Veolia: 2020 First Half Results - Very Strong Rebound of Activity and Results Since June

RECOVER AND ADAPT ADDITIONAL SAVINGS PLAN INCREASED FROM €200M TO €250M IN 2020

OBJECTIVE TO RECOVER 2019 OPERATIONAL PERFORMANCE IN Q4 20201

  • REVENUE : €12 412M vs. €13 324M IN H1 2019

-€912M REVENUE IN H1 2020 vs. 2019, BUT -€88M IN JUNE 2020

  • EBITDA : €1 599M vs. €2 002M IN H1 2019

-€403M EBITDA IN H1 2020 vs. 2019, BUT -€27M IN JUNE

  • €131M OF COST SAVINGS AS PART OF THE EFFICIENCY PROGRAM AND €120M FOR THE RECOVER AND ADAPT ADDITIONAL SAVINGS PLAN
  • CURRENT EBIT : €438M vs. €857M IN H1 2019
  • NET CURRENT INCOME GROUP SHARE : €7M vs. €352M IN H1 2019
  • NET FINANCIAL DEBT OF €11 850M DOWN €628M vs. JUNE 2019

PARIS--()--Regulatory News:

Antoine Frérot, Veolia’s Chairman and CEO indicated: «Facing the sanitary crisis which hit all the world’s economies in the 1st half, we reacted swiftly and strongly in order to limit its consequences on Veolia. I have immediately launched a specific 2020 adaptation plan targeting €200 million of additional cost savings, a target which has been increased to €250 million, and a €500 million capex reduction while maintaining growth capex. Despite the crisis, we have maintained our commercial efforts. The Group has therefore been in a position to absorb the shock and to rebound very quickly. The recovery has started in May, followed by a very strong rebound of our revenues and results in June. Utilization rates of all our facilities have almost recovered nominal level. The strong mitigation measures put in place as well as the very encouraging recent business trends allow us to target to recover 2019 operational performance in Q4 2020. Our objective is thus to begin 2021 having offset the entire remaining COVID consequences and to pursue the implementation of our Impact 2023 strategic program at a sustained rhythm. »

1

At constant forex and in the absence of a second wave of sanitary crisis in the second half of 2020

  • Revenue was €12 412 million compared to €13 324 million in H1 2019, a decrease of -6.8% at current exchange rates, of -6.1% at constant exchange rates and of -5.6% at constant scope and exchange rates

The Group had a good start of the year before the COVID crisis outbreak in March, and the lockdown measures put in place in many geographies.

At constant scope and exchange rates, Q1 was nearly flat at -0.5%. Q2 revenue was down by 10.8%, recovering since May, followed by a strong improvement in June. June revenue was down by 2.7%.

Exchange rate variations unfavorably impacted revenue growth by -€106 million and scope impact by -€65M, mostly due to the divestiture at the end of 2019 of our municipal energy business in the US (TNAI).

Energy prices had a positive impact of +€25M on revenue, and recycled material prices weighed for -€98M, largely due to recycled paper average selling price decrease (-34% yoy) . Weather effect was neutral +€2M.

The volume/commerce impact was negative by -€813M on revenue, or -6.1% due to the consequences of the sanitary crisis on the global economic activity.

Prices remained well oriented, with a positive impact of +€143M on the Group’s revenue (+1.1%).

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

  • In France, activity was down by -9.7%. Water revenue decreased by 6.4%, due to construction works halted temporarily, leading to a revenue decrease of this activity by one third. Water volumes have been stable and tariffs have progressed by 1.5%. Waste revenue was down by 13.4%, including volume decrease of -18%, mostly in the industrial and commercial segment, and prices up +1.8%. C&I Waste collection is down by 17% vs. -6% for municipal collection. Landfilled volumes were down 15% and incinerated volumes have remained up 4%. Waste activity has rebounded significantly in June to recover activity rates close to the pre-crisis ones.
  • Europe excluding France decreased by -2.5%. Solid performance in Central and Eastern Europe (+0.7%) thanks to increased tariffs in Water and Energy. The UK (including Ireland) exhibited a revenue decline of -5.8% due to a strong decline in the C&I waste revenue while municipal collection was more resilient, landfilled volumes decreased by 8% and continued very good availability of the PFI (96%). Germany resisted well, with revenue down by only 1.9% thanks to increased volumes, largely offset by lower recycled paper prices. Scandinavia and the Netherlands suffered from weak level of industrial activity and lower recycled material prices. Southern Europe (Italy, Spain, Portugal) was stable (+0.4%) with in particular a sustained activity in energy efficiency services for hospitals in Italy.
  • Rest of the World was down by -3.7% but only -1.1% at constant scope and forex. Asia continued to deliver solid growth (+4.7%), a strong rebound in hazardous waste volumes in Q2 helped China limit the decrease of revenue to -1.6%, Japan posted strong growth (+8.8%), as well as Hong Kong (+51% thanks notably to an acquisition in energy services) and Taiwan was stable. Latin America grew by +5.8% due to its municipal activities. North America revenue decreased due to the divestiture at the end of 2019 of its municipal energy business but was only slightly down at constant scope and forex (-1.6%), with resilient hazardous waste business. The Pacific region resisted as well, with revenue almost stable (-0.5%). Africa Middle East was slightly down (-1.0%), lower revenue in Morocco (-7.1%) being offset by a scope effect in South Africa.
  • Global businesses were down by 12.5%. Hazardous waste activities in Continental Europe have decreased by 12.8%, with a lower point in March and April before returning to more than 90% capacity utilization in June. Construction decreased by -9.6% due to SADE revenue decrease of -18.3%, with most of construction works in France put to an halt between mid March and mid May, before recovering a 100% activity rate in June. Veolia Water Technologies revenue was nearly stable (-1.2%) due to the construction of desalination plants in the Middle East. Industrial and Energy services activities were down 25% and are recovering progressively.

By business, as constant exchange rates: Water and Waste water revenue decreased by -2.7% with overall stable volumes, price increase impact of 0.6% and lower construction works. Technology and Construction revenue was down by 9.6% with SADE down by 18.3% and VWT nearly stable (-1.2%). Waste activity decreased by 6.2%, with volumes down by -8.4%, service price increases of +2.2% and a recycled material price impact of -1.9%. Energy revenue decreased by -8.7% but -3.4% at constant scope and exchange rates (scope impact of the divestiture of the energy services in the US of -5.9%). Weather effect was neutral (-0.1%) and higher energy prices generated a price effect of +1% .

