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KEY FIGURES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016

3 november 2016
 
  • REVENUE: €17,708 MILLION, -1.2%*
    • EXCLUDING THE IMPACT OF CONSTRUCTION AND ENERGY PRICES, REVENUE INCREASED 1.6%1
  • EBITDA: INCREASE OF 5.1%1 TO €2,206 MILLION, DRIVEN BY COST SAVINGS
  • CURRENT EBIT: €979 MILLION, UP 7.3%1
  • CURRENT NET INCOME – GROUP SHARE: GROWTH OF 8.8%1 TO €421 MILLION, AND UP 21.5%1 EXCLUDING CAPITAL GAINS
  • MORE THAN €175 MILLION IN COST SAVINGS ACHIEVED DURING THE FIRST NINE MONTH
     
Antoine Frérot, Veolia’s Chairman and CEO indicated: “Given a persistently difficult environment, with a sluggish economy and weak inflation, revenue was slightly below our expectations in the third quarter, but commercial development was strong, providing confidence for the coming quarters. In terms of results, Veolia achieved another strong quarter, trending similar to the first half of 2016. EBITDA for the nine months continued to grow more than 5% excluding currency effects, and current net income - group share increased by double digits excluding capital gains. In total, for the third consecutive year, 2016 results should be very satisfactory, primarily due to the continued steady pace of cost reductions, even ahead of our annual objective.  The 2017 fiscal year should fully benefit from numerous developments completed this year, all while maintaining cost reduction efforts at a similar pace to 2016.

 
  • Revenue for the nine months ended September 30, 2016 declined 3.2% (-1.2% at constant exchange rates) to €17,708 million compared with €18,288 million for the prior year period.
The unfavorable movement in exchange rates penalized revenue growth by -1.9% in the first nine months    (-€354 million). Lower energy prices, primarily in the first half of 2016, weighed on revenue to the tune of        -€114 million (-0.6% of revenue growth), and lower construction activity hit revenue by -€396 million (-2.2%).
At constant exchange rates and excluding the impact of lower construction revenue and energy prices, revenue increased 1.6% due to solid commercial performance and an overall positive impact, though limited, of price indexation.
  • In France, revenue for the nine months was largely stable (-0.6%). Water revenue was negatively impacted by lower volumes (-1.7%) and weak price indexation (+0.2%), but posted a slight progression due to the benefit of new contracts (primarily Lille). Waste revenue declined by 1.6%, as in the first half, given stable volumes (+0.1%), and the impact of the fall of scrap metal prices. However, the contract renewal rate was very good and commercial development was strong, including the award of the Troyes waste to energy plant contract. 
  • Revenue in the Europe excluding France segment was also largely stable (-0.4%) at constant exchange rates for the nine months, following -0.3% in the first half. Revenue in Germany increased due to strong performance in Waste.  United Kingdom revenue declined 1.7% at constant exchange rates, but excluding construction revenue (which was down by -€53 million due to the end of construction of the Leeds plant) was up by 1.4%. Central and Eastern Europe revenue posted a decline for the nine months due to lower electricity volumes and prices in the Czech Republic and Lithuania, partially offset by higher invoiced water volumes (+1.5%).
  • The Rest of the World segment continued to improve, posting 1.9% growth at constant exchange rates for the nine months, with Q3 revenue up 6.3% (after Q1 down 2.4% and Q2 up 1.9%). At constant exchange rates, revenue in the United States declined 3.5% for the nine months ended September 30, 2016, after a -9.4% decline in the first half due to lower energy prices and volumes, and the fall in industrial services revenue. Revenue growth improved in the third quarter, due to the integration of the sulfuric acid regeneration business. Asia revenue increased 3.4%, with accelerated growth in China in the third quarter (+17.6% at constant exchange rates), which benefited from the Sinopec contract. Latin America grew 10.9% and Africa Middle East grew 8.9%.  Revenue in Australia declined by 4.2%, penalized by lower industrial services activity.
  • Global Businesses revenue decreased 5.2% at constant exchange rates.  Hazardous waste activity continued to grow (+2.7%), while the progressive downsizing of construction activities in Veolia Water Technologies and SADE continues.
 
