ANNUAL RESULTS 2021

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ANNUAL RESULTS 2021 (343.71 KB)

RECORD RESULTS

ACTIVITY AND RESULTS SIGNIFICANTLY ABOVE 2020 AND 2019

ACCELERATION OF GROWTH DRIVEN BY NEW OFFERINGS AND INTERNATIONAL DEVELOPMENT, CONFIRMING THE SOUNDNESS OF OUR STRATEGIC PROGRAM

SUCCESSFUL TENDER OFFER ON SUEZ

VEOLIA BEGINS 2022 IN VERY GOOD CONDITIONS THANKS TO ITS PORTFOLIO OF CONTRACTS LARGELY PROTECTED AGAINST INFLATION AND THANKS TO THE SYNERGIES EXPECTED FROM THE ACQUISITION OF SUEZ

 

 

  • STRONG REVENUE GROWTH OF +9,6%1 TO €28 508M

  • VERY STRONG EBITDA GROWTH, OF +16%1, TO €4 234M, ABOVE OUR REVISED TARGET

  • €382M OF EFFICIENCY GAINS, ABOVE OUR ANNUAL OBJECTIVE OF €350M

  • CURRENT EBIT STRONGLY UP BY  +42%1, TO €1 766M

  • CURRENT NET INCOME GROUP SHARE OF €896M, UP +133%

  • RECORD FREE CASHFLOW OF €1 341M2

  • PROPOSAL TO INCREASE THE DIVIDEND BY 43% TO €1 PER SHARE
              

  • 2022 OBJECTIVES3:

  •     - SOLID REVENUE GROWTH

        - ORGANIC GROWTH OF EBITDA BETWEEN +4% AND +6%

        - CURRENT NET INCOME GROUP SHARE AROUND €1.1BN, AN INCREASE OF MORE THAN 20%, CONFIRMING AN ACCRETION  OF AROUND 10%

        - LEVERAGE RATIO CONFIRMED AROUND 3x

 

 

Variation at constant forex
Including €122M Suez dividend
3At constant forex - Without extension of the conflict beyond the Ukrainian territory and without significant change in the energy supply conditions in Europe

 

 

Antoine Frérot, Veolia’s Chairman & CEO commented:

2021 year ended on the same strong note as in the first nine month, achieving record results.  Revenue growth remained strong throughout the year, both in terms of volumes (up 3%) and in value, thanks to the tariff indexation mechanisms in the majority of our contracts enabling to offset cost inflation. Moreover, the continued improvement of our efficiency has substantially amplified this increase of revenue. Our record results demonstrate the strength and the sound execution of our strategic program Impact 2023, particularly the new growth opportunities for international development and innovative offerings. It is these foundations that enable our Group to be resilient today in the face of the conflict in Eastern Europe, as in previous crises. Veolia therefore starts 2022 in good conditions,  just as we begin to integrate the activities we bought from Suez through the tender offer. Close to 10 billion euros of revenue will complement our 2021 revenue of 28 billion €, an increase of more than 30% which will notably strengthen our international footprint, and accelerate innovation. This growth, in addition to the expected synergies, will enable our current net income to grow by more than 20% in 2022 and will enhance our earning per share by around 40% in 2024. The creation of the undisputed world champion of ecological transformation is underway and on track.

  • Revenue of €28 508M vs. €26 010M in 2020, an increase of 9.6% at constant forex.

    Veolia’s revenue strongly progressed in 2021 thanks to higher volumes, increased service prices combined with higher energy and recycled material sprices. Compared to 2019, the reference year before the sanitary crisis, revenue is equally strongly up by +6.5% at constant forex.

    At constant forex, after a growth of +4.0% in Q1 2021, of +19.7% in Q2 (compared to the most COVID- impacted quarter of  2020) and of +5.9% in Q3,  Q4 2021 registered a progression of +10.1%. 

    Exchange rates variations were almost neutral on revenue, at -€4M. 

