Veolia Environnement(VEOEY) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q3 2020 revenue reached €6.3 billion, comparable to last year at constant scope and Forex, with EBITDA of €893 million, up 2.5% at constant scope and Forex, and current net income of €142 million, up 10.6% [35][36][54] - Q3 EBITDA and current EBIT exceeded Q3 2019 levels, with EBITDA at 102.5% and current EBIT at 104.3% at constant scope and Forex [14][16] - Net financial debt decreased by over €700 million compared to Q3 last year, standing at €11.7 billion [36][52] Business Line Data and Key Metrics Changes - Municipal water volumes were strong, with cash collection holding up well [24] - Construction activities saw a significant rebound, with a notable catch-up effect in France [25] - Solid waste collection remained resilient, although commercial waste volumes were impacted by lockdown measures [26] - Hazardous waste business showed resilience, with volumes in Europe and the U.S. recovering, and China performing better than expected [27][42] Market Data and Key Metrics Changes - France experienced a sharp revenue rebound in Q3, with a 0.8% increase, driven by strong waste volumes and pricing discipline [37][45] - Central and Eastern Europe showed resilience, benefiting from waste recovery [37][46] - The Rest of the World saw a decline of 6% in revenue, primarily due to the disposal of district heating in the U.S. [37] Company Strategy and Development Direction - The acquisition of Suez is aimed at creating a world champion for green transformation, with a focus on environmental solutions [4][5] - The strategic plans of Veolia and Suez are aligned, with shared resources expected to accelerate growth and innovation [6][32] - The company is maintaining all development and innovation projects to secure future growth [15][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving Q4 performance equivalent to Q4 2019, despite new COVID-19 restrictions [60][61] - The second wave of COVID-19 is expected to have a limited impact on operations compared to the first wave, with most activities running normally [30][69] - The company anticipates a strong recovery in 2021, comparable to 2019 levels [60][66] Other Important Information - A €2 billion hybrid bond was issued to secure financing for the acquisition of Suez [10] - The company achieved €395 million in savings in the first nine months, with a target of €500 million for the year [15][28] Q&A Session Summary Question: Q3 performance and outlook for 2021 - Management confirmed that Q3 was better than expected and reiterated the outlook for Q4, indicating confidence in recovering full underlying performance in 2021 [60][61] Question: Waste volumes and backlog activity - Waste volumes decreased by 2.6% in Q3, but this was an improvement from the nearly 15% drop in Q2, with strong performance in France and China [67][68] - Construction activities are ongoing, with a strong backlog in the order book [66][84] Question: Impact of new lockdowns on business - The second lockdown is expected to have a limited impact, with operations continuing normally and only minor effects anticipated on commercial waste volumes [69] Question: Dividend expectations - Management indicated it is too early to provide guidance on dividends, but better revenue performance would lead to higher dividends [92] Question: Suez acquisition and legal considerations - Management acknowledged the complexities surrounding the acquisition of Suez and the need to navigate legal and regulatory challenges [74][78]