  • EBITDA reached €1 599M vs. €2 002M in H1 2019 (-17.3% at constant scope and exchange rates).
    • Forex effect was negative by -€19M (-0.9%) and scope effect by -€37M (-1.9%).
    • EBITDA was penalized in H1 by an unfavorable volume effect of -€431M including the COVID effect, partially offset by an additional cost savings plan initiated at the end of March, by a favorable energy price impact (+€47M) which more than offset lower recycled material prices (-€22M), a price cost squeeze of -€69M and efficiency gains of +€131M, ahead of our annual objective of €250M for 2020. The specific cost cutting plan put in place to compensate as much as possible the sanitary crisis has generated €120M of savings in H1. The initial target of €200M was increased to €250M for the year 2020. Total cost cutting in 2020 should therefore reach more than €500M..
  • Current EBIT was €438M vs. €857M in H1 2019, -43.1% at constant scope and exchange rates.
    • Forex effect of -€8M.
    • Current EBIT was down due mostly to EBITDA decrease. Depreciation and amortization (including Operating Financial Assets reimbursements) were down by €19M to €1 054M. Provisions, Fair Value adjustments and capital gains on industrial divestments were down to -€16M vs. +€11M in H1 2019. Share of current net income from Joint Ventures and associates was down by €16M to €40M, due to the impact of the sanitary crisis on our Chinese water concessions.
  • Current net income group share reached €7M vs. €352M in H1 2019.
    • Cost of financing was down to -€216M vs. -€222M in H1 2019.
    • Other financial income and expense reached -€84M vs. -€91M in H1 2019
    • No capital gain on financial divestments vs. +€18M in H1 2019.
    • Income tax expense is down to -€64M vs. -€121M in H1 2019.
    • Non-controlling interests reached -€67M vs. -€89M in H1 2019
    • Leading to a current net income of €7M in H1 2020.
    • Net income Group share was -€138M, including notably €33M of specific COVID costs, restructuring charges for €23M, and non current impairments mostly in Latin America and Morocco for €74M.
  • Net financial debt was €11 850M at 30 June 2020, down by €628M vs. June 2019.
  • Net Free cash flow is slightly down, by -€42M, to -€515M
  • Improvement of working capital requirement (WCR) of €225M
  • Net industrial capex reduction of 10% to €873M, while maintaining growth capex.

At June 30, 2020, the Group’s cash position was particularly high at €7.9bn, plus €4.2bn of undrawn credit lines, so a total liquidity position of €12.1bn.

***************

  • Outlook 2020(1)
  • The initial 2020 objectives have been suspended due to the COVID outbreak
  • Taking into consideration the progressive recovery of our activities since the end of the lockdown our objective is to recover 2019 operational performance in Q4 2020 and to begin 2021 having offset all the remaining COVID consequences
  • The strategic choices included in Impact 2023 remain relevant. Due to the sanitary crisis, their implementation is delayed and the planning will be adapted.

(1)

At constant exchange rates (as of December 2019) and in the absence of a second wave of sanitary crisis in H2 2020

Veolia group is the global leader in optimized resource management. With nearly 179,000 employees worldwide, the Group designs and provides water, waste and energy management solutions which contribute to the sustainable development of communities and industries. Through its three complementary business activities, Veolia helps to develop access to resources, preserve available resources, and to replenish them.

In 2019, the Veolia group supplied 98 million people with drinking water and 67 million people with wastewater service, produced nearly 45 million megawatt hours of energy and treated 50 million metric tons of waste. Veolia Environnement (listed on Paris Euronext: VIE) recorded consolidated revenue of €27.189 billion in 2019 (USD 29.9 billion). 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 Autorités 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.

This document contains "non‐GAAP financial measures". These "non‐GAAP financial measures" might be defined differently from similar financial measures made public by other groups and should not replace GAAP financial measures prepared pursuant to IFRS standards.

Financial Information for the period ended June, 30 2020

A] General context and covid health crisis

In response to the public health crisis facing the world in recent months, Veolia is fully mobilized to ensure continuity of service while protecting the health of its employees, the Group’s two overriding priorities:

  • implementation of business continuity plans, tailored to each country, that primarily aim to maintain the production and delivery of drinking water and the treatment of wastewater;
  • continuation of waste processing activities and particularly waste collection and the operation of waste processing facilities;
  • continuation of energy management businesses, both in its heating networks and at industrial and tertiary sites that continue to operate.

Thanks to the commitment, courage and exemplary dedication of our teams working on the ground, the Group is able to provide communities with essential services on a daily basis.

Until mid-March, the Group’s activities outside Asia were not affected by the crisis.

Since then, the introduction of lockdown measures by countries, as a result of the spread of the epidemic have affected Veolia’s activities to varying degrees: following a low point at the start of the second quarter, the gradually recovery of activity has been confirmed in June with a strong rebound in the majority of regions and activities where the Group operates.

In this context, on April 1, 2020 the Group announced the suspension of its 2020 objectives while launching a ‘Recover and Adapt’ plan to reduce as far as possible the negative impact of the public health crisis on the Group’s 2020 results, as well as an industrial investment reduction program:

  • The reinforcing of the cost savings plan of €200 million increased to €250 million for 2020, with several lines of action focusing on reducing our non-committed discretionary expenses such as (i) the reduction of our general expenses, (ii) purchases including subcontracting (iii) maintenance costs through optimization and delaying expenditure where possible (iv) efforts on personnel costs, for example, through the use of furloughing and a reduction in temporary work. This new cost savings plan is in addition to the annual efficiency program of €250 million;
  • the 2020 investment program will be reduced by €500 million, with increased selectivity, while preparing the Group for a post-crisis rebound; the investment program will therefore decrease from €2.5 billion to €2.0 billion representing a reduction of 20%: delay or cancellation of maintenance investments while giving priority as far as possible to maintaining our discretionary investments;
  • Finally the development of new commercial offers such as disinfection, the treatment of medical waste, digital offers or air quality.

In addition to this plan, the Group also participates in recovery plans and is preparing for all eventualities (including a second wave localized in certain geographies if this scenario materializes). Since mid-May, two additional priorities have been fixed: the first being to accommodate as many employees as possible at their workplace in a manner compatible with health regulations and the second being to return to a normal level of activity for employees for the sectors that have been shut down or that have operated in a reduced way such as works, industrial and tertiary maintenance or sanitation maintenance.

Almost all of the Group’s facilities or activities remained open at the height of the health crisis, although the impact on volumes varies between business lines:

  • Essential municipal services such as drinking water, wastewater, collection and treatment of municipal waste and district heating as well as energy services in hospitals were impacted little with a drop in their usual volumes;
  • Hazardous waste activities were moderately impacted with, notably a high rate of utilization of our incinerators in Europe;
  • Conversely, the industrial and commercial waste activity declined sharply in April following the compulsory closure of a large number of companies and tertiary activity centers such as shopping centers, but recovered strongly from the end of the various lockdowns decided by the different governments. Services on industrial sites and for buildings were also affected when those sites were closed.
  • Lastly, construction activities in France were at a standstill in March and April and slowed elsewhere to varying degrees depending on the region. Activity levels have since gradually increased and were back to normal in June.

As such during the second quarter, the Group’s revenue was reduced overall by -11% compared to the second quarter of 2019 with an important reduction in France (-16.1%) and in global businesses (-20.8%) and with better resistance in Europe excluding France (-6.7%) and the rest of the world (-5.7%), our activities in industrial and commercial waste as well as in construction were strongly impacted. The activity in June saw a strong rebound with revenues representing approximately 96% of revenue for June 2019.

Overall in the first-half, the activity was marked by the impacts of the health crisis on the Group’s operations, notably in China from January, then in Europe and in the other regions such as Latin America from the second-half of March, gradually and in line with the local developments of the pandemic. The performance over the first half confirms the resilient nature of our activities with a more pronounced impact on the industrial waste and works business and a strong recovery since late May / early June.

