KEY FIGURES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

Antoine Frérot, Veolia’s Chairman and CEO stated: « In a global economic context heavily impacted by the sanitary crisis, Veolia has reacted swiftly to implement the safest working conditions for its employees and has once again demonstrated its capacity to absorb shocks, to recover quickly and strongly and to pursue ambitious plans for the future. The rebound that began in June and was amplified during the summer has resulted in a very good Q3: revenue was back at the level of 2019, while profits were above, thanks to the adaptation measures put in place at the beginning of the crisis. I am very proud of all the work accomplished and I would like to thank all our employees whose total commitment has enabled us to continue to deliver high quality services to our clients and to recover a positive momentum very quickly. This is par for the course for the benchmark environmental services company. At the same time, we have initiated the most important project for Veolia in 30 years. On October 6th, we bought a 29.9% stake in Suez from Engie, with the goal of acquiring the remaining shares so as to create the world champion of the ecological transformation. Thanks to a unique complementarity, the new Group resulting from this industrial project will create value for all its stakeholders at a time when the priority given to environmental issues has never been greater.»

• Revenue in Q3 was €6 293 million compared to €6 441 million in Q3 2019, stable at constant scope and exchange rates. Revenue for the 9 months reached €18 705 million compared to €19 765 million in 9M2019, -5.4% at current scope and exchange rates, and -3.8% at constant exchange rates

The Group had a good start of the year before the COVID crisis outbreak mid-March, then rebounded as soon as June, and continued this recovery throughout the 3^rd quarter.

At constant scope and exchange rates, Q1 was nearly flat at -0.5%. Q2 revenue was down by 10.8%, recovering since May, followed by a strong improvement in June. In Q3, the recovery continued and revenue was stable (-0.1%).  

Exchange rate variations unfavorably impacted revenue growth by -€214 million (-1.1%) on the 9 month revenue. 

Scope impact was negative too and stood at -€101M, mostly due to the divestiture at the end of 2019 of our municipal energy business in the US (TNAI), partially offset by new developments in Hong Kong, Chile and Spain mostly. 

The volume/commerce impact was negative by -€862M on revenue, or -4.4%, due to the consequences of the sanitary crisis, but by only -€50M (-0.8%) in Q3.

Strict pricing discipline has resulted in a positive impact of +€206M on the Group’s revenue (+1.0%) for the 9 months and of +€63M in Q3 (+1.0%). 

Energy prices had a positive impact of +€32M on revenue, and recycled material prices weighed for -€120M, (of which -€74M due to recycled paper).  

By geography and at constant exchange rates, the evolution for the 9 month sand in Q3 is as follows:  

• In France, activity rose by +0.8% in Q3. Water revenue increased by 1.0% due to volumes up 0.8% and tariffs up 1.5%. Summer was good, even compared to a 2019 which was already up in terms of volumes. Waste revenue was up by 0.6%, including volume increase of 1%, and prices up 2%. This good dynamics was slowed by decreasing recycling activities, mostly in paper. Over the 9 months, France revenue was down 3.9% in Water and -8.8% in waste.

• Europe excluding France increased by +0.8% in Q3 thanks to the very good performance in Central and Eastern Europe, up +8.3% thanks to good performances both in Water and Energy. The UK (including Ireland) exhibited a slight revenue decline of -1.3% due an exit from lockdown delayed compared to other European countries. Northern Europe was down by 4.4%. Southern Europe (Italy, Spain, Portugal) was up by +0.3%. Over the 9 months, Europe excluding France is down by 1.5% with variances in the above mentioned zones of respectively +2.7%, -4.3%, -4.7% and +0.4%.

• Rest of the World exhibited diverse performances in Q3. Latin America was up +7.7%, thanks to tariff increases complemented by tuck-in acquisitions in Chile and Brazil, Africa Middle East grew by +1.6% with an activity rate back to 2019 level in Morocco, North America was down by -5.6% at constant scope and perimeter due to the slowdown in the refining activity, Asia decreased by -5.1% with notably the end of several construction works, low margin activities not harming the continued results growth, and Pacific was down by -2.4% following the lockdown in Melbourne. Over the 9 months, trends are more favorable, helped by the strong underlying dynamics of all the countries. Asia grew by +1.5%, Latin America by +6.4%, Africa Middle East was stable, North America was slightly down by 3% at constant scope and exchange rates and Pacific showed a slight decline of -1.1%

• Global businesses were up by 3.1% in Q3. Hazardous waste activities were stable with good levels of activity in incineration and landfilling, and a continued strict pricing discipline. Construction rebounded sharply, after being halted in Q2, and are up +9.9%, of which +9.8% for Veolia Water Technologies and +10.1% for SADE. Over the 9 months, Global business revenue remains down due to Q2 lockdown, including -3.0% in Construction and -8.6% in Hazardous Waste.

In Q3, at constant exchange rates, revenue was stable and split by business was as follows: Water and Waste water revenue increased by +2.6%. Waste declined by -3.4% with volumes down -2.6%, tariffs up +1.6%, and an impact of recycled material prices of -0.9%. Energy was up by +0.8%. Over the 9 months, and at constant scope and exchange rates, Water was down by -1.9%, Waste by -6.1%, Energy by -2.2% and Technology and Networks by -3.8%.

• EBITDA increased by +2.5% at constant scope and forex in Q3, to €893M thanks to the additional cost cutting. EBITDA for the 9 months reached €2 492M vs. €2 894M at 30 September 2019.

