Estelle Brachlianoff, CEO of the Group commented : << Veolia's performance during the first half of the year was once again very good. Q2 activity was on a very similar trajectory as in the first quarter. The integration of Suez's activities since mid-January was very successful. Their contribution in terms of revenue and synergies is up to our expectations, which confirms the merits of this acquisition. These very good results also benefited from the continued strict cost discipline which allowed us to fully confirm our 2022 objectives.
Veolia, world leader in ecological transformation, continues to fully benefit from good trends in its markets thanks to its value-added offerings, perfectly adapted to the environmental challenges of our clients. The resilience, the adaptability and the relevance of our strategic positioning allow us to face the uncertain macroeconomic and geopolitical context with confidence.>>
Exchange rate effect was +EUR408 M reflecting mainly the evolution of the US dollar, sterling pound and Chinese Renminbi, partially offset by a decrease of Polish zloty and Latin American currencies(1) .
Scope effect of -EUR286M included mainly the asset divestitures in Scandinavia in 2021 (-EUR154 M) and, on the Suez side, the asset divestitures in Australia in 2021 and the remedies in the EU (hazardous waste business in France accounted as assets for sale). These negative items were partially offset by the integration of Osis by Sarp (+EUR96 M) in 2021.
* At constant forex and without extension of the conflict beyond the Ukrainian territory and without significant change in the energy supply conditions in Europe
*** Current net income per share after hybrid costs and before PPA
Veolia Group aims to become the benchmark company for ecological transformation. Present on five continents with nearly 220,000 employees, the Group designs and deploys useful, practical solutions for the management of water, waste and energy that are contributing to a radical turnaround of the current situation. Through its three complementary activities, Veolia helps to develop access to resources, to preserve available resources and to renew them. In 2021, the Veolia group provided 79 million inhabitants with drinking water and 61 million with sanitation, produced nearly 48 million megawatt hours and recovered 48 million tonnes of waste. Veolia Environnement (Paris Euronext: VIE) achieved consolidated revenue of 28,508 billion euros in 2021. www.veolia.com
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 Autorité 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.
FINANCIAL INFORMATION FOR THE PERIOD ENDED JUNE, 30 2022
Group key figures as of June 30, 2022 include the contribution of activities acquired from Suez from January 18, 2022. To enable the comparison of financial information, key figures as of June 30, 2021 were restated to present combined data including the Suez acquired scope (see appendix).
The main foreign exchange impacts between June 30, 2021 and June 30, 2022 are as follows:
Consolidated revenue totaled EUR20,196 million for the half year ended June 30, 2022, compared with EUR17,774 million for the half year ended June 30, 2021 combined and EUR13,645 million for the half year ended June 30, 2021 (published).
All operating segments reported growth in H1 2022.
Compared with H1 2021 combined, quarterly revenue trends at constant exchange rates by operating segment for H1 2022 are as follows:
The increase in Q2 2022 revenue is consistent with trends observed in the first quarter:
Compared with published figures for the half year ended June 30, 2021, segment revenue increased +46.2% at constant exchange rates, due to a scope effect of EUR4,350 million, mainly tied to the integration of Suez activities (EUR4,416 million) and organic growth of EUR1,961 million (+14.4%).
The scope effect of the integration of Suez activities impacts all operating segments:
Organic growth of +14.4% is primarily driven by Europe excluding France (+28,1%), the Rest of the world (+9.9%) and France and Special Waste Europe (+3.9%). The Water Technologies segment reported a slight -2.3% dip in revenue on published figures for the half year ended June 30, 2021 at constant scope and exchange rates, due to a high 2021 comparison base in major Middle East desalination projects where construction is now complete or almost complete. Europe excluding France enjoyed strong growth in energy activities in Central and Eastern Europe and growth in waste activities in Northern Europe, supported by higher recyclate prices.
Compared with combined figures for the half year ended June 30, 2021, revenue rose +12.9% at constant scope and exchange rates, increasing across all operating segments.
See analysis at the beginning of this press release, page 2
Compared with published figures for the half year ended June 30, 2021, revenue by business rose +46.2% at constant exchange rates.