In this context, the first-half of 2020 was marked by:

  • Revenue of €12,412 million, down -6.1% at constant exchange rates and -5.6% at constant scope and exchange rates. Revenue fell -11% in the second quarter versus -1.3% in the first quarter at constant exchange rates.
  • EBITDA of €1,599 million down -19.2% at constant exchange rates and -17.3% at constant scope and exchange rates. EBITDA fell -33.9% in the second quarter and -5.3% in the first quarter at constant exchange rates.
  • Measures to adapt to the health crisis for €120 million of costs savings at the end of June 2020.
  • Current EBIT of €438 million, down -48.0% at current exchange rates and -43.1% at constant scope and exchange rates. Current EBIT fell -86.9% in the second quarter versus -18.0% in the first quarter at constant exchange rates.
  • Current net income attributable to owners of the Company of €7 million, down -97.7% at current exchange rates; adjusted for changes in capital gains, current net income fell -98.3% at current exchange rates and -85.5% at constant scope and exchange rates. The second quarter fall was -178.2% at constant exchange rates compared with -36.3% in the first quarter.
  • A resilient net Free Cash Flow of -€515 million (versus -€473 million at June 30, 2019). The reduction in the EBITDA being compensated for by net industrial investments down €96 million (€500 million reduction expected in industrial investments for the period 2020 vs. 2019) and a more favorable variation in working capital at -€683 million versus -€908 million for the first-half of 2019.
  • A net financial debt of €11,850 million versus €12,478 million as of 30 June, 2019.

Update on the Group’s liquidity

Faced with an unprecedented crisis, Veolia immediately prioritized the monitoring of its liquidity. This involved the daily monitoring of changes in its cash position and weekly forecasts by Business Unit covering a five week time frame, monitoring of Finance Back Office operations (invoicing, collection, payments, suppliers) and a daily financial market update at the Group level.

The Group’s financing policy is therefore prudent and resilient. Pooled cash is mainly invested in liquid monetary assets, cash UCITS and liquid bank deposits.

The Group’s liquidity position at June 30, 2020 is solid at €12.1 billion and mainly consists of the following:

1 €5.6 billion of pooled cash (including commercial paper with an average residual maturity of 4.1 months totaling €4.6 billion, currently being refinanced);

2 €2.3 billion of cash available in the subsidiaries;

3 Undrawn and available bilateral credit lines totaling €4.2 billion

B] Key Figures

 

 

 

Change 2019 / 2020

(in € million)

Half-year
ended
June 30,
2019
published

Half-year
ended
June 30,
2020

∆ at
constant
exchange
rates

∆ at
constant
scope
and
exchange
rates

Revenue

13,324

12,412

-6.8%

-6.1%

-5.6%

EBITDA

2,002

1,599

-20.1%

-19.2%

-17.3%

EBITDA margin

15.0%

12.9%

 

 

 

Current EBIT (1)

857

438

-49.0%

-48.0%

-43.1%

Current net income – Group share

352

7

-97.9%

-97.7%

-91.1%

Current net income – Group share, excluding capital gains and losses on financial divestitures net of tax

334

6

-98.3%

-98.0%

-85.9%

Net income (loss) – Group share

331

(138)

-141.5%

 

 

Net industrial investments

(969)

(873)

 

 

 

Net free cash flow (2)

(473)

(515)

 

 

 

Net financial debt

12,478

11,850

 

 

 

(1)

Including the share of current net income of joint ventures and associates viewed as core Company activities.

(2)

The indicators are defined in Section 3.10.3 of the 2019 Universal Registration document.

The main foreign exchange impacts were as follows:

FX impacts for the half-year ended
June 30, 2020

%

(in
€ million)

(vs. June 30, 2019 published)

Revenue

-0.8%

(106)

EBITDA

-0.9%

(19)

Current EBIT

-0.9%

(8)

Current net income - Group share

-0.2%

(1)

Net financial debt

1.5%

157

C] Income Statement

  1. GROUP CONSOLIDATED REVENUE

Group consolidated revenue for the half-year ended June 30, 2020 was €12,412.0 million, compared with €13,323.9 million for the same period in 2019, down -6.1% at constant exchange rates and -5.6% organically.

The change in revue by quarter is the following by segment for the second quarter of 2020:

(in € million)

1st Quarter

2020

2nd Quarter

2020

Half-year ended June 30, 2
020

France

-3.1%

-16.1%

-9.7%

Europe excluding France

1.1%

-6.7%

-2.5%

Rest of the world

-1.8%

-5.7%

-3.7%

Global businesses

-3.6%

-20.8%

-12.5%

Group

-1.3%

-11.0%

-6.1%

The second quarter of 2020 is marked by:

  • In France by a resilience in the water activity with a limited impact of the crisis on volumes which remain stable over the first-half of 2020, prices increased by +1.5%, compensated by the drop in works activity; in the waste activity the volumes collected were down strongly in March and April and recovering since May to be close to the levels of June 2019 due to the treatment of waste stocked during the lockdown period;
  • In Europe excluding France, by a reduction in the volumes of industrial waste in Germany, the Netherlands and the United Kingdom. An energy activity down in Southern Europe, Scandinavia and Belgium. Central and Eastern Europe are particularly resistant to the crisis (volumes down slightly in municipal water and energy);
  • In the rest of the world by a moderate impact of the health crisis: North America revenue down -3.9% at constant scope and exchange rate, that if Latin America down -0.5% at constant exchange rates, that of the Pacific zone -2.6% at constant exchange rates, whilst Asia saw its revenue increase +2.4% at constant exchange rates;
  • In Global businesses by a decrease due to the stoppage of works in France and the reduction in the volumes of hazardous waste. After having touched its lowest point of activity at the end of April the zone recorded at the end of June an almost normal recovery of its volume of activity (~90%);

Overall, the change in revenue compared with the half-year ended June 30, 2019 breaks down as follows:

 

 

 

Change 2019 / 2020

(in € million)

Half-year
ended
June 30,
2019
published

Half-year
ended
June 30,
2020

∆ at
constant
exchange
rates

∆ at
constant
scope
and
exchange
rates

France

2,759.2

2,490.6

-9.7%

-9.7%

-9.7%

Europe excluding France

4,789.3

4,623.7

-3.5%

-2.5%

-2.8%

Rest of the world

3,495.9

3,308.0

-5.4%

-3.7%

-1.1%

Global businesses

2,275.7

1,988.5

-12.6%

-12.5%

-13.1%

Other

3.7

1.2

-68.0%

-

-

Group

13,323.9

12,412.0

-6.8%

-6.1%

-5.6%

  • Revenue decreased -9.7% in France at constant scope compared with the half-year ended June 30, 2019; Water revenue fell -6.4%, while Waste revenue dropped -13.4% at constant scope.
  • Water revenue is down -6.4% year-on-year, with a significant slowdown in construction activity (-3.7%, virtual stoppage during the lockdown period up until the recovery in June), with the activity slump generated by the health crisis partially offset by higher tariff indexation (+1.5% in 2020).
  • Waste revenue declined -13.4% at constant scope year-on-year, with a fall in the price of recycled materials (price effect of -€19 million and volume effect of -€16 million for paper and cardboard) and a drop in volumes linked to the health crisis in industrial waste collection (-18%), municipal collection (-6%) and landfill activity (-16%), partially offset by higher incineration volumes (+4%) and tariff rises in the first quarter.
  • Europe excluding France declined -2.5% at constant exchange rates compared with the half-year ended June 30, 2019, with varying trends across the regions:
  • In the United Kingdom/Ireland, revenue fell -5.8% at constant exchange rates to €1,072.2 million following a drop in landfill volumes (-8%) compensated by a high rate of availability of the incinerators (95.7%), a downturn in municipal collection contracts (end of multiple contracts) and a slowdown in commercial activity in the second quarter.
  • In Central and Eastern Europe, revenue totaled €1,677.3 million, up +0.7% at constant exchange rates year-on-year and +1% excluding the unfavorable weather impact of -€5.8 million. This growth was mainly driven by:
    • higher tariffs in Energy;
    • increased construction activity (+0.7%) in Romania (favorable weather conditions) and the Czech Republic (maintenance work on the Prague wastewater treatment plant);
    • in Water: higher tariffs in the Czech Republic (annual indexation) and Bulgaria, partially absorbed by lower volumes, particularly in the Czech Republic following a slowdown in tourism in Prague;
  • In Northern Europe, revenue fell -4.9% at constant exchange rates compared with the half-year ended June 30, 2019 to €1,303.8 million, mainly due to:
    • a drop in industrial activity in Sweden (closure of Volvo sites due to the COVID-19 health crisis) and the Netherlands (lower plastic volumes), as well as reduced recycling activity across the region.
    • a -1.9% decline in revenue in Germany (main revenue contributor: €915 million for the half-year). In the Waste business, after a reduction at the end of the first quarter due to the lockdown a recovery in the volumes is observed at the end of the second quarter as well as an increase in prices which are unable to compensate for the strong decline in the sale price of paper.
  • Decline of -3.7% year-on-year in the Rest of the world at constant exchange rates and of -1.1% at constant scope and exchange rates:
  • Revenue in Asia increased by +4.7% at constant exchange rates, mainly due to continued strong growth in China, Hong-Kong and Taiwan, where revenue increased to €568 million, driven:

