Date: January 30, 2007
Source: Veolia Environnement
Water-and-waste management company Veolia Environnement SA (VE) Tuesday reported a 11.9% jump in revenue for 2006 fueled by new contracts and acquisitions, and confirmed its profit target for the full year.
The company remains on the lookout for acquisitions, Chief Financial Officer Jerome Contamine said, but it is still not interested in a tie-up with French construction company Vinci SA (12548.FR), which it unsuccessfully approached last year.
Revenue rose to EUR28.62 billion for the whole of 2006, the company said, beating the EUR28.47 billion expected by five analysts polled by Dow Jones Newswires.
Veolia reported revenue of EUR25.245 billion in 2005, but given new international accounting rules for concessions contracts, comparable revenue for 2005 was EUR25.57 billion, the company said.
Organic growth excluding acquisitions was 8.1% for 2006, the company said.
The water division posted a 10.4% jump in revenue to EUR10.088 billion, while the waste division reported sales of EUR7.463 billion, up 10.6% from the previous year, the company said.
'Organic growth was strong on the whole, especially outside the company's domestic market,' Fideuram Wargny analyst Julien Picard said. 'But there's a slowdown in the fourth quarter, partly due to warmer weather than expected hitting the energy services division.'
Picard added he believes the company will largely meet its 2007 growth target. The company reiterated that it expects net profit and operating profit growth to exceed the 11.9% revenue growth reported in 2006. It is also 'very confident' it will achieve revenue growth between 8% and 10% in 2007, Veolia's CFO said in a conference call following the release of the figures.
Growth is expected to be driven mainly by new contracts and the acquisition of U.K. waste management company Cleanaway, he explained.
Veolia last summer bought Cleanaway for EUR859 million.
WestLB analyst Marc Koebernick said he wouldn't be surprised if the company raises its guidance during the course of the year, given the pace of business. But he warned that signals from the company that it could look at large acquisitions may cast a shadow on the stock. 'I don't like that. The Vinci deal was a bad idea,' Koebernick said.
Organic growth is the company's main focus, Contamine said. But Veolia will remain 'opportunistic' with regard to acquisitions. Those should be mainly small and targeted, he said, but he didn't rule out larger deals.
Contamine confirmed that Veolia has looked to buy Houston-based water treatment company Synagro Technologies (SYGR), as reported Monday by Dow Jones Newswires.
Synagro Monday announced it agreed to be acquired by U.S. investment fund Carlyle Group for an enterprise value of $772 million, including debt.
However, Veolia won't try to approach construction and concession company Vinci again, Contamine said, saying the company has 'closed the file on Vinci.'
Last spring, Veolia approached Vinci for a tie-up, but was abruptly rebuffed by the management.
Artemis, the holding company owned by French billionaire and financier Francois Pinault, has recently built a 5.1% stake in Vinci, rekindling speculation of a bid for the company. Prior to the Vinci episode, Veolia had considered joining Italian electricity giant Enel SpA (E) in a bid for Franco-Belgian rival Suez (SZE). That attempt was left in limbo as Suez announced plans to merge with French state-owned gas company Gaz de France SA (1020848.FR).
Veolia would be still interested in Suez's international water and waste assets if they were to be sold one day, Contamine reiterated.
---------------------------- official announcement -----------------------------------------
Consolidated revenue (1) for the full-year ending December 31, 2006
Veolia Environnement At Dec. 31, 2006
(€m)
Adjusted at Dec. 31, 2005
(€m) (2)
% change
2006/2005
Internal
growth
External
growth
Currency
effect
28,620.4
25,570.4
11.9%
8.1%
3.8%
0.0%
Veolia Environnement's consolidated revenue for the year ending December 31, 2006 grew 11.9% to €28,620.4 million, compared to €25,570.4 million at December 31, 2005. Internal growth totaled 8.1%.
External growth of 3.8% was primarily the result of acquisitions made by Veolia Transport in France and the United States (a combined contribution of around €443 million) and Veolia Environmental Services in the United Kingdom (a contribution of around €215 million). Revenue from outside France stood at €15,217.4 million, or 53.2% of the total compared with 51.3% in 2005.
The currency effect was neutral, with a weakening of the U.S. dollar (-€53.5 million) offset by a strengthening of the Czech koruna (+€44.7 million).
To top Water At Dec. 31, 2006
(€m)
Adjusted at Dec. 31, 2005
(€m) (3)
% change
2006/2005
Internal
growth
External
growth
Currency
effect
10,087.6
9,134.2
10.4%
9.1%
1.2%
0.1%
In France, internal revenue growth was 3.6%, excluding Veolia Water Solutions & Technologies, due to a good performance of the distribution businesses as well as further growth in the engineering business.
