and 1.8% at constant exchange rates excluding Construction
revenue and energy price effects, compared with represented figures
for the nine months ended September 30, 2016. This improvement can
be explained as follows:
- Higher volumes in France, Central
Europe (notably the new extended Armenia contract) , Asia (Sinopec
contract), and a positive commercial impact lead to an overall
increase of +1.9%;
- Tariff increases in Central Europe and
Latin America;
- A slight decrease in Construction
revenue (-0.9%) following a slowdown in activity.
WASTE
Waste revenue rose +6.7% at constant exchange rates compared
with represented figures for the nine months ended September 30,
2016 (+4.2% at constant scope and exchange rates), due to:
- A scope impact of +2.6%, mostly related
to the acquisition of the Chemours’ Sulfur Products division assets
in the United States (+€106.9 million), the acquisition of Pedreira
in Brazil (+€16.5 million) and external growth transactions in
Asia, partially offset by the sale of Bartin (-€105 million);
- Commercial and volume effects of +1.5%:
slowdown in Waste volumes in the United States (Industrial services
still weak) offset by numerous contract wins, particularly in
France, the UK and Germany;
- A positive price effect of +1.0%;
- The favorable impact of higher
recyclate prices (+1.5%) and particularly paper.
ENERGY
Energy revenue rose +9.4% at constant exchange rates compared
with represented figures for the nine months ended September 30,
2016 (+6.9% at constant consolidation scope and exchange rates).
This improvement can be explained as follows:
- The positive volume and commerce effect
of +5%, due to higher volumes of energy sold in Central Europe,
China and the United States and new energy efficiency contracts in
Asia and Europe;
- A favorable weather impact of €30
million (+0.9%) mostly in Poland and the Czech Republic;
- A slightly positive price effect of
+0.4%: lower heat and electricity prices in Europe were mostly
offset by higher prices in the United States;
- A scope impact of +2.5%, related to the
acquisition of Prague Left Bank and Gesten in 2016 and an energy
efficiency business in the United States (Enovity) in 2017.
2. EBITDA
Group consolidated EBITDA for the nine months ended September
30, 2017 was €2,358.7 million, up 1.7% at constant exchange rates
compared to the represented prior year period. The EBITDA margin
decreased from represented 13.3% for the nine months ended
September 30, 2016 to 12.9% for the nine months ended September 30,
2017.
Changes in EBITDA by segment
were as follows:
In France, EBITDA improved:
- In the Water business, EBITDA improved
significantly in the nine months ended September 30, 2017, thanks
to significant cost savings and higher volumes (+1%), partially
offset by squeezed margins due to negative tariff indexation and
contractual renegotiations;
- In the Waste business, EBITDA also
increased, benefiting from cost savings and the impact of
commercial developments.
EBITDA stabilized in Europe excluding France (excluding
Lithuania) as a result of several impacts:
- In Central and Eastern Europe, EBITDA
improved mainly thanks to a favorable weather impact in Energy and
good volumes in Water;
- In the United Kingdom, good operating
performance was partially offset by plant outages and one-off
dismantling costs;
- Lower EBITDA in Northern Europe, mainly
due to favorable non-recurring items in the first-half of 2016
(litigation payment and insurance claim reimbursement).
EBITDA grew in the Rest of the World:
- Increased EBITDA in the United States
was mainly due to changes in consolidation scope, with the
successful integration of Chemours’ Sulfur Products division assets
and progression in Energy, with the acquisition of Enovity,
partially offset by the sale of West Coast energy assets. The
decline in industrial services was partial offset by the
restructuring measures previously implemented;
- EBITDA growth in Latin America was
mainly due to price increases in Argentina and the impact of
acquisitions in Brazil and a new contract in Colombia;
- Sustained EBITDA growth in China across
all businesses: Municipal and Industrial Energy, Industrial Water
(Sinopec) and Waste (landfill volumes and growth in hazardous
waste).
In the Global Businesses segment, the benefits of
restructuring at Veolia Water Technologies and the good performance
of Hazardous waste activities were offset by the non-recurrence of
2016 favorable impacts (favorable outcome of a contract
termination). Veolia Water Technologies is pursuing its
transformation plan with the standardization of its offerings,
purchasing savings and a decrease in selling and administrative
costs.