- in Hong-Kong (+51% at constant exchange rates), by the integration of Southa’s activities (energy services for buildings, +€30.4 million) and the construction of an extension at the Green Valley landfill site;

- in China (-1.6% at constant exchange rates year-on-year), by an increase in energy (impact of the 2019 acquisitions of Yibin and Kedong Heating, network extensions and higher heating tariffs for the Harbin network) and waste (Huafei plastic business) activities and a fall in industrial service activities;

- in Japan (+8.8% at constant exchange rates), by an increase in Municipal Water revenue due to organic growth in O&M activities and a good performance in industrial EPC activity generated by the Lithium (+€13 million) and Hiroshima EPC projects.

  • Revenue fell -1.6% in North America at constant scope and exchange rates to €882 million (scope impact tied to the divestiture of heating networks in the United States of €184 million as of June 30, 2019), marked by lower waste volumes in Canada and a drop in industrial water activity, which offset the progression in the hazardous waste business.
  • The Pacific zone reported a -0.5% decline in revenue for the half-year ended June 30, 2020 at constant exchange rates, despite improved industrial services and hazardous waste activities and contract wins in New Zealand, that were unable to offset the end of the water works activity in Australia.
  • Revenue growth in Latin America (+5.8% at constant exchange rates), driven mainly by tariff increases in Argentina (tied to inflation), the start-up of new contracts in Peru and scope impacts (Stericycle in Chile, Gadere in Ecuador and Entorno in Colombia - impact of +€3 million).
  • Africa/Middle East declined -1% at constant exchange rates: the decrease in volumes and construction work in Morocco (-7.1% at constant exchange rates) is offset by the impact of the South African activities acquired in 2019.
  • Global businesses: revenue fell -12.5% at constant exchange rates compared to June 30, 2019:
  • Hazardous waste activities in Europe have been relatively resilient since the end of lockdown but report a drop of -12.8% at constant exchange rates at the end of June. Incineration activities were strong with volumes varying between sectors (the pharmaceutical, food and chemical sectors being less impacted by the health crisis), while positive commercial impacts which compensate a decrease in landfill volumes and decontamination, heavily impacted by the shutdown of construction and public works sites;
  • Veolia Water Technologies revenue declined -1.2% at constant exchange rates year-on-year following a slowdown in activity tied to the health crisis, offset by the ramp-up of desalination plant construction contracts won in 2019 (All Dur II, Um Al Quwain and Rabigh 3). The revenue of the Sade fell by -18.3% at constant exchange rates due to the near total stoppage of construction sites in France between March 17 and May 11. Over the month of June the activity rate of the Sade was recovered to 100%.

The increase in revenue between June 2019 and June 2020 breaks down by main impact as follows

The foreign exchange impact on revenue was -€106 million (-0.8% of revenue) and mainly reflects fluctuations in the U.S. dollar (+€24.5 million), the Argentine peso (-€38.1 million), the Australian dollar (-€23.7 million), the Polish zloty (-€16.6 million), the Czech crown (-€13.3 million), the Hungarian forint (-€12.4 million) and the Brazilian real (-€15.5 million).

The consolidation scope impact of -€65 million mainly reflects:

  • operations in 2019: sale of heating networks in the United States (-€184.3 million) and the acquisition of Southa in Hong Kong (+€30.4 million), sludge treatment assets in Germany (+€10.7 million), and Stericycle hazardous waste activities in Chile (+€10.9 million);
  • operations in 2020, including the acquisition of Torrepet in Spain for €11.6 million and Alcoa assets (hazardous waste) in the United States for +€6.4 million.

Energy and recyclate prices had an impact of -€73 million, with notably a decrease in the price of recycled materials (-0.7%, or -€98 million of which -€63 million due to decrease in paper and cardboard prices) and an increase in energy process (principally in Central and Eastern Europe).

The Commerce effect (Volume/works) was -€813 million including notably the effect of Covid for all of the first-half of the year.

Favorable price effects (+€143 million) are tied to positive tariff indexation in water in France (+1.5%) and Central and Eastern Europe and in waste in France, the United Kingdom, Northern Europe and Latin America.

By business, the change in revenue compared with June 30, 2019 breaks down as follows:

 

 

 

Change 2019 / 2020

(in € million)

Half-year
ended
June 30,
2019
published

Half-year
ended
June 30,
2020

∆ at
constant
exchange
rates

∆ at
constant
scope
and
exchange
rates

Water

5,342.1

5,095.8

-4.6%

-4.4%

-5.0%

of which Water Operations

4,009.7

3,896.4

-2.8%

-2.7%

-3.3%

of which Technology and Construction

1,332.4

1,199.4

-10.0%

-9.6%

-10.2%

Waste

5,036.7

4,667.8

-7.3%

-6.2%

-7.4%

Energy

2,945.1

2,648.4

-10.1%

-8.7%

-3.4%

Group

13,323.9

12,412.0

-6.8%

-6.1%

-5.6%

Water

Waste Operations revenue decreased -2.7% at constant exchange rates compared with June 30, 2019, reflecting:

■ In France: a -6.4% fall in revenue mainly due to construction site stoppages (-3.7%), stable volumes and increased tariff indexation (+1.5%);

■ In Central and Eastern Europe: -2.4% reduction in volumes (Czech Republic due to reduced tourism in Prague) compensated by a favorable price indexation +2.6% (Czech Republic and Bulgaria);

Technology and Construction revenue declined -9.6% at constant exchange rates compared with June 30, 2019, this decrease is explained by:

■ VWT revenue of €665 million (-1.2% at constant exchange rates), due to desalination projects won in 2019 and commenced in the first quarter of 2020;

  • a limited COVID-19;
  • a more resilient Technology & Services activity;

■ Sade revenues of €534 million, down -18.3% at constant exchange rates, consequences of construction projects in France being at a standstill during the lockdown period.

Waste

Waste revenue is down -6.2% at constant exchange rates compared with June 30, 2019.

A commerce and volume effect of -8.4%, strongly impacted by the effects of the health crisis on the second quarter primarily in France, Germany and in Asia (notably on industrial and commercial waste activities);

■ A positive price effect of +2.2% mainly in France, the UK, Germany and Latin America, partially offset by the fall in recycled paper and cardboard prices (-1.9%).