    Scope effect was €234M, or +0.9% on revenue. Developments in Central Europe (District heating network in Prague, cogeneration in Budapest mainly) and in Global Businesses (acquisition of OSIS from SUEZ) more than offset the divestment of Sade Telecom and of a cleaning business in Singapore.  

    Energy price increase (heat and electricity) has gathered momentum in the second part of the year, yielding a positive impact of €405M, or +1.5% on revenue,  while recycled material prices have contributed by €499M (+1.9%) on revenue growth, of which €319M for paper and cardboard, €63M for plastics and €60M for metals.   Recycled paper revenue thus doubled to €605M, while plastic recycling revenue grew by 29% to €383M.  

    Weather effect was a positive of €73M (+0.3 %). After a cold winter, favorable for heating activities, rainy summer weighed on water volumes in France.  

    The Volume/Commerce effect was a positive of €886M, or +3.4% on the Group’s revenue growth, thanks to continued strong commercial momentum in all our businesses, volume recovery in Waste and the rebound of works (+€211M). 

    Service prices continued to be well oriented, with a positive impact of €405M on the Group’s revenue, or +1.5%, in line with the 1st nine-month trend.

 

At constant exchange rates and by geography, the evolution over the year 2021 is as follows :

  • In France, revenue grew strongly, by +8.9% vs. 2020 and by +4.6% vs. 2019, to €5 868M. Water revenue increased by +1.2% including a moderate tarif indexation of +0.9%, lower volumes (-1.3%) due to the rainy summer, offset by works dynamism. Waste revenue grew sharply by +18.1% vs.  2020 and by +11.1% vs. 2019, benefitting from new contracts and the start of a new waste-to-energy facility. Volumes were up by +5.7% and recovered their pre-Covid level, and prices grew by +2.5 %. Waste activities also took advantage of higher recycled material prices (a +7.7% impact on Waste revenue) with average cardboard selling prices of €153/T compared to €56/T in 2020.
     
  • Europe excluding France exhibited the highest growth, with a revenue of €10 942M, up +15.6% vs. 2020, and up +16% vs. 2019. All geographies registered double-digit growth. This progression is mostly attributable to Central and Eastern Europe (including Germany), with a revenue of €6 260M, up +19.6%, mainly coming from the Energy business, up +37%, due to the combination of a favorable weather effect, higher heat and electricity prices, and the integration of new assets in Prague and Budapest. Water revenue was up by +3% including volumes +0,3% (penalized by slow touristic activity in Prague) and more sustained tariff increases. Germany grew by +9.1% thanks to volume recovery in C&I Waste, higher energy and recyclate prices, a favorable weather impact and increased tariffs. Northern Europe (including the UK) revenue was €3 276M, a growth of  +7.6% vs. 2020 and of +2% vs. 2019. The UK benefitted from the C&I waste volumes rebound, a good level of service prices, an excellent availability rates of the PFI (94.8%), and high recycled materials prices. The Netherlands recovered quite well, thanks to the plastic recycling activity. In Scandinavia, Swedish and Norwegian activities were sold at the end of 2021. Southern Europe (Italy-Spain-Portugal) revenue reached a revenue of €1 405M, up +17.8% vs. 2020 and up +20.2% vs. 2019 thanks to a strong commercial momentum and energy price increases. 
     
  • Rest of the World revenue came out at €7 067M, a growth of +5.4% vs. 2020 and of +2.6% vs. 2019 (at constant scope). All geographies progressed. Latin America once again exhibited strong growth, of +14.1%, driven by increased prices, good volumes and a continued strong commercial dynamism. North America grew by +5.2%. Africa Middle-East registered a sustained +12.3% growth thanks notably to contract wins in the Middle East and water and energy businesses in Morocco back to normal. Asia progressed only slightly due to the end of some contracts and Australia recovered progressively after the sanitary crisis.
     