The increase in EBITDA between the nine months ended 2016 and
2017 breaks down by impact as
follows:
- The foreign exchange impact on
EBITDA was -€9.5 million and mainly reflects the depreciation of
the UK pound sterling (-€18.1 million) and the Chinese renminbi
(-€3.3 million), partially offset by the appreciation of the Czech
crown (+€4.6 million), the Polish zloty (+€3.2 million), the
Brazilian real (+€2.7 million), and the Australian dollar (+€2.2
million).
- The consolidation scope impact
(+€52.6 million) mainly concerns developments in 2016: the
integration of Chemours’ Sulfur Products division assets in the
United States, Prague Left Bank in the Czech Republic, and the
Pedreira landfill site in Brazil.
- Commerce and volume impacts
totaled +€33 million thanks to strong commercial momentum (notably
in Asia), good water volumes in Europe, higher waste volumes and
favorable weather conditions over the first nine months. These
favorable items were partially offset by the impact (albeit weaker)
of contract negotiations in France Water, contract losses in Italy
and a downturn in industrial service activities in North America
and the Pacific.
- Energy and recyclate prices
positively impacted EBITDA (+€1 million): heating and electricity
prices changed in line with the purchase price of fuel used to
produce heat and electricity (decrease in Central Europe and
increase in the U.S.). The positive impact of higher recyclate
prices in the United Kingdom was offset by increased fuel costs in
Waste in France.
- The -€104 million price squeeze
includes in particular the negative impact of the start-up of new
activities.
- Cost savings plans contributed
€190 million, consistent with the annual objective of €250 million.
They mainly cover operational efficiency (46%) and purchasing
(31%), and were achieved across all geographic zones: France (32%),
Europe excluding France (26%), Rest of the World (25%), Global
Businesses (15%) and Corporate (2%).
- Transitory costs and one-off
items mainly concern the absence of the favorable impact of
one-off items recorded in the first nine months of 2016 (litigation
payment in Belgium, insurance claim reimbursement received in
Germany, favorable contract termination at Veolia Water
Technologies) and additional insurance and maintenance costs
(particularly in the United Kingdom) incurred in the first half of
2017.
3. CURRENT EBIT
Group consolidated Current EBIT for the nine months ended
September 30, 2017 was €1,049.2 million, up +2.2% at constant
exchange rates compared to the represented figures for the
prior-year period.
The reconciling items between EBITDA and Current EBIT for the
nine months ended September 30, 2017 and 2016 are as follows:
(in € million)
9 months endedSeptember 30,2016
represented
9 months endedSeptember 30,
2017
EBITDA 2,329.0 2,358.7 Renewal
expenses (202.5) (206.7) Depreciation and amortization (*)
(1,231.1) (1,255.5) Provisions, fair value adjustments & other:
58.3 76.9
- Current impairment of property, plant and equipment, intangible
assets and operating financial assets
1.9 10.5
- Net charges to operating provisions, fair value adjustments and
other
36.3 57.2
- Capital gains or losses on industrial divestitures
20.1 9.2 Share of current net income of joint ventures and
associates 81.6 75.8
Current EBIT
1,035.3 1,049.2
(*) Including principal payments on operating financial assets
(OFA) of -€120.1 million for the nine months ended September 30,
2017 (compared with -€140.4 million for the nine months ended
September 30, 2016.)
The increase in Current EBIT at constant exchange rates
reflects:
- EBITDA growth at constant exchange
rates;
- the increase in depreciation and
amortization charges at constant exchange rates, in line with
consolidation scope impacts, primarily in the Unites States
following the acquisition of Chemours’ assets in July 2016, as well
as in Brazil;
- the favorable change in net operating
provision reversals, in particular captive insurance provisions
(+€12 million);
- a decline in capital gains or losses on
industrial divestitures in the nine months ended September 30,
2017;
- Share of current net income of joint
ventures and associates was +€75.8 million versus +€81.6 million in
2016; improved performance of Chinese concessions were offset by
sales of assets in United Kingdom.
The foreign exchange impact on Current EBIT was -€8.9 million
and mainly reflects fluctuations in the pound sterling (-€10.5
million), Brazilian real (+€1.6 million), Czech crown (+€2.3
million), Chinese renminbi (-€3.1 million), and Australian dollar
(+€1.2 million).