Energy

Energy revenue fell -8.7% at constant exchange rates compared with June 30, 2019 (-3.4% at constant scope and exchange rates), mainly due to:

■ A scope effect of -€156 million mainly due to the disposal of heating network activities in the United States in 2019;

■ A negative weather effect of -€3 million (-0.1%) notably in Central and Eastern Europe;

■ A positive price effect of +1.0% with higher heat and electricity prices in Central and Eastern Europe.

■ A reduction in volumes (-3.3%) principally in Central Europe, France, Spain and Italy.

2. EBITDA

Group consolidated EBITDA for the half-year ended June 30, 2020 was €1,599.0 million, down -19.2% at constant exchange rates compared with June 30, 2019. The margin rate was down to 12.9% in June 2020, compared with 15.0% as of June 30, 2019.

The increase in EBITDA between 2019 and 2020 breaks down by impact as follows

The foreign exchange impact on EBITDA was -€19 million and mainly reflects fluctuations in the U.S. Dollar (+€2.1 million), the Argentinian Peso (-€3.4 million), the Australian dollar (-€2.7 million), the Colombian peso (-€2.3 million), the Hungarian forint (-€1.8 million) and the Japanese yen (+€0.9 million).

The consolidation scope impact of -€37 million mainly reflects operations completed in 2019 and particularly the divestiture of heating network activities in the United States (-€45.4 million) and the acquisition of Stericycle activities in Chile (+€2 million), as well as the acquisition of the Yibin (+€1.3 million) and Kedong (+€1 million) heating networks in China, but also some developments in 2020, including the integration of Torrepet assets in Spain (+€2.2 million).

Unfavorable commerce and volume impacts totaled -€431 million and include the Covid impacts partially offset by the introduction of a ‘recover & adapt plan’, the realization of which has made it possible to achieve additional savings to operating costs.

The weather impact was -€4 million (-€6 million at June 30, 2019), notably due to unfavorable weather conditions in Central and Eastern Europe and Asia.

Energy and recyclate prices had a positive impact on EBITDA and represent a marked improvement on 2019: +€25 million (versus -€14 million at June 30, 2019) including +€47 million in energy and -€22 million in recyclates, with a significant increase in the price of energy sold in Central and Eastern Europe (+€43 million mainly in Poland with higher heating prices), partially offset by a -€15 million drop in Italy resulting from the fall in the price of gas (-20%) and electricity (-18%) in connection with the health crisis.

The impact of prices net of inflation is -€69 million.

Cost savings plans contributed +€131 million, which integrates into an annual cost savings plan of €250 million for the period 2020. These savings mainly concern operating efficiency (56%) and purchasing (33%) and were achieved across all geographic zones: France (26%), Europe excluding France (34%), Rest of the world (27%), Global businesses (11%) and Corporate (2%).

3. CURRENT EBIT

Group consolidated current EBIT for the half-year ended June 30, 2020 was €437.5 million, down -48.0% at constant exchange rates year-on-year.

EBITDA reconciles with Current EBIT for the half-years ended June 30, 2020 and June 30, 2019 as follows:

(in € million)

Half-year ended
June 30, 2019
published

Half-year ended
June 30, 2020

EBITDA

2,001.9

1,599.0

Renewal expenses(*)

(138.9)

(132.3)

Depreciation and amortization (**)

(1,073.3)

(1,053.7)

Provisions, fair value adjustments & other(*)

11.3

(15.6)

Share of current net income of joint ventures and associates

56.3

40.1

Current EBIT

857.3

437.5

(*) Including renewal expenses of €102.5 million and €29.8 million for provisions for contractual commitments.

(**) Including principal payments on operating financial assets (OFA) of -€66 million for the half-year ended June 30, 2020 (compared with -€76 million for the half-year ended June 30, 2019.)

The decline in the Current EBIT at constant exchange rates reflects:

  • a decrease in EBITDA;
  • slightly lower depreciation and amortization charges compared with June 2019;
  • an increase in operating provisions;
  • a decrease in the contribution of associates, notably the water concessions in China (-€9 million) as a result of the health crisis with an impact on volumes essentially on the first quarter.

The foreign exchange impact on Current EBIT was -€7.9 million and mainly reflects fluctuations in the Argentine peso (-€1.5 million), the Polish zloty (-€2.2 million), the Czech crown (-€1.8 million), the Hungarian forint (-€1.1 million) and the Colombian peso (-€1.1 million).

Selling, general and administrative expenses

Selling, general and administrative expenses impacting Current EBIT decreased 4% (current basis) from €1,392.6 million for the half-year ended June 30, 2019 to €1,336.7 million for the half-year ended June 30, 2020. The ratio of selling, general and administrative expenses to revenue increased slightly from 10.5% in the half-year ended June 30, 2019 re-presented to 10.8% in the half-year ended June 30, 2020 due to the marked drop in revenue (-6.8%).

4. NET FINANCIAL EXPENSE

The cost of net financial debt is down and totaled -€215.6 million for the half-year ended June 30, 2020, compared with -€222.5 million for the half-year ended June 30, 2019 due to:

- a decrease in the total cost of debt tied to the more favorable financing conditions of the euro-denominated bond issues performed in 2019 and 2020,

- a decline in investment remuneration combined with higher average commercial paper volumes in Q1 2020 compared with the first-half of 2019.

The financing rate was therefore 4.04% at June 30, 2020, compared with 3.88% at June 30, 2019.

Other financial income and expenses totaled -€84.2 million for the half-year ended June 30, 2020, compared with -€90.6 million for the half-year ended June 30, 2019.

These expenses include mainly the interest on concession liabilities (IFRIC 12) of -€39.8 million, interest on the right of use (IFRS 16) of -€17.7 million and the unwinding of discounts on provisions of -€11.1 million.

Gains on financial divestitures recognized in the first-half of 2020 totaled +€0.2 million, compared with +€18.3 million for the half-year ended June 30, 2019.

5. INCOME TAX EXPENSE

The current income tax expense for the half-year ended June 30, 2020 amounted to -€63.4 million, compared with -€121 million for the half-year ended June 30, 2019.

The current income tax rate for the half-year ended June 30, 2020 increased to 64.9% (versus 23.9% in H1 2019).

(in € million)

Half-year ended
June 30, 2019
published

Half-year ended
June 30, 2020

Current income before tax (a)

562.5

138.0

of which share of net income of joint ventures & associates (b)

56.3

40.1

Re-presented current income before tax: (c)= (a)-(b)

506.2

97.9

Re-presented tax expense (d)

(121.0)

(63.4)

Re-presented tax rate on current income (d)/(c)

23.9%

64.9%

The change to the current tax rate is due to the geographical mix and the negative net income before tax in regions without recognition of deferred tax assets.

6. CURRENT NET INCOME / NET INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY

Current net income

Current net income attributable to owners of the Company was €7.4 million for the half-year ended June 30, 2020, compared with €352.4 million for the half-year ended June 30, 2019.

Excluding capital gains and losses on financial divestitures net of tax and minority interests, current net income attributable to owners of the Company decreased from €333.7 million in H1 2019 to €5.6 million in H1 2020, due to the negative impact of COVID-19 on the Group's financial statements for the half-year ended June 30, 2020.

NET INCOME

Net income attributable to owners of the Company was -€138 million for the half-year ended June 30, 2020, compared with €331 million for the half-year ended June 30, 2019.

Net income attributable to owners of the Company per share was -€0.25 (basic) and -€0.25 (diluted) for the half-year ended June 30, 2020, compared with €0.60 (basic) and €0.57 (diluted) for the half-year ended June 30, 2019.