  • Rest of the World revenue came out at €7 067M, a growth of +5.4% vs. 2020 and of +2.6% vs. 2019 (at constant scope). All geographies progressed. Latin America once again exhibited strong growth, of +14.1%, driven by increased prices, good volumes and a continued strong commercial dynamism. North America grew by +5.2%. Africa Middle-East registered a sustained +12.3% growth thanks notably to contract wins in the Middle East and water and energy businesses in Morocco back to normal. Asia progressed only slightly due to the end of some contracts and Australia recovered progressively after the sanitary crisis.


By business, at constant scope and exchange rates,  the evolution is as follows.
In Water, Water distribution and Wastewater treatment grew by +1.9%, and water Technology and Networks progressed by +2.8%. Waste revenue grew sharply, by +14.2%, thanks to strong volumes, up by +5.3%, well-oriented prices, up +2.7% and the favorable impact of recycled material prices (+5.2%). Energy revenue also recorded a strong growth of +12.3% including a favorable weather impact of +1.6% (€85M) and a positive heat and electricity price effect of  +6.8% on revenu

 

• Very strong EBITDA growth to €4 234M vs. €3 641M in 2020, an increase of +16% at constant forex and of +6.9% vs. 2019.

  • Exchange rates variations had s slight positive impact of +€9M (+0.2%) while scope  had a positive effect of  +€78M (+2.1%). 
  • Solid revenue growth translated into a good operating leverage effect at the EBITDA level. The strong EBITDA progression was driven by higher volume and activity level for +€277M (+7.6%), by efficiency gains for €382M (+10.5%), a very high level in 2021, above the annual objective of €350M, due to the combined effects of the annual efficiency plan  and  the specific Recover and Adapt plan put in place to compensate the sanitary crisis impact in 2020 and 2021. The energy and recyclate price impact was   +€35 M, of which +€113M for recycled material prices and -€78M for CO2 and energy prices. The price cost squeeze effect reached -€199M, or -5.5%. Weather impact was only slightly positive (+€11M), the favorable cold winter for Energy being partially offset by the unfavorable rainy summer for Water. For the record, EBITDA in Q3 had benefitted from on positive one-off item of +€86M due to the construction completion of an incinerator in Troyes, with no impact at the EBIT level. 

 

•  Current EBIT up +41.7 % to €1 766M vs. €1 242M  in 2020. 

  • Exchange rates variation was +€5M.
  • The very strong Current EBIT growth (+€524M) can be explained as follows : 
    • EBITDA growth for +€593M
    • Depreciation and Amortization (including Operating Financial Assets reimbursements) up by €159M due to the integration of new assets in Energy in Central Europe and of Osis in hazardous waste, and to the impact of the one-off OFA repayment associated with the Troyes incinerator project. At constant scope and exchange rates, D&A excluding OFA reimbursements are up 2.3%
    • The item « provisions, fair value adjustments and industrial capital gains » reached +€119M in 2021, after -€11M in 2020 and +€52M in 2019. 2020 was the impacted by the consequences of the sanitary crisis. The increase from +€52M in 2019 to +€119M in 2021 is mostly due to higher capital gains on industrial divestitures (capital losses of -€39M in 2019 and capital gains of +€39M in 2021), and the level of provisions is back to 2019 level.
    • Current net income from joint ventures and associates came out at €105M compared with €111M in 2020 due to the divestment of the Shenzhen water concession.

 

  •  Very strong growth of Current Net income Group share to €896M vs €382M in 2020 and €738M in 2019, a respective growth of +132.9% and +20.9% at constant forex.

Current net income group share increased strongly thanks to:

  • Sharp current EBIT growth vs. 2020, which was impacted by the sanitary crisis

  • Cost of financing down sharply, from €414M to €343M thanks to favorable Euro debt refinancing (average of 1.95%) and the unwinding of a portfoio of interest rates derivatives for €20M. Net cost of borrowing reached  2.98% vs. 4.02% in 2020.

  • €122M of dividend received from our 29.9% stake in Suez.

  • Other financial income and expense of -€145M vs. -€166M in 2020.

  • Unfavorable evolution of net  financial capital gains/losses to  -€16M vs. +€26M in 2020. 

  • Doubling of income tax expense to -€330M vs. -€160M. Current tax rate was 25.8%.