  • Continued commercial development momentum since the beginning of 2016
    • Building on the strong business development performance achieved during the first half of 2016, the Group has been awarded several significant contracts during the third quarter.
    • In the municipal sector, Veolia has notably been awarded the PFI waste contract in Hertfordshire in the United Kingdom (30-year contract with expected cumulative revenue of £1 billion), the waste collection and recycling contract for the London borough of Camden (expected cumulative revenue of £338 million over 8 years) and the construction and operation of a waste-to-energy plant in the Troyes region of France (expected cumulative revenue of €240 million over 25 years). 
    • In the industrial sector, the significant water treatment contract award in China for Yanshan Petrochemicals, a subsidiary of SINOPEC, for 25 years and expected cumulative revenue of €3.3 billion was finalized and commenced in August.
 
  • EBITDA increased 2.7% (+5.1% at constant exchange rates) to €2,206 million.
    • Exchange rate movements negatively impacted EBITDA by 2.4% (-€52 million) with in particular -€22 million related to the U.K. pound sterling.
    • At constant exchange rates, the sustained growth in EBITDA was mainly due to cost savings continuing at a rate superior to the €200 million annual objective, with more than €175 million in savings achieved in the first nine months of 2016. Operational efficiency contributed 44% of savings, purchasing contributed 35% and lower SG&A expense contributed 21% of savings. For the full year 2016, cost savings are expected to be in the range of €220 million to €240 million.   
 
Current EBIT increased 4.0% (+7.3% at constant exchange rates) to €979 million.
  • Current EBIT was negatively impacted by unfavorable exchange rate movements of -€31 million, including -€14 million related to the U.K. pound sterling.
  • Excluding exchange rate impacts, current EBIT growth was mainly driven by the increase in EBITDA. Depreciation and amortization and principal payments on operating financial assets in total increased to €1,165 million for the nine months ended September 30, 2016 (compared with €1,133 million in the prior year period).  The contribution of the share of net income of joint ventures and associates was stable at €82 million.
 
  • Current net income – Group share increased 2.9% (+8.8% at constant exchange rates) to €421 million for the nine months ended September 30, 2016, compared with €410 million for the first nine months of 2015.
    • Current net income was negatively impacted by exchange rate movements in the amount of       -€24 million.
    • It benefited from a €29 million reduction in financial costs.
    • Current net income includes €33 million of net capital gains in the first nine months of 2016 versus €71 million in the first nine months of 2015.
    • Excluding capital gains, current net income – Group share was up strongly to €388 million for the nine months ended September 30, 2016 (+21.5% at constant exchange rates).
 
  • Net financial debt declined to €8,883 million at September 30, 2016 compared with €8,977 million at September 30, 2015.
    • Net financial debt declined €94 million compared to the prior year.
    • It benefited from a favorable exchange rate impact of €284 million vs. September 30, 2015 and includes the impact of -€410 million in net financial investments.
    • The leverage ratio is 2.9x.

- - - - - - - - - 
 
  • 2016-2018 Objectives
            Based on the results recorded during the first nine months of 2016, the Group’s outlook is as follows:
 
  • 2016 Objectives* 
    • Revenue now expected to be overall stable
    • EBITDA growth
    • Net free cash flow before divestments and acquisitions of at least €650 million
    • Current net income of at least €600 million
 
  • 2016-2018 Outlook*
    • The Group expects a progressive increase in revenue growth to achieve average annual revenue growth between 2% and 3% based on the current economic environment
    • Average annual EBITDA growth of around 5% per year
    • More than €600 million in cost savings over the period
    • Current net income greater than €800 million in 2018
    • Net free cash flow of €1 billion in 2018
*at constant exchange rates

Veolia group is the global leader in optimized resource management. With over 174,000 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 2015, the group Veolia supplied 100 million people with drinking water and 63 million people with wastewater service, produced 63 million megawatt hours of energy and converted 42.9 million metric tons of waste into new materials and energy. Veolia Environnement (listed on Paris Euronext: VIE) recorded consolidated revenue of €25.0 billion in 2015. 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.


*At constant exchange rates
At current consolidation scope and exchange rates, revenue declined 3.2%, EBITDA grew 2.7%, current EBIT increased 4.0% and current net income – group share grew 2.9%.

 

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