Veolia Environnement(VEOEY) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue reached nearly €10 billion, up 14.7% at constant scope and forex compared to combined Suez Veolia revenue in Q1 2021, driven by strong momentum across all activities [9][26] - EBITDA grew sharply by 7.6% at constant scope and forex, reported EBITDA is €1.456 billion, with a strong increase of 18% at constant scope and forex for current EBITDA [9][10][26] - Net debt stands at €21.3 billion, with expectations to achieve a leverage ratio of around three times by year-end [26][40] Business Line Data and Key Metrics Changes - Water segment showed resilience with tariff indexation compensating for volume declines in certain regions, while Water Technologies had a strong order book [13][14] - Solid waste revenue grew by 9.6%, supported by increasing recycled prices and solid volumes [14] - Hazardous waste performed well, with price increases exceeding 10% in North America and 5% in Europe [14] Market Data and Key Metrics Changes - Central and Eastern Europe generated €4.2 billion in annual turnover, largely from essential services, indicating resilience despite geopolitical tensions [18][22] - The rest of Europe segment grew by 26.8%, particularly driven by district heating business in Central Europe and Germany [29][35] - North America saw a 9% growth, with significant tariff increases in hazardous waste [36] Company Strategy and Development Direction - The merger with Suez is progressing well, with integration processes implemented at all levels, aiming for synergies of €100 million [5][16] - The company is focusing on ecological transformation and sustainable energy production, with new projects launched to reduce fossil fuel imports [11][12] - A specific plan is being rolled out to optimize energy production and find alternative sustainable energy sources [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining guidance despite economic uncertainties, with a focus on resilience in essential services [24][22] - Inflation is expected to have a neutral or slightly positive impact, with 70% of contracts indexed to inflation [19][20] - The company is prepared for potential economic slowdowns, with a portfolio that is largely resilient to GDP fluctuations [22][65] Other Important Information - The company confirmed its annual guidance, targeting organic revenue growth and EBITDA growth of 4% to 6% [24][41] - The integration of Suez is expected to yield significant efficiency gains, with €350 million targeted for the year [16][24] Q&A Session Summary Question: Inflation impact on business model - Management acknowledged a slight lag between inflation in tariffs and cost increases, expecting this to continue but not to the same extent as in Q1 [44][47] Question: Net debt and working capital effects - Additional working capital was attributed to energy price increases and Suez integration, with expectations to reverse this by year-end [53][57] Question: CMA discussions in the UK - The timeline for CMA discussions is on track, with a finalized position expected by the end of July [59][60] Question: Capital gains from Australia - The net capital gain from Australia is around €30 million, with business performance being the main driver for current net income [63][66] Question: Revenue growth exposure to macro conditions - Approximately €7 billion of annual turnover is exposed to potential GDP slowdown, but the majority of the business remains resilient [65][66]