  • Non-controlling interests increased to -€158M vs. -€146M in 2020.

 

  • Strong decrease of net financial debt from €13 217M at 31 December 2020 to €9 532M at 31, December 2021 . Record net Free cash Flow of €1 219M.
    • Strong decrease of net financial debt benefitted also from Suez dividend for €122M, from the capital increase of €2.5bn closed in October and from an hybrid issuance of €0.5bn.  

    • Controlled industrial capex of €2 212M vs. €2 151M in 2020

    • Strict control of WCR,  with another reduction of  €382M

    • Strong improvement of Net Free Cash Flow to €1 219M vs. €507M in 2020

    • Net financial investments of +€64M mainly Osis acquisition closed in May 2021, offset by divestments in Scandinavia and in China

• Increase of the divididend to €1 per share, to be paid at 100% in cash, with respect to the 2021 fiscal year

Veolia’s Board of Directors will propose to shareholders at the Annual General Shareholders Meeting on June 15, 2022 the payment of a dividend of €1 per share with respect to the 2021 fiscal year, payable in cash. The ex-dividend date is fixed at 5th July 2022. 2021 dividends will be paid starting as of 7th July 2022.

 

• 2022 Prospects*

The year 2022 starts in an inflationary environment in which Veolia’s business are well protected thanks to the contractual model of price indexation which applies to around 70% of the Group’s revenue, and thanks to its energy purchases hedging  policy. 

Besides, the Group’s exposure to Russia and Ukraine is very limited with a total revenue of c. €120 million (0.3% of the Group’s revenue) and €130 million of capital employed (less than 0.5% of the combined Veolia-Suez)

In view of the continued favorable underlying trends of our businesses, without extension of the conflict beyond the Ukrainian territory and without significant change in the energy supply conditions in Europe, the Group’s 2022 prospects, which include for the 1st time the Suez acquired activities (since January 18th), are the following : 

  • Solid organic revenue growth 

  • Efficiency gains above €350M complemented by €100M of synergies coming from the 1st year of  integration of Suez 

  • Organic growth of  EBITDA between +4% and +6%

  • Current net income group share around €1.1bn, a growth of more than 20%, confirming the earning per share accretion of around 10%** 

  • Confirmed 2024 EPS accretion of around 40%** 

  • Leverage ratio around 3x

  • Dividend growth in line with current EPS growth

* At constant forex
** Current net  income per share after hybrid costs and before PPA

 

Acquisition of Suez finalized on 27 January 2022 with the closing of  the tender offer

  • In 2021, the different steps of the acquisition of Suez have led to the Tender Offer in December 2021 which resulted in a 95.95% ownership of Suez capital on January 27th 2022, followed by the squeeze-out of the remaining Suez shares, realized on February 18th.
     
  • Moreover, and as planned in the combination agreement of April 2021, Veolia sold a portfolio of Suez assets on 31 January 2022 to a consortium of investors composed of Meridiam, GIP, Caisse des Dépôts and CNP. This portfolio of assets includes the Water and Waste activities of Suez in France, as well as some international water assets of Suez in the following geographies: Italy (including the Acea stake), Czech Republic, Africa (including Lydec), Central Asia, India, China, Australia and the global digital activities of SES.
     
  • Regarding the anti trust process, Veolia has obtained all of them except for the Competition and Markets Authority (CMA) in the UK  which is still underway and which should take place in 2022

Veolia group aims to be the benchmark company for ecological transformation. With nearly 179,000 employees worldwide, the Group designs and provides game-changing solutions that are both useful and practical for water, waste and energy management. Through its three complementary business activities, Veolia helps to develop access to resources, preserve available resources, and replenish them. 
In 2020, the Veolia group supplied 95 million people with drinking water and 62 million people with wastewater service, produced nearly 43 million megawatt hours of energy and treated 47 million metric tons of waste. Veolia Environnement (listed on Paris Euronext: VIE) recorded consolidated revenue of €26.010 billion in 2020. www.veolia.com


Important disclaimer 

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.