The scope effect of the integration of Suez activities (EUR4,416 million in total) is EUR2,998 million in Water and EUR1,818 million in Waste. It is recalled that the revenue adjustment for the first seventeen days of the year for the Suez scope, prior to acquisition of control, is recorded in the "Other" segment (-EUR400 million).
Excluding scope effects, organic growth compared with published figures for the half year ended June 30, 2021 is +14.4%, mainly driven by:
Compared with combined figures for the half year ended June 30, 2021, revenue by business rose +12.9% at constant scope and exchange rates. See analysis at the beginning of this press release, page 2
Group consolidated EBITDA for the half year ended June 30, 2022 was EUR2,953 million, compared with EUR2,792 million for the half year ended June 30, 2021 combined and EUR2,081 million for the half year ended June 30, 2021 (published).
EBITDA is up +40.4% compared with published figures for the half year ended June 30, 2021 at constant exchange rates, due to a scope effect of +EUR725 million primarily due to the integration of activities acquired from Suez and organic growth of +5.6%.
Compared with June 30, 2021 combined figures, EBITDA rose +6.1% at constant scope and exchange.
The growth of the EBITDA for the operational segments France and Special waste Europe (+6.8% at constant scope and exchange rates) and Europe excluding France (+8.5% at constant scope and exchange rates) results from the growth in the activity. The decline in the EBITDA for the rest of the world segment comes from China where the volumes of waste are lower as well as services to industry and energy due to restrictions related to the health crisis. In the Water Technologies segment, the EBITDA is in progression for VWT but in decline for WTS, which benefited from one-off elements in the first half of 2021.
The increase in EBITDA between 2021 and 2022 breaks down by impact as follows:
The foreign exchange impact on EBITDA was +EUR52 million and mainly reflects the appreciation of the American, Czech, British and Chinese currencies, partially offset by unfavorable movements in South American and Middle East currencies(4) .
The consolidation scope impact of -EURSHY61 million mostly concerns the sale of assets in Scandinavia in 2021 and, at Suez level, sales of activities in Australia and the impact of European Union remedies with the transfer of some hazardous waste activities in France to Assets classified as held for sale. These negative effects are partially offset by the integration of Osis by Sarp in 2021.
Favorable commerce and volume impacts of +EUR39 million resulted from the positive impact on revenue.
The weather impact is -EUR39 million and mainly concerns Central and Eastern Europe which was affected by a milder than normal winter and to a lesser extent Chile.
Recyclate and energy prices had a net favorable impact on EBITDA of +EUR70 million, mainly concerning paper and cardboard in France and Northern Europe. The increase in energy selling prices net of higher purchase costs (including CO(2) and diesel), had a neutral impact on EBITDA.
The impact of tariff reviews net of cost inflation was -EUR97 million.
Other impacts are mainly due to one-off items positively impacting 2021 EBITDA of the Suez scope.
The contribution of cost savings plans and synergies totaled +EUR230 million at the end of June and includes:
Group consolidated Current EBIT for the half year ended June 30, 2022 was EUR1,475 million, up +20.2% at constant scope and exchange rates on combined figures for the half year ended June 30, 2021.
EBITDA reconciles with Current EBIT compared with the half year ended June 30, 2021 as follows:
The +EUR256 million (+20.2%) increase in Current EBIT at constant scope and exchange rates compared with combined figures for the half year ended June 30, 2021(6) is mainly due to:
The foreign exchange impact on Current EBIT of +EUR17 million mainly reflects fluctuations in the United States (+EUR15 million), Czech Republic (+EUR7 million), United Kingdom (+EUR6 million) and Chinese (+EUR1 million) currencies, partially offset by a downturn in Chile (-EUR5 million) and Middle East (-EUR4 million) currencies.
The net financial expense for the half year ended June 30, 2022 is -EUR551.3 million, compared with - EUR121.2 million for the half year ended June 30, 2021 (published). This decrease is mainly due to the scope effect on financial expenses of the integration of the cost of Suez debt, as well as the positive impact, in H1 2021, of dividends received of EUR122 million on the Group's investment in Suez.