Current net income (loss) / Net income (loss) attributable to owners of the Company

The share of net income attributable to non-controlling interests totaled €66.3 million for the half-year ended June 30, 2020, compared with €88.1 million for the half-year ended June 30, 2019.

Net income attributable to owners of the Company was -€138 million for the half-year ended June 30, 2020, compared with €331 million for the half-year ended June 30, 2019.

Current net income attributable to owners of the Company was €7 million for the half-year ended June 30, 2020, compared with €352 million for the half-year ended June 30, 2019.

Net income attributable to owners of the Company per share for the half-year ended June 30, 2020 was -€0.25 (basic) and -€0.25 (diluted) compared with €0.60 (basic) and €0.57 (diluted), for the half-year ended June 30, 2019.

Current net income attributable to owners of the Company per share was €0.01 (basic) and €0.01 (diluted) for the half-year ended June 30, 2020, compared with €0.64 (basic) and €0.61 (diluted) for the half-year ended June 30, 2019.

As of June 30, 2020 the weighted average number of shares outstanding was 554,541,074. The instruments (principally related to the OCEANE convertible bonds issued on September 12, 2019) are excluded from the calculation of diluted net income per share as they are anti-dilutive.

Net income (loss) attributable to owners of the Company for the half-year ended June 30, 2020 breaks down as follows:

(in € million)

Current

Non-current

Total

EBIT

437.5

(145.1)

292.5

Cost of net financial debt

(215.6)

-

(215.6)

Other financial income and expenses

(84.0)

-

(84.0)

Pre-tax net income (loss)

138.0

(145.1)

(7.1)

Income tax expense

(63.4)

8.3

(55.2)

Net income (loss) of other equity-accounted entities

-

-

-

Net income (loss) from discontinued operations

-

(9.0)

(9.0)

Net (income) loss attributable to non-controlling interests

(67.0)

0.8

(66.3)

Net income (loss) attributable to owners of the Company

7.4

(145.0)

(137.6)

Net income (loss) attributable to owners of the Company for the half-year ended June 30, 2019 breaks down as follows:

(in € million)

Current

Non-current

Total

EBIT

857.3

(60.9)

796.4

Cost of net financial debt

(222.5)

-

(222.5)

Other financial income and expenses

(72.3)

32.7

(39.6)

Pre-tax net income (loss)

562.5

(28.2)

534.3

Income tax expense

(121.0)

22.2

(98.8)

Net income (loss) of other equity-accounted entities

-

-

-

Net income (loss) from discontinued operations

-

(15.9)

(15.9)

Net (income) loss attributable to non-controlling interests

(89.0)

0.9

(88.1)

Net income (loss) attributable to owners of the Company

352.4

(21.0)

331.4

Current EBIT reconciles with operating income, as shown in the income statement, as follows:

(in € million)

Half-year ended
June 30, 2019
published

Half-year ended
June 30, 2020

Current EBIT

857.3

437.5

Impairment losses on goodwill and negative goodwill

-

(44.2)

Net charges to non-current provisions

15.4

21.4

Restructuring costs

(20.9)

(23.4)

Non-current impairment losses on WCR

(0.2)

-

Personnel costs - share-based payments

(8.8)

(2.2)

Non-current provisions and impairment of property, plant and equipment, intangible assets, operating financial assets and other

(44.9)

(92.7)

Share acquisition costs, with or without acquisition of control

(1.6)

(4.0)

Total non-current items

(60.9)

(145.1)

Operating income after share of net income of equity-accounted entities

796.4

292.5

The impairment of goodwill principally concerns the non-current depreciation in Latin America for -€44.3 million.

Restructuring charges for the half-year ended June 30, 2020 mainly concern Veolia Water Technologies for

-€11 million and France RVD for -€4 million. The impact of restructuring in Water France is €1.1 million at the operating income level, as incurred costs are partially offset by equivalent provision reversals.

The non-current provisions and impairments of property, plant and equipment, intangible assets, operating non-financial assets and other non-current expenses primarily concern:

- specific costs dedicated to the current health crisis beyond the usual costs of equipment and individual protection of our employees, not only by the extent of the consumption but also the unit costs of this equipment including logistical costs during the period of April and May (-€33 million).

- Non-current impairment of intangible assets (notably Morocco and Latin America) for a total of -€53 million.

D] Changes in free cash flow and net financial debt

The following table summarizes the change in net financial debt and net free cash flow:

(in € million)

Year ended
June 30, 2019

Year ended
June 30, 2020

EBITDA

2 002

1 599

Net industrial investments

(969)

(873)

Change in operating WCR

(908)

(683)

Dividends received from equity-accounted entities and joint ventures

61

53

Renewal expenses

(139)

(103)

Other non-current expenses and restructuring charges

(73)

(97)

Interest on concession liabilities

(40)

(40)

Interest on IFRS 16 lease liabilities

(23)

(18)

Financial items (current cash financial expense, and operating cash flow from financing activities)

(242)

(215)

Taxes paid

(142)

(140)

Net free cash flow before dividend payment, financial investments and financial divestitures

(473)

(515)

Dividends paid

(620)

(347)

Net financial investments

(116)

(370)

Change in receivables and other financial assets

(45)

(68)

Issue / repayment of deeply subordinated securities

0

0

Proceeds on issue of shares

0

-6

Free cash-flow

(1 022)

(1 306)

Effect of foreign exchange rate movements and other

31

136

 

Change

(991)

(1 170)

Opening net financial debt

(11 487)

(10 680)

Closing net financial debt

(12 478)

(11 850)

Net free cash flow -€514.9 million for the half-year ended June 30, 2020 (versus -€472.6 million for the half-year ended June 30, 2019).

The change in net free cash flow compared with the half-year ended June 30, 2019 reflects:

  • a decline in EBITDA
  • lower net industrial investments, down -10% compared with June 30, 2019 and including:
    • net maintenance investments of €408 million (3.1% of revenue)
    • growth investments in the current portfolio of €337 million (€316 million in the first-half of 2019)
    • discretionary investments of €128 million, down €159 million compared with the first-half of 2019.
  • A change in operating working capital of -€683.3 million, an improvement of €224 million versus 2019 .

Overall, net financial debt amounted to €11,849.9 million, compared with €12,477.6 million as of June 30, 2019.

In addition to the change in net free cash flow, net financial debt comprises financial investments (including acquisition costs and the net financial debt of new entities) of €370 million.

Net financial debt was also impacted by positive exchange rate fluctuations of €157 million as of June 30, 2020 compared with December 31, 2019, primarily in the Polish zloty (€36 million), the pound sterling (€32 million), the Australian dollar (€27 million), the Brazilian real (€22 million), the Chinese renminbi (€16 million) and the Czech crown (€12 million), offsetting the depreciation of the US dollar (-€18 million).

  1. INDUSTRIAL AND FINANCIAL INVESTMENTS

1.1 Industrial investments

Total Group gross industrial investments, including new operating financial assets, amounted to -€962 million for the half-year ended June 30, 2020, compared with -€1 005 million for the half-year ended June 30, 2019.

Industrial investments, excluding discontinued operations, break down by segment as follows:

Half-year ended June 30, 2020 (in € million)

Maintenance
and
contractual
requirements (1)

Discretionary
growth

Total gross
industrial
investments (2)

Industrial
divestitures

Total net
industrial
investments

France

194

19

213

(18)

195

Europe excluding France

332

32

364

(32)

332

Rest of the world

211

71

282

(16)

266

Global businesses

84

6

90

(23)

67

Other

13

0

13

0

13

Group

834

128

962

(89)

873

(1)

Including maintenance investments of €497 million (including IFRS16 leases) and contractual investments of €336 million.