4. CURRENT NET
INCOME
Current net income attributable to owners of the Company was
€406 million for the nine months ended September 30, 2017, compared
with represented €412 million for the nine months ended September
30, 2016. Excluding capital gains and losses on financial
divestitures net of tax and minority interests, current net income
attributable to owners of the Company rose 4.3% at constant
exchange rates to €392 million from represented €379 million for
the nine months ended September 30, 2016.
D] FINANCING
Net free cash flow was -€63 million for the nine months
ended September 30, 2017, versus represented -€25 million for the
nine months ended September 30, 2016.The change in net free cash
flow compared with the represented nine months ended September 30,
2016 mainly reflects the increase in restructuring and other costs
(-€40 million).
Net FCF excluding WCR seasonality for the nine months ended
September 30, 2017 amounted to €619 million.
Overall, net financial debt amounted to €8,419 million at
September 30, 2017, compared with represented €7,812 million at
December 31, 2016.
In addition to the change in net free cash flow (including the
change in operating WCR), net financial debt was impacted by net
financial investments of -€248 million, as well as favorable
exchange rate fluctuations totaling €221 million in the first nine
months of the year and dividends paid.
APPENDIX
Reconciliation of 2016 published data for the nine months
ended September 30, 2016 with represented data1
(In €m)
Sept 30, 2016published
IFRIC 12Adjustment
(2)
IFRS 5Adjustment
(5)
Sept
30,2016represented
Revenue 17,707.6 0.0 -138.8
17,568.8
EBITDA (a)
2,206.4 151.4 -28.8
2,329.0
Current EBIT (3) 978.8 69.6 -13.1
1,035.3 Operating income 828.4 69.6 -13.1
884.9 Current net income – Group share 421.4
0.5 -9.5
412.4 Gross industrial investments (b)
-902 -84 0
-986 Of which change in concession WCR
0 -80 0
-80 Interest on operating assets - IFRIC
12 (c)
0.0 -67.3 0.0
-67.3 Net free cash
flow (4) 3 0 -28
-25 Net financial
debt -8,883 0 0
-8,883
(1) Unaudited figures
(2) See below
(3) Including the represented share of current net income of
joint ventures and associates for the nine months ended September
30, 2016.
(4) The IFRIC 12 adjustment has no impact on net Free Cash Flow
(a)+(b)+(c)=0)
(5) In order to ensure the comparability of periods, the
accounts for the nine months ended September 30, 2016 have been
adjusted for the reclassification of the Group's activities in
Lithuania to "Net income (loss) from discontinued operations"
pursuant to IFRS 5
IFRIC 12
In the income statement, the adjustments resulting from this
clarification drive an increase in EBITDA and Current EBIT. In
effect, the concession fee formerly accounted for as a charge is
eliminated and then reallocated between interest expense and
repayment of the recognized debt. At the same time, a depreciation
charge for the asset is recognized and then deferred taxes are
adjusted accordingly.
On the balance sheet, the liability related to the fixed
payments is classified within concession liabilities and broken
down between current and non-current liabilities according to
maturity. The liability balance relating to the adjustments is
greater than the corresponding net asset value: in effect, the
asset depreciation rate is linear, while the reimbursement rate is
progressive ("constant annuity formula,” with reduction in the
interest portion in favor of the principal repayment).
The increase in EBITDA resulting from the application of the
clarification is offset by the liability repayment (classified in
CAPEX) and interest payments. As a result, these adjustments have
no impact on net free cash flow or net financial debt.
1 At constant exchange rates.At current consolidation scope and
exchange rates: revenue up 3.7%, EBITDA up 1.3%, current EBIT up
1.3%, and current net income-group share was down 1.6%, though up
3.3% excluding capital gains.
2 Construction activities encompass the activities of Veolia
Water Technologies, SADE and Sede.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171106006378/en/
Group Media RelationsLaurent ObadiaSandrine GuendoulTél :
+ 33 (0)1 85 57 42 16sandrine.guendoul@veolia.comorInvestor
& Analyst RelationsRonald Wasylec - Ariane de LamazeTel. :
+ 33 (0)1 85 57 84 76 / 84 80Terri Anne Powers (USA)Tel. : + 1 630
218 1627
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