Cost of net financial debt
The cost of net financial debt totaled -EUR319.6 million for the half year ended June 30, 2022, compared with -EUR152.4 million for the half year ended June 30, 2021 (published). The increase in the cost of Group net financial debt is mainly due to the scope effect of the integration of the cost of Suez debt for EUR104.5 million (particularly the bond debt of the former holding company, Suez SA, and that of water activities in the United States), higher interest rates on foreign currency-denominated debt (euro/currency rate spreads) and the positive impact in H1 2021 of the cancellation of an interest rate hedging portfolio (pre-hedge swaps) for EUR20 million.
The Group's financing rate (excluding IFRS 16 impacts) was therefore 3.65% at June 30, 2022 (compared with 2.51% at June 30, 2021, published), a lower than the pre-COVID period (4.36% at June 30, 2020 and 4.3% at June 30, 2019). Interest rates were very low in 2021.
Other current financial income and expenses
Other financial income and expenses totaled -EUR207 million for the half year ended June 30, 2022, compared with +EUR53 million for the half year ended June 30, 2021 (published).
At June 30, 2021, other financial income includes dividends received on the Group's investment in Suez of EUR122 million.
At June 30, 2022, other financial income and expenses include the scope effect of the integration of Suez financial expenses of -EUR104.2 million which includes notably the financial expenses of the debt of the subsidiary Aguas Andidas in Chile (indexed on inflation). The other financial income and expenses also include as a non current item the financial costs generated by the Suez combination for -EUR24.4 million.
At June 30, 2022 it includes interest on concession liabilities (IFRIC 12) of -EUR38.8 million and the unwinding of discounts on provisions of -EUR16.2 million.
Losses on financial divestitures recognized in H1 2022 totaled -EUR7.6 million and mainly include the impacts of the liquidation of several companies.
Gains on current financial divestitures recognized in the first half of 2021 totaled -EUR4.6 million and mainly comprised the gain on disposal of Utilities Services activities in Nordic countries (+EUR13 million), offset by the loss on the divestiture of Aqua Utilities activities in Veolia Water Technology (-EUR7 million) and disposal costs in North America (-EUR3 million).
The current income tax expense for the half year ended June 30, 2022 amounted to -EUR256.4 million, compared with -EUR188.4 million for the half year ended June 30, 2021 (published).
The current income tax rate for the half year ended June 30, 2022 is 28.9%, after integration of the activities of Suez versus 25% for the half year ended June 30, 2021 (published).
Current net income attributable to owners of the Company was EUR528 million for the half year ended June 30, 2022, compared with EUR516 million for the year ended June 30, 2021 (published) and EUR394 million excluding dividends received from Suez in 2021 for 2020. Excluding capital gains and losses on financial divestitures net of tax and minority interests, current net income attributable to owners of the Company is EUR538 million, compared with EUR520 million for the half year ended June 30, 2021 (published).
Net income attributable to owners of the Company was +EUR236 million for the half year ended June 30, 2022, compared with +EUR301 million for the year ended June 30, 2021 (published) and EUR179 million excluding dividends received from Suez in 2021.
Net income attributable to owners of the Company per share was EUR0.34 (basic) and EUR0.33 (diluted) for the half year ended June 30, 2022, compared with EUR0.53 (basic) and EUR0.51 (diluted) for the half year ended June 30, 2021.
8. CURRENT NET INCOME (LOSS) / NET INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE COMPANY
The share of net income attributable to non-controlling interests totaled EUR161.2 million for the half year ended June 30, 2022, compared with EUR95.4 million for the half year ended June 30, 2021.
Net income attributable to owners of the Company was EUR236 million for the half year ended June 30, 2022, compared with EUR301 million for the half year ended June 30, 2021.
Current net income attributable to owners of the Company was EUR528 million for the half year ended June 30, 2022, compared with EUR516 million for the half year ended June 30, 2021.