(2)

Including new OFA in the amount of -€60 million.

Half-year ended June 30, 2019 published
(in € million)

Maintenance
and
contractual
requirements (1)

Discretionary
growth

Total gross
industrial
investments (2)

Industrial
divestitures

Total net
industrial
investments

France

225

4

229

(22)

207

Europe excluding France

279

51

330

(23)

307

Rest of the world

233

97

330

20

350

Global businesses

95

7

102

(11)

91

Other

14

0

14

(0)

14

Group

846

159

1,005

(36)

969

(1)

Including maintenance investments of €530 million, and contractual investments of €316 million.

(2)

including new OFA in the amount of -€71 million.

1.2 Financial investments and divestitures

Financial investments amounted to -€368 million in the half-year ended June 30, 2020 (including acquisition costs and net financial debt of new entities) and mainly included the impacts of the acquisition of Alcoa assets in the United States (€231 million) and Nagpur minority interests in India (€113 million), as well as the acquisition of shares in Torrepet which specializes in plastic recycling in Spain (€26 million).

At end-June 2019, financial investments amounted to -€264 million and included the impacts of the acquisition of Levice in Slovakia (€71 million) and Renascimento in Portugal (€38 million) as well as the acquisition of 66% of shares in Huafei which specializes in plastic recycling in China (€22 million).

Financial divestitures totaled -€2 million for the half-year ended June 30, 2020 (including disposal costs) and primarily concerned the sale of Foshan medical activities in China for €14 million.

At end-June 2019, financial divestitures (€381 million) concerned the sale of Transdev Group for €334 million and the sale of the investment in Foshan’s landfill site in China (€26 million).

2. OPERATING WORKING CAPITAL

The change in operating working capital requirements (excluding discontinued operations) was -€683 million for the half-year ended June 30, 2020, compared with re-presented -€908 million for the half-year ended June 30, 2019.

The change in operating working capital requirements compared with December 31, 2019 is mainly due to seasonal effects.

3. EXTERNAL FINANCING

3.1 Structure of net financial debt

As of June 30, 2020, net financial debt after hedging is entirely at fixed rates.

The average maturity of bond debt was 7.5 years as of June 30, 2020, compared with 7.2 years as of June 30, 2019 and 6.9 years as of 31 December, 2019.

(in € million)

As of June 30,
2019 published

As of June 30,
2020

Non-current borrowings

11,722

11,995

Current borrowings

4,753

7,580

Bank overdrafts and other cash position items

333

269

Sub-total borrowings

16,808

19,844

Cash and cash equivalents

(3,836)

(7,111)

Fair value gains (losses) on hedge derivatives

(29)

(58)

Liquid assets and financing-related assets

(467)

(825)

Net financial debt

12,478

11,850

3.2 Group liquidity position

Liquid assets of the Group as of June 30, 2020 break down as follows:

(in € million)

As of
December
2019

As of
June 30,
2020

Veolia Environnement:

 

 

Undrawn syndicated loan facility

3,000.0

3,000.0

Undrawn MT bilateral credit lines

1,000

1,000.0

Undrawn ST bilateral credit lines

100.0

100.0

Letters of credit facility

87.0

93.0

Cash and cash equivalents (1)

5,092.6

6,664.9

Subsidiaries:

 

 

Cash and cash equivalents (1)

1,218.4

1,270.9

Total liquid assets

10,497.8

12,128.8

Current debt and bank overdrafts and other cash position items

 

 

Current debt

5,909.5

7,580.0

Bank overdrafts and other cash position items

302.2

269.2

Total current debt and bank overdrafts and other cash position items

6,211.7

7,849.2

Total liquid assets net of current debt and bank overdrafts and other cash position items

4,286.1

4,279.6

(1)

Including liquid assets and assets linked to financing included in net financial debt

APPENDIX

RECONCILIATION OF GAAP INDICATORS AND THE INDICATORS USED BY THE GROUP

The reconciliation of Current EBIT with operating income, as shown in the income statement, is presented in Section C. Likewise, the reconciliation of current net income with net income attributable to owners of the Company, as shown in the income statement, is presented in Section C.

The reconciliation of Net cash from operating activities of continuing operations (included in the Consolidated Cash Flow Statement) with net free cash flow is as follows:

(in € million)

Half-year
ended
June 30, 2019
published

Half-year
ended
June 30, 2020

Net cash from operating activities of continuing operations

558.4

440.0

Plus:

0.0

0.0

Industrial investments, net of grants

(672.6)

(604.1)

Proceeds on disposal of industrial assets

36.6

89.5

New operating financial assets

(70.5)

(59.8)

Principal payments on operating financial assets

102.2

65.7

New finance lease debt

(210.3)

(234.4)

Dividends received

61.0

53.4

Net financial interest

(292.6)

(275.5)

Less:

 

 

Acquisition and selling costs on securities, and other

15.1

10.3

Net free cash flow

(472.7)

(514.9)

The reconciliation of Industrial investments, net of grants (included in the Consolidated Cash Flow Statement) with industrial investments as follows:

(in € million)

Half-year ended
June 30, 2019
published

Half-year ended
June 30, 2020

Industrial investments, net of grants

(672.6)

(604.1)

New finance lease debt

(202.3)

(234.4)

Change in concession working capital requirements

(51.8)

(63.2)

New operating financial assets

(70.5)

(59.8)

Industrial investments

(997.2)

(961.5)

CONSOLIDATED INCOME STATEMENT

(in € million)

Half-year ended
June 30, 2019

Half-year ended
June 30, 2020

Revenue

13,323.9

12,412.0

Cost of sales

(11,134.5)

(10,717.8)

Selling costs

(305.6)

(279.3)

General and administrative expenses

(1,089.6)

(1,059.0)

Other operating revenue and expenses

(54.1)

(103.5)

Operating income before share of net income (loss) of equity-accounted entities

740.1

252.3

Share of net income (loss) of equity-accounted entities

56.3

40.1

o/w share of net income (loss) of joint ventures

37.8

27.9

o/w share of net income (loss) of associates

18.5

12.2

Operating income after share of net income (loss) of equity-accounted entities

796.4

292.5

Cost of net financial debt

(222.5)

(215.6)

Other financial income and expenses

(39.6)

(84.0)

Pre-tax net income (loss)

534.3

(7.1)

Income tax expense

(98.9)

(55.2)

Share of net income (loss) of other equity-accounted entities

-

-

Net income (loss) from continuing operations

435.4

(62.3)

Net income (loss) from discontinued operations

(15.9)

(9.0)

Net income (loss) for the period

419.5

(71.3)

Attributable to owners of the Company

331.4

(137.6)

Attributable to non-controlling interests

88.1

66.3

NET INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE COMPANY PER SHARE

 

 

Basic

0.60

(0.25)

Diluted

0.57

(0.25 )

NET INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO OWNERS OF THE COMPANY PER SHARE

 

 

Basic

0.63

(0.23)

Diluted

0.60

(0.23)

NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO OWNERS OF THE COMPANY PER SHARE

 

 

Basic

(0.03)

(0.02)

Diluted

(0.03)

(0.02)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION - ASSETS

(in € million)

