key figures as of march 31, 2012 - conference call on may 4, 2012
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Key figures as of March 31, 2012
Conference call on May 4, 2012
Pierre‐François RiolacciChief Finance Officer
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Investor Relations Key figures as of March 31, 2012
DisclaimerVeolia Environnement is a corporation listed on the NYSE and Euronext Paris. This document 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 risks associated with conducting business in some countries outside of Western Europe, the United States and Canada, the risk that changes in energy prices and taxes may reduce Veolia Environnement's profits, the risk that we may make investments in projects without being able to obtain the required approvals for the project, the risk that governmental authorities could terminate or modify some of Veolia Environnement's contracts, the risk that our long‐term contracts may limit our capacity to quickly and effectively react to general economic changes affecting our performance under those contracts, the risk that acquisitions may not provide the benefits that Veolia Environnement hopes to achieve, 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.
This document contains "non‐GAAP financial measures" within the meaning of Regulation G adopted by the U.S. Securities and Exchange Commission under the U.S. Sarbanes‐Oxley Act of 2002. These "non‐GAAP financial measures" are being communicated and made public in accordance with the exemption provided by Rule 100(c) of Regulation G
Highlights and key figures as of March 31, 2012
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Investor Relations Key figures as of March 31, 2012
1st quarter 2012 highlights
Convergence• Implementation of cost reduction program: €75M in savings identified to
date, relative to an annual objective of €100M
• Asset divestment process continuing
Good commercial dynamics
Good resilience of activity• Revenue increased 4.6%, including +3.4% at constant scope and FX
• Adjusted operating cash flow declined 3.1% (‐3.3% at constant FX)
• Adjusted operating income declined by 12.2% due to costs to implement the transformation plan and higher amortization expense in several priority regions
• Industrial investment increased, notably in Energy Services (biomass and in Central Europe)
5
Investor Relations Key figures as of March 31, 2012
1st quarter 2012 key figures
15,02114,51114,511Net financial debt (3)
‐519539539Free Cash Flow
544.0618.8636.1Operating income
6.9%8.3%7.8%Adj. operating income margin
‐12.1%‐12.2%543.5618.8636.1Adjusted operating income
11.5%12,4%12.2%Adj. operating cash flow margin
‐3.3%‐3.1%900.4928.8996.8Adjusted operating cash flow
+3.8% (2)+4.6%7,825.57,478.68,159.4Revenue
Constant
FX
current
FX
Q1 2012Q1 2011 re‐presented (1)
Q1 2011 published
In €M
(1) To ensure the comparability of period, the 2011 financial statements have been re-presented to include:- the impact of the reclassification into “net income from discontinued operations” of Habitat Services (“Proxiserve”) activities in the Water and Energy Services division, Citelum activities in the Energy Services division, Solid waste activities in the United States in the Environmental Services division and the regulated activities in the United Kingdom in the Water division;- the impact of the reclassification into “net income from discontinued operations” of the Transportation Division as a whole;- the impact of the reclassification into ‘continuing operations’ of the “Pinellas” incineration activities within the Montenay International entities in the United States in the Environmental Services division.
(2) +3.4 % at constant consolidation scope and exchange rates(3) Net financial debt as of December 31, 2011: €14,730M
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Investor Relations Key figures as of March 31, 2012
Breakdown of revenue by division
2,342 2,540
2,230 2,236
2,907 3,050
Δcurrent
FX
Δconstant
FX
Δ excl. FX & scope
Water +4.9% +3.8% +5.3%
Environmental Services +0.3% ‐1.3% ‐0.9%
Energy Services +8.5% +8.8% +5.3%
Total Company +4.6% +3.8% +3.4%
(1) To ensure the comparability of period, the 2011 financial statements have been re-presented to include:- the impact of the reclassification into “net income from discontinued operations” of Habitat Services (“Proxiserve”) activities in the Water and Energy Services division, Citelum activities in the Energy Services division, Solid waste activities in the United States in the Environmental Services division and the regulated activities in the United Kingdom in the Water division;- the impact of the reclassification into “net income from discontinued operations” of the Transportation Division as a whole;- the impact of the reclassification into ‘continuing operations’ of the “Pinellas” incineration activities within the Montenay International entities in the United States in the Environmental Services division.
