Veolia Environnement(VEOEY) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for 2021 reached €28.5 billion, an increase of 9.6% at constant rates compared to 2020 and 6.5% compared to 2019 [19][20] - EBITDA grew by 16% compared to 2020 and by 6.9% compared to 2019, reaching €4.234 billion, exceeding the guidance of €4.1 billion [20][23] - Current net income more than doubled versus 2020 and increased by 21% compared to 2019, reaching nearly €900 million [23][24] - Net financial debt decreased by €3.5 billion to €9.5 billion at year-end 2021, supported by a €2.5 billion capital increase and strong free cash flow generation of over €1.2 billion [23][24] Business Line Data and Key Metrics Changes - Hazardous waste revenue grew by 25% in Q4, partly due to the integration of Osis [25] - Waste activities grew by 15.5% year-on-year, with a strong contribution from volumes and recyclate prices [86] - Energy efficiency activities showed strong growth, particularly in Spain, Italy, and the Middle East, aided by rising energy prices [38] Market Data and Key Metrics Changes - Revenue growth in the fourth quarter was above 10%, driven by energy prices and strong sales activity [24][25] - The Rest of Europe segment experienced outstanding growth of almost 20% in Q4, particularly in Central Europe [82] - North America had a good Q4 with a revenue increase of 10.5%, while Latin America continued to grow at double-digit rates [99] Company Strategy and Development Direction - The merger with Suez is a key strategic move aimed at creating a champion of ecological transformation, with a target of €500 million in synergies by 2025 [15][70] - The company aims to maintain a strong focus on operational efficiency and cost discipline, targeting €350 million in efficiency measures for 2022 [47][71] - The company is committed to ecological transformation and plans to invest in innovative solutions such as battery recycling and biogas production [56][68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in 2022 despite geopolitical challenges, targeting solid organic revenue growth [71][74] - The company anticipates a positive impact from inflation on revenues due to indexed contracts and price increases [40][41] - Management highlighted the resilience of essential services provided, particularly in Eastern Europe, amidst the ongoing crisis [49][52] Other Important Information - The company reported a high level of employee engagement at 87% and a Net Promoter Score of 43, indicating strong customer satisfaction [59] - The company is committed to exiting coal by 2030 and investing in decarbonization efforts [67] Q&A Session All Questions and Answers Question: Inflation protection within revenues - The company indicated that 70% of total turnover is directly indexed to inflation, while the remaining 30% involves annual price increases [118][119] Question: Regulatory risks around energy costs for end consumers - Management acknowledged the potential regulatory risks associated with higher energy costs but emphasized the resilience of their essential services [118][119]