Date: November 9, 2010
Source: Veolia Environnement SA
(Non-audited IFRS Figures)
Veolia Environnement consolidated revenue increased 0.8% for the nine months ending September 30, 2010. The return of growth was confirmed during the third quarter given 1) another strong quarter of progression in the Environmental Services division (+9.7% in Q3 after +0.7% and +8.2% growth in Q1 and Q2, respectively), principally due to recycled raw materials prices which remained strong, more favorable evolution in volumes and selective commercial discipline; 2) a return to growth in the Water division (+1.5% in Q3 after -7.0% and -3.7% performance in Q1 and Q2, respectively); and 3) a solid revenue performance in Energy Services, which also benefited from one time Works activities. Due to the resurgence of commercial opportunities and strict adherence to the Group's selective growth strategy, Veolia Environnement has also won many significant contracts during the previous months.
Adjusted operating cash flow and adjusted operating income benefited from good revenue trends, continued focus on cost reduction efforts (183 million realized for the first nine months of 2010) and the continuation of elevated recycled raw material prices.
The volume of divestments completed since the beginning of the year was 847 million, which combined with controlled gross investments (at 2,077 million), contributed to a 10% Y-Y increase in operating cash flow - net investments(*) to 1,720 million, versus the first nine months of 2009. Net financial debt was 15,765 million at September 30, 2010 and was impacted by the effect of exchange rate variations and a 279 million increase in working capital.
In total, a progressively improving environment, the return of positive organic revenue growth and solid operational performance together allow the Group to confirm its annual objectives and approach the fiscal year end with confidence.
| Revenue (M) | |||||
| Nine months ending September 30, 2010 (in M) |
Nine months ending September 30, 2009 re-presented (in M) |
Variation 2010/2009 |
Of which internal growth |
Of which external growth |
Of which currency effect |
| 25,467.9 | 25,254.3 | 0.8% | 0.1% | -1.9% | 2.6% |
(1) In application of IFRS 5, nine months results for 2009 have been re-presented, in order to insure assure the comparability of periods, for the reclassification into « net income from discontinued operations » of the U.K. operations in the Transport division, and the German activities and the Renewable Energies business in the Energy Services division.
Veolia Environnement's consolidated revenue for the nine months ending September 30, 2010 increased 0.8% to 25,467.9 million compared to re-presented nine months revenue of 25,254.3 million in the same period in 2009. Third quarter 2010 revenue showed noticeable progression, with +5.3% Y-Y growth, marking a strong net inflexion following -4.0% in the first quarter and +1.9% growth in the second quarter of 2010.
This improvement is also confirmed at constant scope and exchange rates: -3.1% in Q1 2010, +1.3% in Q2 2010 and +3.0% in Q3 2010, confirming a return to positive organic revenue growth.
This evolution is explained principally by the stabilization of the economic environment and demand from certain industrial sectors, the increase in recycled raw material prices, as well as good performance in terms of commercial development.
The effect of net divestments realized in 2009 and 2010 on revenue during the first nine months of 2010 was -490.2 million (which is -1.9% impact on revenue growth) divided among the following: -138.5 million in the Water Division, -290.4 million in the Environmental Services Division (principally Veolia Propretι Nettoyage et Multiservices), -56.3 million in the Energy Services Division, and -5.0 million in the Transport Division.
The share of revenue generated outside of France amounted to 15,442.5 million, which is 60.6% of total revenue for the nine months ending September 30, 2010 versus 60.3% for the same period ending September 30, 2009.
The positive currency effect on revenue of 647.2 million reflects essentially the appreciation, compared to the euro, of the Australian dollar for 148.5 million, the U.S. dollar for 85.6 million, the Northern European currencies (Norway and Sweden) for 85.5 million, Eastern European currencies for 72.8 million, and the U.K. pound sterling for 54.3 million.
Veolia Environnement has observed a resurgence in commercial opportunities and has won several significant contracts during the last weeks.
Adjusted operating cash flow(2) for the nine months ending September 30, 2010 grew 3.3% (+0.3% at constant exchange rates) to 2,665.6 million versus 2,581.0 million at September 30, 2009.
This progression is due essentially to the Environmental Services division, which benefited during the first nine months of 2010 from:
In total, the adjusted operating cash flow margin improved 30 basis points to 10.5% versus 10.2% at September 30, 2009.
The results of Veolia's efficiency plan also contributed 183 million to the growth in adjusted operating cash flow.
The positive impact of the evolution of average exchange rates on adjusted operating cash flow was 76.8 million, primarily reflecting the appreciation of the Australian dollar for an impact of 14.5 million, the U.S. dollar for an impact of 10.6 million, the U.K. pound sterling for an impact of 9.7 million and the Eastern and Central European currencies for an impact of 13.0 million for the nine months ending September 30, 2010.
Operating income for the nine months ending September 30, 2010 increased 2.5% to 1,566.4 million versus 1,528.4 million for the period ending September 30, 2009. It includes positive non-recurring items totaling 99.4 million for the period ending September 30, 2009, versus 70.9 million for the period ending September 30, 2010.
Adjusted operating income for the nine months ending September 30, 2010 grew 4.7% (1.4% at constant exchange rates) to 1,495.6 million versus 1,429.0 million for the same period ending September 30, 2009. It includes the negative impact of lower discount rates utilized to calculate provisions for site rehabilitation already accounted for at June 30, 2010 for -33.2 million, compared with an unfavorable effect of -18.7 million at September 30, 2009.
