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Veolia in 2018: strong growth in terms of revenue and results

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  • Veolia in 2018: strong growth in terms of revenue and results
  • Revenue rose to €25,911 million, up by 6.5% compared with 2017 at constant exchange rates, or 4.7% in like-for-like growth.
  • The pace of revenue growth was sustained throughout the year: up by 7% in the first quarter, 5.1% in the second, 7.8% in the third and 6.4% in the fourth (at constant exchange rates).
  • Revenue grew in all geographies:
    • In France, revenue increased by 1.6%;
    • Europe excluding France posted very solid growth of 7.2% at constant exchange rates. Revenue rose by 2.4% in Italy, 3.5% in Germany, 4.1% in the UK and Ireland, 7.8% in Central and Eastern Europe, 11.6% in the Iberian Peninsula and 29.2% in the Nordic countries (at constant exchange rates);
    • Growth remained strong in the rest of the world, with revenue increasing overall by 11.9%. North America grew by 3.9% (12% at constant scope and exchange rates), 5.4% in the Pacific region, 7.8% in Africa-Middle East, 16.9% in Asia (13.3% in China) and 38.2% in Latin America;
    • Global Business posted a progression of 3.7% at constant exchange rates).
  • EBITDA reached €3,392 million, compared with €3,217 million in 2017 – a 7.3% rise at constant exchange rates.
  • Cost savings of €302 million were made in 2018, in line with the annual target.
  • Current EBIT was €1,604 million – 9.7% growth at constant exchange rates compared with 2017 (€1,497 million).
  • The current net income group share increased to €675 million (compared to €614 million for 2017 represented), up by 14,7% at constant exchange rates and excluding capital gains

About the entity

Veolia
Veolia Water Technologies specializes in water treatment solutions and provides the complete range of services required to design, build, maintain and upgrade water and wastewater treatment facilities for industrial clients and public authorities.
Global Omnium
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Themes

Antoine Frérot, Veolia’s Chairman & CEO commented

“2018 was a new year of acceleration for Veolia, with revenue and results both demonstrating clear growth. Sales growth increased by 6.5%, even stronger than the previous year, and current net income jumped by 14.7% at constant exchange rates. Our strategy’s success is being confirmed year after year. It is founded on our commercial momentum, combined with a strict discipline of operational efficiency and cost reduction. This performance is being achieved in all of our activities and geographies, a testament to the pertinence and coherence of our choices, of our capacity to capture the best opportunities for profitable growth, as well as our ability to compete in the marketplace. Our perspectives remain favorable. 2019 should be another year of sustained growth. Taking into account the effect of exchange rate variations, our objectives are therefore fully confirmed at the higher end of the initially communicated range.”

The revenue growth was principally the result of a very good commercial momentum with numerous contract wins and strong volume growth (notably in the Waste business) of €752 million (+3%) and a price effect of €243 million (+1%). The increase in energy prices of €177 million was partially absorbed by the decrease in recycled paper prices (-€117 million).

By geography and at constant exchange rates, the evolution is as follows:

  • In France, revenue growth resumed, progressing by +1.6%. Water revenue was stable (-0.1%), volumes decreased by -0.7 % after growing by +1% in 2017, and prices increased by 0.7% after a 0.2% increase in 2017. The very good commercial momentum of 2017 continued in 2018. Waste revenue grew by 3.6% thanks to commercial successes and higher treated volumes, which more than compensated for the 25% decrease in recycled paper prices.

  • Europe excluding France posted a very solid growth (+7.2% at constant exchange rates), a pace similar to that of 2017 (+6.4%) All of the regions exhibited solid growth. Central and Eastern Europe grew by 7.8%, with good performance in both Water and Energy in spite of a slightly unfavorable climate impact. Germany grew by 3.5% thanks to good commercial performance and the successful integration of Waste acquisitions which more than offset the paper price decrease. The UK (including Ireland) is up by 4.1% with good commercial gains and the improved availability of PFIs (95% vs. 93% in 2017). In addition, the Nordic countries performed well (+29.2%) thanks to scope impacts, as well as the Iberian Peninsula (+11.6%), very active in the Energy efficiency sector. Italy returned to growth in 2018, +2.4% relying on a high renewal rate of municipal contracts and a good development with Industrial clients.

  • At constant exchange rates, the Rest of the World continued to exhibit strong growth (+11.9% following +11.6 % in 2017). Asia continued its strong growth (+16.9%) including +13.3% in China, driven by the success in hazardous waste, the opening of new treatment facilities, and the ramp up of industrial contracts in Water and Energy. Latin America posted strong growth of 38.2%, thanks to a good commercial momentum, price increases, and the integration of Grupo Sala in Columbia. The Pacific region grew by 5.4% as a result of the strong growth in Industrial Services. North America grew by 3.9% but by 12% at constant scope and exchange rates after the divestment of its Industrial Services activity, thanks to a good heating season in the first quarter and the startup of new contracts in Energy efficiency (Dupont). Africa Middle-East grew by 7.8%.
  • Global Business posted a progression of +3.7% at constant exchange rates. Hazardous Waste continues to grow significantly (+10.4%), with the growth in treated volumes, price increases, and profitable oil recycling activity. Veolia Water Technologies revenue was down -6.2% a result of a continued decline in construction activity and the reorientation toward packaged solutions and the sale of technologies. SADE revenue grew by 4.5% driven by the good performance in France, in the telecom sector, and the resizing of its international activity. VIGS (multi-business Industrial Services) once again grew double digit in 2018, +12.3%, carried by its commercial success, notably with Arcelor Mittal.

By business:

  • Water revenue increased by 2.3% at constant exchange rates.
  • Wastewater Operations grew by +3.8%, while works and technologies activity declined by -1.9% at constant exchange rates.
  • Waste activity posted a very strong increase (+9.2% at constant exchange rates) the result of increased volumes (+3.6%), price increases (+2.2%), an unfavorable impact from recycled material prices (-1.0%), and a favorable scope impact of +4.3%.
  • Energy revenue also grew substantially (+11% at constant exchange rates), with a good sales / volumes dynamic, a negligible scope effect and a price effect of + 2.3%.

2019 outlook

  • Continuation of Revenue growth
  • Cost savings of at least €220 million
  • EBITDA between €3.5 billion and €3.6 billion*
  • Dividend growth in line with that of current net income

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