Q1 2011re‐presented (1)
Q1 2012
7,479
In €M
7,826
7
Investor Relations Key figures as of March 31, 2012
Water: revenue increase of 4.9% to €3,050M
Operations: Revenue increased 2.0% (+3.6% at constant scope and FX)
• France : revenue increased 2.6% (+3.2% at constant scope and FX), given stable volumes and favorable indexation, and continued contract erosion
• Outside France: Revenue increased 1.7% (+3.8% at constant scope and FX) due to good performance in Central and Eastern Europe and in Asia
Technologies and Networks: Revenue increased 12.7% (+9.7% at constant scope and FX)
• Confirmed recovery in Industrial activity
• Favorable impact of the Hong Kong contract
• VWS backlog increased compared to the end of March 2011, primarily due to Industrial Design & Build projects
784 884
2,123 2,166
2011* 2012OperationsTechnologies & Networks
*The 2011 financial statements have been re‐presented to ensure the comparability of periods, for the U.K. regulated water activities and Proxiserve
2,907 3,050 +4.9%
+2.0%
+12.7%
Quarterly revenue as of March 31 (€M)
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Investor Relations Key figures as of March 31, 2012
Environmental Services: Stable revenue at €2,236M
France: Revenue growth of +3.8% at constant scope, despite the impact of lower raw material prices: improved volumes, notably in recycling, incineration and treatment of hazardous waste
UK: Revenue decline of 8.4% at constant scope and FX due to decline in PFI construction revenue, shutdowns due to incinerator maintenance, and strong decline in landfill volumes
Germany: Revenue decline at constant scope of 8.8% due to lower raw material prices and volumes
Italy: Procedure for voluntary liquidation presented on April 18 and applicable to all Veolia Environmental Services activities with the exception of the Technoborgo and Energonut incinerators
2012
Price and volumes of recycled materials ‐1.2%
Waste volumes ‐0.1%
Service price increases +1.1%
Other ‐0.7%
Consolidation scope & currency effect +1.2%
Revenue variation 2012 / 2011:+0.3% and ‐0.9% at constant scope and FX
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Investor Relations Key figures as of March 31, 2012
Energy Services: revenue increased 8.5% to €2,540M
Revenue increased 8.5% (+5.3% at constant scope and FX) to €2,540M• Higher energy prices: positive impact of €140M vs. 2011
• Marginal weather impact
In France, revenue increased 9.6% (+10.6% at constant scope)• Average fuel prices increased
Outside France, revenue increased 7.3%, and was stable at constant scope and FX• Central & Eastern Europe revenue increased 19.5% (+4.6% at constant scope and FX)
Unfavorable currency effect
Consolidation scope: essentially impact of the Warsaw heating network for €95M
Higher prices, but lower electricity sales in the Czech Republic and cogenerated electricity subsidies in Hungary
1,172 1,284
1,170 1,256
2011* 2012
France Outside France
* The 2011 financial statements have been re‐presented to ensure the comparability of periods, for the Citelum and Proxiserve activities.
2,342 2,540 +8.5%
+7.3%
+9.6%
Quarterly revenue as of March 31 (€M)
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Investor Relations Key figures as of March 31, 2012
Free Cash Flow
Asset divestments well advanced but no material divestments completed in Q1 2012 (versus €840M in Q1 2011)
Seasonal variation in WCR: ‐€679M (‐€570M as of March 31, 2011)
Gross investments of €656M compared to €528M in Q1 2011Repurchase of minority interest in Water division in Central Europe for €79M
Significant increase in growth investments in Energy Services, notably in France associated with biomass cogeneration projects
Free Cash Flow: ‐€519M
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Investor Relations Key figures as of March 31, 2012
Net financial debtIn €M
• Seasonal increase in net financial debt• Active net financial debt management: public exchange offer of euro issues with maturities in 2013, 2014, 2017 and 2018 versus a new €750M issue with maturity in 2027, as well as reimbursement of the U.S. private placement for €350M
15,02114,73015,045
14,76414,511
16,52816,820 16,827
15,909 15,76715,218
15,37715,127
16,027
10,000
12,000
14,000
16,000
18,000
31-Dec-08
31-Mar-09
30-Jun-09
30-Sep-09
31-dec-09
31-Mar-10
30-Jun-10
30-Sep-10
31-Dec-10
31-Mar-11
30-Jun-11
30-Sep-11
31-Dec-11
31-Mar-12
Convergence: Update on strategic plan
13
Investor Relations Key figures as of March 31, 2012
Update on asset divestment program
U.K. Regulated Water & U.S. Solid Waste:• An ambitious timeline followed to‐date• Strong interest expressed by the market• Non‐binding offers received