As of
December 31, 2019

As of
June 30, 2020

Goodwill

5,128.0

5,257.0

Concession intangible assets

3,517.4

3,546.2

Other intangible assets

1,372.6

1,319.7

Property, plant and equipment

7,679.8

7,416.3

Right of use (net)

1,664.6

1,578.5

Investments in joint ventures

1,497.7

1,460.2

Investments in associates

382.5

351.3

Non-consolidated investments

52.4

52.1

Non-current operating financial assets

1,431.2

1,332.9

Non-current derivative instruments - Assets

39.0

56.4

Other non-current financial assets

374.6

459.2

Deferred tax assets

952.9

968.3

Non-current assets

24,092.7

23,800.6

Inventories and work-in-progress

792.0

800.0

Operating receivables

9,341.7

9,112.4

Current operating financial assets

86.0

86.3

Other current financial assets

738.5

1,098.2

Current derivative instruments - Assets

91.5

133.2

Cash and cash equivalents

5,843.3

7,110.6

Assets classified as held for sale

33.3

105.3

Current assets

16,926.3

18,446.0

TOTAL ASSETS

41,019.0

42,246.6

CONSOLIDATED STATEMENT OF FINANCIAL POSITION - EQUITY AND LIABILITIES

(in € million)

As of
December 31, 2019

As of
June 30, 2020

Share capital

2,836.3

2,836.3

Additional paid-in capital

7,197.9

7,197.9

Reserves and retained earnings attributable to owners of the Company

(4,100.5)

(4,741.4)

Total equity attributable to owners of the Company

5,933.7

5,261.2

Total equity attributable to non-controlling interests

1,144.7

1,108.9

Shareholders’ equity

7,078.4

6,401.6

Non-current provisions

1,848.7

1,837.9

Non-current borrowings

9,366.8

10,640.7

Non-current lease debt (IFRS 16)

1,417.9

1,354.4

Non-current derivative instruments - Liabilities

52.4

61.9

Concession liabilities - non-current

1,421.7

1,478.5

Deferred tax liabilities

984.4

961.5

Non-current liabilities

15,091.9

16,335.0

Operating payables

11,753.6

10,774.8

Concession liabilities - current

128.3

137.6

Current provisions

539.1

568.2

Current borrowings

5,443.7

7,167.9

Current lease debt (IFRS 16)

465.7

412.1

Current derivative instruments - Liabilities

197.8

113.7

Bank overdrafts and other cash position items

302.2

187.5

Liabilities directly associated with assets classified as held for sale

18.3

64.1

Current liabilities

18,848.7

19,425.8

TOTAL EQUITY AND LIABILITIES

41,019.0

42,162.4

CONSOLIDATED CASH-FLOW STATEMENT

(in € million)

Half-year ended
June 30, 2019

Half-year ended
June 30, 2020

Net income (loss) for the period

419.5

(71.3)

Net income (loss) from continuing operations

435.4

(62.3)

Net income (loss) from discontinued operations

(15.9)

(9.0)

Operating depreciation, amortization, provisions and impairment losses

943.3

1,078.3

Financial amortization and impairment losses

(0.3)

13.1

Gains (losses) on disposal of operating assets

(0.8)

3.0

Gains (losses) on disposal of financial assets

(59.1)

(16.0)

Share of net income (loss) of joint ventures

(37.8)

(27.9)

Share of net income (loss) of associates

(18.5)

(12.2)

Dividends received

(1.0)

(0.9)

Cost of net financial debt

222.5

215.6

Income tax expense

98.8

55.2

Other items

77.6

80.5

Operating cash flow before changes in working capital

1,660.2

1,326.4

Change in operating working capital requirements

(907.5)

(683.3)

Change in concession working capital requirements

(51.8)

(63.2)

Income taxes paid

(142.4)

(139.9)

Net cash from operating activities of continuing operations

558.4

440.0

Net cash from operating activities of discontinued operations

(24.4)

(24.7)

Net cash from operating activities

534.1

415.3

Industrial investments, net of grants

(672.6)

(604.1)

Proceeds on disposal of industrial assets

36.7

89.5

Purchases of investments

(194.6)

(375.1)

Proceeds on disposal of financial assets

377.7

46.2

Operating financial assets

-

-

New operating financial assets

(70.5)

(59.8)

Principal payments on operating financial assets

102.2

65.7

Dividends received (including dividends received from joint ventures and associates)

61.0

53.4

New non-current loans granted

(78.6)

(136.5)

Principal payments on non-current loans

55.5

80.3

Net decrease/increase in current loans

(21.9)

(11.9)

Net cash used in investing activities of continuing operations

(405.1)

(852.3)

Net cash used in investing activities of discontinued operations

-

(0.6)

Net cash used in investing activities

(405.1)

(852.9)

Net increase (decrease) in current borrowings

(291.5)

1,097.8

CONSOLIDATED CASH-FLOW STATEMENT (CONTINUED)

(in € million)

Half-year ended
June 30, 2019

Half-year ended
June 30, 2020

Repayment of current lease debt (IFRS 16)

(226.2)

(243.7)

Other changes in non-current lease debt (IFRS 16)

(39.3)

(61.1)

New non-current borrowings and other debts

830.5

1,996.8

Principal payments on non-current borrowings and other debts

(30.0)

(29.2)

Change in liquid assets and financing financial assets

(273.8)

(359.1)

Proceeds on issue of shares

2.1

1.0

Share capital reduction

-

-

Transactions with non-controlling interests: partial purchases

(2.5)

(3.8)

Transactions with non-controlling interests: partial sales

8.4

0.2

Proceeds on issue of deeply subordinated securities

-

-

Coupons on deeply subordinated securities

-

-

Purchases of/proceeds from treasury shares

(0.1)

(6.4)

Dividends paid

(620.4)

(346.4)

Interest paid

(229.8)

(218.0)

Interest on operating assets (IFRIC 12)

(40.3)

(39.8)

Interest on lease debt (IFRS 16)*

(22.8)

(17.8)

Net cash from (used in) financing activities of continuing operations

(974.4)

1,770.5

Net cash from (used in) financing activities of discontinued operations

-

(2.0)

Net cash from (used in) financing activities

(974.4)

1,768.5

Effect of foreign exchange rate changes and other

5.9

(30.6)

Increase (decrease) in external net cash of discontinued operations

1.0

-

NET CASH AT THE BEGINNING OF THE PERIOD

4,340.8

5,541.1

NET CASH AT THE END OF THE PERIOD

3,502.3

6,841.4

Cash and cash equivalents

3,835.5

7,110.6

Bank overdrafts and other cash position items

333.2

269.2

NET CASH AT THE END OF THE PERIOD

3,502.3

6,841.4

(*)

Interest on IFRS 16 lease debt is not included in the Cost of net financial debt, but in Other financial income and expenses

 

Contacts

Relations Presse Groupe
Laurent Obadia
Sandrine Guendoul
Tél : + 33 (0)1 85 57 42 16
sandrine.guendoul@veolia.com
 
Relations Investisseurs & Analystes
Ronald Wasylec - Ariane de Lamaze
Tél. : + 33 (0)1 85 57 84 76 / 84 80

Release Summary

VEOLIA 2020 HALF YEAR RESULTS

Contacts

Relations Presse Groupe
Laurent Obadia
Sandrine Guendoul
Tél : + 33 (0)1 85 57 42 16
sandrine.guendoul@veolia.com
 
Relations Investisseurs & Analystes
Ronald Wasylec - Ariane de Lamaze
Tél. : + 33 (0)1 85 57 84 76 / 84 80