Outside France, excluding Veolia Water Solutions & Technologies and Proactiva, revenue grew 13.6% (11.8% on a like-for-like basis). In Europe, revenue growth of 11.4% was driven by the start-up of new contracts, in particular in Germany (the Braunschweig municipal contract), in the Czech Republic (Hradec Kralove and Prostejov) and in Slovakia (Poprad and Banska Bystrica). In the Asia-Pacific region, strong revenue growth of 36.2% (of which 26.9% was internal growth) was mainly driven by new contracts signed in China (Hohhot, Changzhou, Kunming and Urumqui in the municipal sector). External growth in this region was the result of Veolia Water's increased stake in the Adelaide contract in Australia and small acquisitions in Japan. The Company is continuing its expansion in Africa
and the Middle East where growth exceeded 12%. In North America, revenue grew 6.7% for the full-year on a like-for-like basis.
Veolia Water Solutions and Technologies posted revenue growth of 17.8% on a like-forlike basis, driven in particular by a sharp upturn in the engineering and construction businesses in France, the Middle East and the United States. Including acquisitions made during the year, revenue growth totaled 21.8%.
To top Environmental Services (Waste Management) At Dec. 31, 2006
(€m)
Adjusted at Dec. 31, 2005
(€m) (3)
% change
2006/2005
Internal
growth
External
growth
Currency
effect
7,462.9
6,748.7
10.6%
7.6%
3.5%
-0.5%
In the Environmental Services (waste management) business, revenue in France grew 4.1% (of which 3.7% was internal growth), driven by the combined effect of the growing contribution of new incineration plants and the increased tonnages of solid waste collected and treated under high value added service contracts.
Outside France, excluding Proactiva, internal growth was 10.8%. It was particularly strong (13.2%) in the United States in all business lines. In the United Kingdom, overall growth totaled 34.2% (of which 6.9% was internal growth), driven by the acquisition of Cleanaway UK, completed on September 28, 2006 and by the general development of the business within a growing market. In Asia, the start-up of the Foshan and Guanghzou-Likeng contracts made a significant contribution to revenue growth of 14%.
To top Energy At Dec. 31, 2006
(€m)
Adjusted at Dec. 31, 2005
(€m) (3)
% change
2006/2005
Internal
growth
External
growth
Currency
effect
6,118.4
5,463.6
12.0%
10.0%
1.5%
0.5%
Revenue growth totaled 12% of which 10% was internal growth. The full-year impact of the rise in energy prices was €260 million compared with €226 million during the first nine months of 2006. Excluding this effect, revenue growth was 7.2%.
The business was subject to contrasting weather conditions over the course of the year. While the beginning of the year had experienced more harsh temperatures than the average, the end of the year, on the contrary, was warmer than the seasonal norms.
In France, internal growth of 8.2% resulted primarily from the increase in energy prices in the first quarter of the year, the start-up of new contracts and an upturn in the engineering business.
Outside France, revenue growth totaled 17.0% of which 12.6% was internal growth. It was primarily driven by the full effect of the Lodz contract (Poland), favorable pricing in Central Europe as well as acquisitions in Italy and Brazil.
To top Transport At Dec. 31, 2006
(€m)
Adjusted at Dec. 31, 2005
(€m) (4)
% change
2006/2005
Internal
growth
External
growth
Currency
effect
4,951.5
4,223.9
17.2%
12.9%
1.2%
-0.4%
In France, revenue growth was 12.7%, driven by the contribution of SNCM (approximately €200 million). The end of the Toulouse contract was offset by the positive impact of new contracts in the field of urban and intercity transit systems, and by the good performance of other business lines. ?? Outside France, revenue advanced by 20.4% of which 7.6% was internal growth. External growth was mainly due to acquisitions made in the United States (ATC and Shuttleport) and in Norway (Helgelandske).
Veolia Environnement's consolidated revenue for the year ending December 31, 2006 grew 11.9% to €28,620.4 million, compared to €25,570.4 million at December 31, 2005. Internal growth totaled 8.1%.
External growth of 3.8% was primarily the result of acquisitions made by Veolia Transport in France and the United States (a combined contribution of around €443 million) and Veolia Environmental Services in the United Kingdom (a contribution of around €215 million). Revenue from outside France stood at €15,217.4 million, or 53.2% of the total compared with 51.3% in 2005.
The currency effect was neutral, with a weakening of the U.S. dollar (-€53.5 million) offset by a strengthening of the Czech koruna (+€44.7 million).
(www.veoliaenvironnement.com/en/newsroom/20070130,veolia-consolidated-revenue-december-31-2006.aspx)
Sign up to receive our free Weekly News Bulletin