• Adaptation measures put in place to offset the negative impacts of the sanitary crisis have allowed the Group’s results to rebound sharply in Q3 and to be even higher than Q3 2019, ahead of our plans

• Over the 9 months, scope effect was negative by -€44M mainly due to the divestiture of the municipal energy business in the US. Forex effect was negative by -€33M mostly due to Latin America and Central and Eastern Europe.

• At constant scope and forex, Q3 EBITDA grew by +2.5%, including a neutral volume effect thanks to the “Recover and Adapt” adaptation measures put in place for €80M , a price cost squeeze of -€34M and the strong contribution of the efficiency plan for +€64M. Over the 9 months, EBITDA stood at €2 492M vs. €2 894M at September 30 2019, including a cumulated volume/commerce impact of -€432M due to sanitary crisis.

• Current EBIT was up +4.3% at constant scope and forex in Q3 2020, to €333M. At September 30 2020, current EBIT reached €771M vs. 1 190M in 9M2019.

• Forex effect of -€13M over the 9 months.

• In Q3, Current EBIT reached €333M, up +4.3% at constant scope and forex, thanks to EBITDA improvement, lower depreciation and amortization (-€22M) offset by higher renewal expenses (+€22M). Provisions, Fair Value adjustments and capital gains on industrial divestments were up €7M. Share of current net income from Joint Ventures and associates was down by €4M to €33M.

• Current net income group share in Q3 was up +10.6% at constant scope and forex (+6.8% current) to €142M. Over the 9 months, current net income group share reached €149M vs. €486M in 9M 2019.

• Cost of financing was down to -€315M vs. -€333M in 9M 2019 thanks to favorable refinancing conditions and lower net financial debt. Other financial income and expense reached -€127M vs. -€132M in 9M 2019.

• Capital gain on financial divestments were down to +€9M vs. +€14M in 9M 2019.

• Income tax expense is down to -€98M vs. -€151M in 9M 2019.

• Net financial debt was €11 745M at 30 September 2020 vs. €12 487M at 30 September 2019, down by €742M vs. September 2019.

• Net financial debt  favorable evolution  is due to controlled capital expenditures, down by €121M. This decrease is mostly attributable to maintenance investments. Growth projects have been maintained at €211M vs. €241M at 30 September 2019. Working capital requirement has continued to improve (+€79M) thanks to strict cash management.

• Outlook 2020⁽¹⁾ :  Q4 objectives confirmed  

• Taking into consideration the recovery of our activities since the end of the lockdown and our Q3 performances, we confirm our objective of an operational performance in Q4 2020 equivalent to Q4 2019

• The strategic choices included in Impact 2023 remain relevant.

⁽¹⁾ At constant exchange rates (as of December 2019)

• Acquisition of a 29.9 % stake in Suez from Engie on 6th October 2020 in order to create the world champion of the  ecological transformation

• On 31 July 2020, as part of a strategic review, Engie announced to envisage the divestment of some of its businesses including its stake in Suez.
   
• On 30 August 2020, Veolia proposed to acquire 29.9 % stake in Suez from Engie at €15.5 per share and then raised the price to €18 on September 30, for a total consideration of €3.4bn.
   
• On 6 October Engie accepted Veolia’s offer. After the acquisition of the 29.9% in Suez, Veolia intends to launch a voluntary tender offer on the remaining share capital of Suez at €18 per share (coupon attached) once our project is accepted by Suez’s current Board of Directors or by a Board renewed by its shareholders.
   
• On November 3rd, Veolia has confirmed its intention to  make a public takeover bid for the entire share capital of Suez at a price of €18 per share (cum dividend) as soon as the Board of Directors of Suez issues an opinion in favor of this proposal and deactivates the inalienability mechanism applicable to the water business in France
   
• This acquisition is the first step of a very ambitious project: the creation of the world champion of the ecological transformation. 
   
• By combining the very strong competencies of Suez and Veolia, this transaction will significantly accelerate the development of the new entity facing growing competition, and enable the sector to tackle the environmental challenges of the 21st century. This project  relies on the following pillars:
  • Stronger expertise and commercial offering
  • Enhanced innovation capabilities 
  • An improved geographical footprint 
  • A compelling combination 

Finally this combination is value creating for all the stakeholders:

For employees, the combined entity, more innovative and more international, will offer even more prospects and opportunities. The transaction will have no negative impact on employment in France. Moreover, the new combined entity will be a better partner to all clients, municipalities and industrial clients, enabling them to fulfill their environmental objectives more rapidly.

Finally, the transaction will create value from year 1 for the shareholders of Veolia, thanks notably to operational and procurement synergies estimated at €500M.

This common, inspiring project is perfectly in line with the Purpose of Veolia and will position ideally the new entity in order to tackle the main challenge of this century : the ecological transformation

Veolia group is the global leader in optimized resource management. With nearly 179,000 employees worldwide, the Group designs and provides water, waste and energy management solutions which 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 2019, the Veolia group supplied 98 million people with drinking water and 67 million people with wastewater service, produced nearly 45 million megawatt hours of energy and treated 50 million metric tons of waste. Veolia Environnement (listed on Paris Euronext: VIE) recorded consolidated revenue of €27.189 billion in 2019 (USD 29.9 billion). www.veolia.com

Important disclaimer

As the changes in the health crisis are difficult to estimate, we draw your attention to the “forward-looking statements” that may appear in this press release and relating to the consequences of this crisis which may affect the future performance of the Company.

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. 

Contacts

Relations Presse Groupe
Laurent Obadia
Sandrine Guendoul
Tél : + 33 (0)1 85 57 42 16
[email protected]

Relations Investisseurs & Analystes
Ronald Wasylec - Ariane de Lamaze 
Tél. : + 33 (0)1 85 57 84 76 / 84 80