Similar to the first half of 2010, the Group continues to apply selective investment criteria while preserving industrial and maintenance capital expenditures as required by contractual agreements.
The enterprise value of financial investments was 355 million for the nine months ending September 30, 2010. These investments notably include the acquisition of New World Resources Energy (NWR Energy or « Endo ») within Dalkia in the Czech Republic for 97 million in enterprise value.
Operating cash flow minus net investments* for the nine months ending September 30, 2010 was 1,720 million versus 1,561 million for the same period in 2009. After the change in operational working capital (279 million use of funds), payment of interest expense, taxes and dividends (719 million), net financial debt was 15,765 million at September 30, 2010 versus 15,127 million at December 31, 2009. Net debt was also impacted by unfavorable foreign exchange movements of 395 million.
Free cash flow* after dividend payment was -220 million.
The operational and financial performances of the Group at September 30, 2010 are consistent with the Group's objective for the 2010 fiscal year:
(2) As of January 1, 2010, due to the application of the new amendment to IAS 7, adjusted operating cash flow for the first nine months of 2009 has been re-presented for replacement costs by an amount of 239.8m, of which 162.7m is within the Water division and 77.1m is within the Energy Services division.
| Revenue (M) | |||||
| Nine months ending September 30, 2010 (in M) |
Nine months ending September 30, 2009 (in M) |
Variation 2010/2009 |
Of which internal growth |
Of which external growth |
Of which currency effect |
| 8,997.9 | 9,285.0 | -3.1% | -3.8% | -1.5% | 2.2% |
The decline in Water division revenue for the nine months ending September 30, 2010 is explained primarily by the diminution of Works activities. Excluding Works, division revenue improved in the third quarter by 0.8% at constant scope and exchange rates.
For the nine months ending September 30, 2010, adjusted operating income declined slightly at constant exchange rates. Adjusted operating cash flow evolved in line with the trend observed during the first semester of 2010.
| Revenue (M) | |||||
| Nine months ending September 30, 2010 (in M) |
Nine months ending September 30, 2009 (in M) |
Variation 2010/2009 |
Of which internal growth |
Of which external growth |
Of which currency effect |
| 7,201.7 | 6,776.0 | 6.3% | 7.2% | -4.3% | 3.4% |
The positive differential of recycled raw materials prices (notably in France, Germany and Norway), good progression of certain activities in the United States and the ramping and growth of integrated contracts in the United Kingdom contributed to organic growth of 7.2% during the third quarter of 2010. In addition, after a volume effect still marginally negative during the first quarter, the second and third quarters confirm signs of volume recovery in certain activities, and in certain countries, of the Environmental Services division.
Adjusted operating cash flow progressed noticeably, largely due to:
Adjusted operating income for the nine months ending September 30, 2010 increased significantly compared to the same period ending in 2009.
| Revenue (M) | |||||
| Nine months ending September 30, 2010 (in M) |
Nine months ending September 30, 2009 re-presented (in M) |
Variation 2010/2009 |
Of which internal growth |
Of which external growth |
Of which currency effect |
| 4,981.9 | 4,787.9 | 4.1% | 3.3% | -1.2% | 2.0% |
Energy Services revenue for the nine months ending September 30, 2010 increased 3.2% at constant scope and exchange rates. The variation is explained principally by a positive climate effect at the beginning of the year and a progression in Works activities, despite an unfavorable effect of energy prices (-64.3 million compared to the same period in 2009).
For the nine months ending September 30, 2010, adjusted operating cash flow improved. Adjusted operating income declined compared to the prior year period due to a capital gain on divestments realized during the third quarter of 2009.
| Revenue (M) | |||||
| Nine months ending September 30, 2010 (in M) |
Nine months ending September 30, 2009 re-presented (in M) |
Variation 2010/2009 |
Of which internal growth |
Of which external growth |
Of which currency effect |
| 4,286.4 | 4,405.4 | -2.7% | -5.3% | -0.1% | 2.7% |
Transport division revenue for the nine months ending September 30, 2010 declined 2.7%. Correcting for the impact of the non-renewed Stockholm, Melbourne and Bordeaux contracts, revenue growth would have been +9.1%.
Adjusted operating cash flow and adjusted operating income for the nine months ending September 30, 2010 in the Transport division declined, notably due to the lost contribution from the aforementioned non- renewed contracts.
*Net financial debt represents gross financial debt (non-current borrowings, current borrowings, bank overdrafts and other cash position items), net of cash and cash equivalents and excluding fair value adjustments to derivatives hedging debt.
*Free cash flow represents cash generated (sum of operating cash flow before changes in working capital and repayments on operating financial assets) net of the cash component of the following items: (i) changes in working capital for operations, (ii) operations involving equity (share capital movements, dividends paid and received), (iii) investments net of disposals (including the change in receivables and other financial assets), (iv) net financial interest paid and (v) tax paid.
*The indicator Operating cash flow - Net investments is defined by Adjusted operating cash flow, including operating cash flow from discontinued operations - (Gross investments - (divestments, plus repayments from operating financial assets, plus partial purchases net of partial sales resulting from transactions with non-controlling interests that do not result in a gain or loss of control, plus increases in capital subscribed to by minority interests)).
For more information, contact:
Marie-Claire Camus
Tιl +33 (0)1 71 75 06 08
Veolia Environnement is a corporation listed on the NYSE and Euronext Paris. This [document/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 risks described in the documents Veolia Environnement has filed with the U.S. Securities and Exchange Commission. 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 a free copy of documents filed by Veolia Environnement with the U.S. Securities and Exchange Commission from Veolia Environnement.
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