(AOF) – Veolia fell more than 6% to 25.1 euros, swept by the return of risk aversion. However, the world’s number one in the field of environment (water, waste) announced quarterly results this morning, supported in particular by the integration of the Suez activities. The CEO of the group, Antoine Frérot, also considered that the main event of the beginning of the year was the successful integration of the Suez teams. Based on these achievements, the French champion confirmed his annual targets.
It continues to rely on solid organic sales growth, organic EBITDA growth of between +4% and +6% and net current income, group share of approximately 1.1 billion, up more than 20%, benefiting the positive effect of approximately 10% on current net earnings per share.
Veolia also forecasts cost savings of more than €350 million, to which should be added €100 million in synergies expected for the first year of the Suez integration.
Finally, the company confirms an increase in net current earnings per share of approximately 40% in 2024, a leverage ratio approximately 3 times and a dividend growth in line with net current earnings per share.
In the first quarter of 2022, Veolia posted a current Ebit of €692 million, an increase of 18% at constant scope and exchange rate compared to March 31, 2021 combined. EBITDA increased by 33.4% compared to March 31, 2021, published at constant exchange rates, thanks to a scope effect of +276 million euros, mainly linked to the integration of the Suez activities and organic growth of +7.8%. Compared to March 31, 2021 combined, EBITDA increased by +7.6% at constant scope and exchange rates.
Sales amounted to 9.935 billion euros, an increase of 44.3% at constant published exchange rates thanks to a scope effect of 1.878 billion euros, mainly linked to the integration of the Suez activities (1.89 billion euros) and organic growth of 1.137 billion (+16.7%).
Compared to the first quarter of 2021 combined, sales growth was +14.7% at constant scope and exchange rates.
Jefferies confirmed his Hold recommendation and his $27 target price on Veolia in the wake of this publication.
AOF – MORE INFORMATION
Most important points:
– World leader in environmental services, born in 1853;
– Activity of €28 billion, divided between water management for 38%, waste management for 39% and energy services;
– Steady increase in international activity: 21% in France, 38% in the rest of Europe, 25% in the rest of the world and the rest in “Global business” – business services to large companies;
– Business model based on the complementarity of the 3 companies of the group in a logic of use and recovery through the circular economy;
– Non-operating open capital (4.5% of the capital for Caisse des Dépôts and 4.1% for employees), the 12-member Board of Directors is chaired by Chief Executive Officer Antoine Frérot who, on 1
Juli will transfer her position as Chief Executive Officer to Estelle Brachlianoff;
– Solid balance sheet following the 2021 capital increase with net debt reduced to €9.5 billion compared to €16.5 billion in equity, and cash above €15 billion to be bolstered in 2022 through municipal water divestments and waste in France and in water activities internationally.
– Impact 2023 strategy “to be the reference company for ecological transition”: growth of differentiating activities: treatment of hazardous waste, remediation of soil and industrial water, energy efficiency of industries and buildings, recycling of plastics, recovery of bio-waste, industrial ecological offers (circular economy cycles, utility pooling, etc.) / digital reinvention of traditional businesses – water, waste, energy networks / solid revenue growth, €1 billion in cost savings over 4 years, debt ratio below 3 over the period and €2023 dividend 1.30;
– Innovation strategy based on 3 pillars: coordination by the VERI R&D center organized in 5 departments – biosystems, environment & health, process engineering, digital innovation and industrial support / Via Veolia open innovation focused on innovative responses to needs precise / global sharing network of information with 200 researchers and 200 partnerships and “Open Playground for co-constructing ecological solutions;
– Environmental Strategy 2020-2023: Reducing CO2 emissions by eliminating coal-fired power plants in Europe by 2030 / GreenPath, internal platform for evaluating the environmental footprint of solutions / increasing the efficiency of drinking water networks;
– Implementation of the cooperation with Saudi Arabia in the water and waste processing companies;
– Benefits of diversification in nuclear decommissioning, biomethane, waste disposal, in the United States and Russia (1.5% of revenues).
– Favorable impact of commodity inflation in the energy, plastics, paper-board and recycled metals sectors;
– Risks related to the war between Russia and Ukraine: 0.3% of revenues in the area (waste and water management activities in Ukraine and Russia), but study by the Municipality of Montreal of the group’s commitments in Russia;
– 2022 target of “solid revenue growth – about €37 billion with the integration of Suez, an operating profit increase of 4 to 6%, net profit of about 1.1 billion, debt leverage of 3 and a growing dividend with that of earnings per share, or 40%.
High-stakes waste management
In France 350 million tons of waste are produced every year. If 66% is recycled, the rates vary according to the nature of the waste. That is therefore only 21% of the plastics. In order to strengthen the circular economy, the government is providing massive support for R&D in the context of the 3R strategy (Recyclability, Recycling and Reincorporation of materials). An envelope of 370 million euros is being spent on it. In terms of hazardous waste, this activity is very profitable. In France, storage and processing capacities have been stretched compared to annual needs.