Net income attributable to owners of the Company per share for the half year ended June 30, 2022 was EUR0.34 (basic) and EUR0.33 (diluted) compared with EUR0.53 (basic) and EUR0.51 (diluted) (and EUR0.31 (basic) and EUR0.30 (diluted) excluding dividends received from Suez of EUR122 million), for the half year ended June 30, 2021. Current net income attributable to owners of the Company per share was EUR0.77 (basic) and EUR0.74 (diluted) for the half year ended June 30, 2022, compared with EUR0.91 (basic) and EUR0.87 (diluted) for the half year ended June 30, 2021 (and EUR0.69 (basic) and EUR0.67 (diluted) excluding dividends received from Suez of EUR122 million).
The weighted average number of outstanding shares in the half year ended June 30, 2021 was 687,074,155.
Net income (loss) attributable to owners of the Company for the half year ended June 30, 2022 breaks down as follows:
Published net income (loss) attributable to owners of the Company for the half year ended June 30, 2021 breaks down as follows:
The net income attributable to owners of the company excluding dividends received from Suez for the half year ended June 30, 2021 is EUR178.5 million.
Current EBIT reconciles with operating income, as shown in the income statement, as follows:
Impairment losses concern Russian goodwill which was impaired in full in the amount of -EUR69 million due to the Russian-Ukrainian conflict.
Restructuring costs total -EUR32 million in H1 2022, down slightly compared to 2021.
Non-current provisions, impairment and other costs total -EUR120 million in H1 2022 and mainly comprise integration costs relating to the Suez combination, as well as costs incurred in respect of a dispute in North America and asset impairment in Russia and Ukraine (EUR11 million).
Share acquisition costs mainly comprise costs incurred in the context of the Suez combination of EUR62 million for the first semester of 2022.
1/ CHANGE IN FREE CASH FLOW AND NET FINANCIAL DEBT
Net free cash flow totaled -EUR304 million for the half year ended June 30, 2022, compared with +EUR270 million for the half year ended June 30, 2021 (published).
The change in net free cash flow compared with published figures for the half year ended June 30, 2021 reflects:
The following table summarizes the change in net financial debt and net free cash flow:
Net financial debt amounted to EUR22,353 million, compared with EUR9,532 million as of December 31, 2021. Compared with December 31, 2021, the change in net financial debt is mainly due to:
Net financial debt was also impacted by negative exchange rate fluctuations of -EUR464 million as of June 30, 2022.
Group gross industrial investments, including new operating financial assets, amounted to -EUR1,585 million for the half year ended June 30, 2022, compared with -EUR972 million for the half year ended June 30, 2021 (published).
The entry into the consolidation scope of the activities acquired from Suez is reflected by gross investments of EUR472 million in the H1 2022.
Industrial investments, excluding discontinued operations, break down by segment as follows:
The main financial investment in H1 2022 was the acquisition of the Suez Group, completed following the finalization of the Public Tender Offer in the first quarter for -EUR10,501 million, including debt assumed and the rest of the cession of a part of the Suez Group to the consortium on January 31, 2022.
Excluding the acquisition of Suez, net financial investments totaled -EUR145 million in H1 2022 compared with -EUR245 million in H1 2021 (including acquisition costs and net financial debt of acquired entities). In the first half of the year, investments primarily concerned the acquisition of 47.4% of the share capital of Lydec "Lyonnaise des Eaux de Casablanca", a Moroccan subsidiary of the Suez group for EUR98 million.
Financial investments totaled -EUR413 million in the half year ended June 30, 2021 (including acquisition costs and net financial debt of acquired entities) and mainly included the acquisition of Osis in France (EUR262 million excluding IFRS 16 debt) and the acquisition of an organic fertilizer facility in France (EUR22 million).
Financial divestitures totaled -EUR1 million in the half year ended June 30, 2022 (including disposal costs) and mainly included the sale of Huancheng Puxi in China, a waste-to-energy subsidiary, for EUR27 million and a sales price adjustment in respect of a divestment performed in 2021 in Germany of -EUR25 million.
Financial divestitures totaled EUR168 million for the half year ended June 30, 2021 (including disposal costs) and included the sale of the 5% stake in the Shenzhen concession in China by VE CGE (EUR80 million, excluding the repayment of the shareholder loan of EUR105 million), as well as the sale of Utilities Services activities in Sweden and Norway in the amount of EUR32 million (total transaction of EUR70 million).
