2011 Half Year Results
+4.4% organic revenue growth.
Positive free cash flow* and net financial debt* reduction.
Difficulties in Southern Europe, North Africa and the United States
Adjusted operating cash flow -3.5% (excluding Veolia Transdev)**
Adjusted operating income* -10% (excluding Veolia Transdev)**
Approximately €800M in asset write-downs.
Company-wide restructuring and transformation plan.
Executive committee changes.
(non-audited ifrs figures)
«In the context of improving Company performance, several months ago I launched a complete review of our operations, which is now finished and decisions have been reached. A number of changes have already been initiated and accomplished and the scope of Veolia's operations has already changed significantly throughout the last 18 months. However I have decided to accelerate the restructuring of our activities and supplement the transformation of Veolia Environnement with a convergence plan in order to increase synergies between our businesses and further reduce costs. This second phase will facilitate the achievement of the objective we set: to make Veolia a more reactive and more efficient company given its operational environment, focused on a significantly reduced number of countries, with fewer entities and activities, and a clear objective: to quickly improve profitability, all while capturing growth opportunities present within our activities.»
First half 2011 performance was characterized by: continued organic revenue growth, localized operational difficulties and asset write-downs.
- Consolidated revenue grew 4.4% at constant scope and exchange rates (+15.5% at current exchange rates) to €16,286.7M.
- Adjusted operating cash flow grew 2.3% at constant scope and exchange rates (+2.8% at current rates) to €1,740.8M, which was negatively impacted by operational difficulties within the United States in the Marine Services business, in Southern Europe and to a lesser extent in North Africa, by a total amount of €97M. Excluding Veolia Transdev, adjusted operating cash flow declined by 3.5% compared to previously published first half 2010 figures.
- Adjusted operating income declined 8.3% at constant exchange rates (-7.2% at current rates) to €937.8M, versus €1010.9M in H1 2010 due to operational difficulties resulting in a -€109M impact. Excluding Veolia Transdev, adjusted operating income declined 10% compared to previously published first half 2010 figures.
- Operating income amounted to €252.2M, versus €1100.7M in the prior year period and was negatively impacted by non-recurring write-downs amounting to €686M (principally in Italy, Morocco and the United States).
- The total amount of non-recurring write-downs accounted for in the first half of 2011 was €800.3M, to which an additional €38M in write-downs were accounted for in adjusted operating income. In addition, a capital gain of €429.8M was generated due to the combination of Veolia Transport and Transdev, which is accounted for in discontinued operations.
- Net income was -€67.2M. Adjusted net income amounted to €188.1M versus €262.9M in H1 2010.
Positive free cash flow* of €155M versus -€133M in H1 2010. Reduction in net financial debt by €454M, to €14.8 billion versus €15.2 billion at December 31, 2010.
- Controlled gross investments*, €1,199M in H1 2011 versus €1,333M in H1 2010
- Solid execution on asset divestment program, with €1,048M in divestments completed as of June 30, 2011, including €540M related to the combination of Veolia Transport and Transdev.
- Continued organic revenue growth
- A program of asset divestments of at least €1.3 billion
- Positive free cash flow after dividend payment
- Efficiency Plan cost savings of at least €250M
- Slight decline in adjusted operating income at constant exchange rates, compared to previously published 2010 figures, excluding Veolia Transdev.
Acceleration of company restructuring
- Exit certain geographies and certain activities: Transport in Morocco, Environmental Services in Egypt, Marine Services in the United States, and in Southern Europe
- Increased geographic concentration of company operations, with a presence in less than 40 countries targeted by 2013, versus 77 countries currently
Launching Convergence plan
- Reinforcement of Company operational performance and integration
- Rationalization of the organization, processes and local headquarters
- Additional cost savings plan: a minimum of €150M benefit to 2013 annual operating income, increasing to €250M to €300M annually by 2015, in addition to the annual Efficiency Plan of at least €250M.
Executive Committee changes
- Denis Gasquet, Chief Operating Officer and Senior Executive Vice Presidentof Veolia Environnement, will take responsibility for a team dedicated tooperational performance, organizational structure and cost reductions. He willno longer serve as CEO of the Environmental Services division in order todevote himself fully to the Company's transformation plan.
- A new Head of Environmental Services division: Jérôme Le Conte
- A new Head of Energy Services division: Franck Lacroix
- A new Director of Human Resources: Jean-Marie Lambert
The Board of Directors will determine its dividend per share recommendation associated with the 2011 fiscal year at the Annual General Shareholders Meeting associated with the full year 2011 accounts. The Board confirms the intent to maintain a high payout as a percentage of adjusted net income.
Veolia Environnement is a corporation listed on the NYSE and 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 forwardlooking 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 risks described in the documents Veolia Environnement has filed with the U.S. Securities and Exchange Commission. 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 a free copy of documents filed by Veolia Environnement with the U.S. Securities and Exchange Commission from Veolia Environnement.
* Refer to page 14 for definitions
** Compared to previously published 2010 figures