Veolia Transdev:• Continued preparation of VTD as part of withdrawal• Negotiation in process on the basis of an offer received• Interest expressed from a new potential buyer
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Investor Relations Key figures as of March 31, 2012
Advancement of cost reduction program
6075
100
‐38 ‐52‐80
Feb. 17, 2012e Apr. 27, 2012e Dec. 31, 2012e
Implementation costs
Gross savings
22.0%
10.0%
11.0%
13.0%5.0%
14.0%
12.0%
13.0%
France
North America &Australia
Latin America &Southern Europe
Asia, Africa &Middle East
Central & EasternEurope
Northern Europe
Corporate HQ
Other
25.0%
66.0%
1.0% 0.0%6.0%
2.0%
Purchasing
OrganizationalEfficiency
IT costs
Externalexpenses
Insurance costs
Other
In €M
Breakdown of net savings by geographic zone Breakdown of net savings by lever
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Investor Relations Key figures as of March 31, 2012
(1) Before exchange rate impact (2) Net of implementation costs(3) Subject to approval of Veolia’s Board of Directors and shareholders(4) Net financial debt / (Operating cash flow before changes in working capital + principal repayments on operating financial assets) (5) ±5%
• Divestments of €5bn• Reduce net financial debt below €12bn(1)
• Cost reduction in 2013: gross impact of €220M and net(2) impact of €120M on Operating Income
• Commitment on dividend policy• €0.70(3) per share in 2012, paid in cash or shares
• €0.70(3) per share in 2013
2012‐2013Transition
period
2014 and beyond:
New Veolia
• Organic revenue growth > +3% CAGR (mid‐cycle)• Adjusted Operating Cash Flow > +5% CAGR (mid‐cycle)
• Leverage(4) of 3.0x(5)
• Mid‐term: historical payout ratio(3)
• Cost reduction in 2015: gross impact of €450M and net(2) impact of €420M on Operating Income
Outlook
Appendices
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Investor Relations Key figures as of March 31, 2012
618.8636.1Operating income/Adjusted operating income
539.0539.0Free Cash Flow (2)
996.8
8,159.4
2011published
7,478.6Revenue
(€M)2011Re‐
presented
Adjusted operating Cash Flow 928.8
(1) To ensure the comparability of period, the 2011 financial statements have been re‐presented to include:‐ the impact of the reclassification into “net income from discontinued operations” of Habitat Services (“Proxiserve”) activities in the Water and Energy Services division, Citelum activities in the Energy Services division, Solid waste activities in the United States in the Environmental Services division and the regulated activities in the United Kingdom in the Water division;‐ the impact of the reclassification into “net income from discontinued operations” of the Transportation Division as a whole;‐ the impact of the reclassification into ‘continuing operations’ of the “Pinellas” incineration activities within the Montenay International entities in the United States in the Environmental Services division.
(2) Free Cash Flow represents cash generated (sum of operating cash flow before changes in working capital and principal payments 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 .
Appendix 1: Main at end March 2011 re‐presented figures (1)
(1)
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Investor Relations Key figures as of March 31, 2012
Appendix 2: Commercial dynamics since the beginning of 2012 (1/2)
In France :• Veolia Water chosen to renovate Europe’s largest wastewater treatment plant.
SIAAP (Syndicat Interdépartemental pour l’Assainissement de l’Agglomération Parisienne, the interdepartmental wastewater authority for the Greater Paris area) chose OTV, a subsidiary of Veolia Water Solutions & Technologies, to head the consortium that was awarded the contract to renovate the Seine Aval biological wastewater treatment plant in Achères, the 2nd largest wastewater treatment plant in the world after that of Chicago. The portion of revenue that will be attributable to OTV is expected to be roughly €196M.
• Greater Dijon chose Dalkia to design and operate its future heating network.
The Greater Dijon joint district authority appointed Dalkia, as part of a public service management contract, the design, build and operation of its new heating network for a period of 25 years. As much as 80% of the network’s energy needs will come from renewable resources. Cumulated revenue is estimated at more than €200M.
In Europe :• Veolia Environmental services selected by the city of Leeds for a waste management contract (United
Kingdom).
Veolia Environmental Services, through its subsidiary Veolia Environmental Services (UK) Plc, a leading UK recycling and waste management company, was selected as a preferred bidder by the Leeds City Council for a Private Finance Initiative (PFI) contract for the treatment and disposal of residual waste. This contract will have a duration of 25 years.