The change in operating working capital requirements (excluding discontinued operations) was -EUR821 million for the half year ended June 30, 2022, compared with -EUR381 million for the half year ended June 30, 2021 (published). This change is mainly due to the seasonality and the increase on energy prices on the working capital requirements and the entry of the activities of Suez.
See Note 6.3 to the consolidated financial statements for the half year ended June 30, 2022.
Structure of net financial debt
As of June 30, 2022, net financial debt after hedging is borrowed 85% at fixed rates (compared with 100% as of December 31, 2021).
This change is mainly due to the integration of Suez debt, increasing by 11 points the share of floating-rate debt (through a swap portfolio), as well as optimized management of bond debt in Q1 2022. The Group nonetheless targets net financial debt primarily at fixed rates and plans to return to levels close to 100% on receipt of the proceeds from antitrust divestitures.
The average maturity of net financial debt was 6.7 years as of June 30, 2022 compared with 5.9 years as of June 30, 2021.
Liquid assets of the Group as of June 30, 2022 break down as follows:
1/ COMBINED DATA FOR THE HALF YEAR ENDED JUNE 30, 2022
To enable comparability of H1 2022 financial data including the contribution of activities acquired from Suez from January 18, 2022, published key figures for the half year ended June 30, 2021 were restated to present the financial data of the new Veolia group including the activities acquired from Suez and the adjustment for the first seventeen days of 2022 applied to 2021. Combined data for the half year ended June 30, 2022 is presented for Revenue, EBITDA and Current EBIT.
2/ RECONCILIATION OF 2021 PUBLISHED DATA BY OPERATING SEGMENT WITH IFRS 8 RE-PRESENTED DATA
The change in Group governance effective February 2022 led to an update to the IFRS 8 operating segments to reflect the new breakdown by Management Zone implemented following the integration of Suez activities.
Pursuant to IFRS 8, segment financial reporting published in 2021 was re-presented in accordance with the new segments.
Re-presented figures at 30 June 2021 were published on the website of the Group : https://www.veolia.com/fr/groupe/finance/information-financiere/publications-financieres
3/ RECONCILIATION OF GAAP INDICATORS AND THE INDICATORS USED BY THE GROUP
The reconciliation of Current EBIT with operating income, as shown in the income statement, is presented earlier in this press release. Likewise, the reconciliation of current net income with net income attributable to owners of the Company, as shown in the income statement.
The reconciliation of Net cash from operating activities of continuing operations (included in the Consolidated Cash Flow Statement) with net free cash flow is as follows :
The reconciliation of industrial investments, net of grants (included in the Consolidated Cash Flow Statement) with industrial investments is as follows:
No changes have been made to non-GAAP financial indicators by the Group.
NON-STRICTLY ACCOUNTING INDICATORS (NON GAAP)
To calculate Current EBIT (which includes the share of current net income of joint ventures and associates), the following items are deducted from Operating income:
For the other indicators, please refer to Section 5.5.8 of the 2021 Universal Registration Document.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION -- ASSETS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION - EQUITY AND LIABILITIES
CONSOLIDATED CASH FLOW STATEMENT CONTINUED
(1) Main foreign exchange impacts by currency: US dollar (+207 million euros), British pound (+60 million euros), Czech crown (+44 million euros), Chinese yuan RenMinBi (+51 million euros), Polish zloty (-21 million euros), Hungarian forint (-23 million euros), Chilean peso (-15 million euros), Argentine peso (-14 million euros).
(2) Restatement of the first 17 days of the contribution of Suez activities
(3) Restatement of the first 17 days of the contribution of Suez activities
(4) Foreign exchange impacts by currency: Czech koruna (+EUR12 million), pound sterling (+EUR10 million), Chinese RenMinBi yuan (+EUR9 million), US dollar (+EUR31 million), Lebanese pound (-EUR8 million), Chilean peso (-EUR7 million).
(5) Excluding principal payments on operating financial assets.
(6) See Section 6.1 for more information on this restatement
View source version on businesswire.com: https://www.businesswire.com/news/home/20220802006141/en/
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