• Dalkia selected by the European Investment Bank to aid the Bank in its plan to reduce its carbon footprint (Luxembourg).
The European Investment Bank awarded Dalkia the contract for technical and energy systems management of more than 180,000m² of its office space in Luxembourg. The 4 year contract covers 4buildings and includes and ambitious target for reducing energy consumption and CO2 emissions.
19
Investor Relations Key figures as of March 31, 2012
In Asia‐Oceania:• India: first «”full city ” public‐private partnership in the Water division.
Veolia Water India, a Veolia Water subsidiary, was awarded the drinking water service operation and maintenance contract by the city of Nagpur for 25 years (cumulated revenue of €387M). Veolia Water will take on the challenge of providing a continuous supply of drinking water to homes of the population of 2.7 million in Nagpur, including the portion of the population living in the city’s slums (a first in India).
Appendix 2: Commercial dynamics since the beginning of 2012 (2/2)
• Japan : Veolia Water won contracts for the operations and maintenance of three water and wastewater treatment plants which will service the needs of 1,215,000 people in Japan.
Veolia Water Japan, a Veolia Water subsidiary, successfully bid on the operations and maintenance contracts for two wastewater treatment plants in Hiroshima and Kyoto, and was also chosen by the city of Matsuyama (on the southern island of Shikoku) for the operations and maintenance of all facilities used to treat drinking water (cumulated revenue of €49M).
20
Investor Relations Key figures as of March 31, 2012
Appendix 3: Impacts of variation in foreign exchange rates during the quarter
Depreciation of the euro 3M 2012 / 3M 2011
Average rate Closing rate
• Australian dollar +8.7% +6.6%
• Czech koruna ‐2.9% ‐0.8%
• U.K. pound sterling +2.2% +5.6%
• U.S. dollar +4.1% +6.0%
Impact on key Company figures
• Revenue +€60.1M
• Adjusted operating cash flow +€2.5M
• Adjusted operating income ns
• Decline in net financial debt ‐€12M
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Investor Relations Key figures as of March 31, 2012
Appendix 4: Evolution of recycled material prices€/T Q1, 2011 Q2, 2011 Q3, 2011 Q4, 2011 2011 avg Q1, 2012
Var Q1 2012 / Q1 2011
March 2012: 12 month var
March 2012 : 3 month var
March 2012 : 1 month var
Cardboard (1.05) 131.1 147.9 132.8 94.4 126.5 119.0 -9.2% -3.1% 70.4% 12.5%Paper (1.11) 112.2 124.3 121.5 93.5 119.3 92.8 -17.3% -6.1% 20.3% 13.9%Metals (E40) 342.6 320.0 318.7 296.1 327.1 325.4 -5.0% 0.4% 8.6% 3.6%
Evolution of raw materials prices (€/t)
0
20
40
60
80
100
120
140
160
180
jan 08
feb 08
mar 08
apr 0
8may
08jun
08jul
08au
g 08
sept
08oc
t 08
nov 0
8de
c 08
jan 09
feb 09
mar 09
apr 0
9may
09jun
09jul
09au
g 09
sept
09oc
t 09
nov 0
9de
c 09
jan 10
feb 10
mar 10
apr 1
0may
10jun
10jul
10au
g 10
sept
10oc
t 10
nov 1
0de
c 10
jan 11
feb 11
mar 11
apr 1
1may
11jun
11jul
11au
g 11
sept
11oc
t 11
nov 1
1de
c 11
janv 2
012
fev 20
12
mars 20
12ap
r 201
2
0
50
100
150
200
250
300
350
400
450
500
Cardboard Paper Metals
22
Investor Relations Key figures as of March 31, 2012
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Investor Relations Contact Information
Ronald Wasylec, Senior Vice President, Investor Relations
Tel +33 1 71 75 12 23
e‐mail ronald.wasylec@veolia.com
Ariane de Lamaze
Tel +33 1 71 75 06 00
e‐mail ariane.de‐lamaze@veolia.com
38 Avenue Kléber – 75116 Paris ‐ France
Fax +33 1 71 75 10 12
Terri Anne Powers, Director of North American Investor Relations
200 East Randolph Street
Suite 7900
Chicago, IL 60601
Tel +1 (312) 552 2890
Fax +1 (312) 552 2866
e‐mail terri.powers@veoliaes.com
http://www.finance.veolia.com
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