2012 annual sharholders’meeting
DESCRIPTION
2012-05-16TRANSCRIPT
2012General Meeting
2012General Meeting
Pierre‐François RIOLACCI
Chief Finance Officer
Disclaimer
Veolia 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.<
(1) To ensure the comparability of periods, the 2010 financial statements have been re-presented to include: - the impact of the reclassification into “net income from discontinued operations” of the Transportation division as a whole, Habitat Services (“Proxiserve”) activities in the Water and
Energy Services divisions, and Citelum activities in the Energy Services division; - the impact of the reclassification into ‘continuing operations of the activities in Gabon in the Water division and the “Pinellas” incineration activities within the Montenay International
entities in the United States in the Environmental Services division.- The impact of the fraud discovered during the second quarter of 2011 in the Marine Services business in the United States (a unit of the Environmental Services Division). The impact in
2010 was not material, but the adjustment was made in application of IAS8 “Accounting Policies, Changes in Accounting Estimates and Errors”.
(2) Of which change in discount rates used for provisions for landfill site remediation (+€26M in 2010 and -€7M in 2011)
(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
2011Annual ResultS
First year of Transformation– Definition of the target scope– Launch of restructuring– Concentration of investments– Disposals ahead of the target
A year focused on cash generation– Revenue of €29.6B– Adjusted operating income of €1.7B– Adjusted net income of €290M. Special items of -€780M, essentially non
cash, contributed to a net loss of €490M– Positive free cash flow of €438M– Reduction of net financial debt by €488M, to €14,730M
2011 highlights
€ 12 ,617 M
€ 7,290 M
€ 9,740 M 33%
25%
42%
Recovery of organic growth
2011:€29,647M
TOTAL COMPANY
WaterEnvironmental Services
current FX rates Excl. FX & scope
+3.0% +1.2%
+4.3% +4.9%
+1.6% -0.5%
+3.1% +2.0%Energy Services
Water Division
Annual revenue (€M)
+3.6%
+1.5%
OperationsTechnologies
& networks
3,501
8,749
2010re-presented
3,553
9,064
2011
12,25012,617
Revenue increased +1.2% at constant scope & FX – Good level of activity in Europe, particularly in
Germany and Central and Eastern Europe,– Good performance in Asia (China and Japan),– Net recovery in industrial client activities,– Impact of contractual negotiations in France (in
particular the new contract with the SEDIF) and ongoing decline in volumes sold (unfavorable summer weather conditions in 2011).
Adjusted operating cash flow declined to €1,462M (-4.1%)
+3.0%
Environmental Services Division
Change excl. FX & change vs 2010 re-presented (%)
Recycled materials(price-volumes)
Waste volumesPrice increaseOther
+4.9
+1.8
+1.3+0.9+0.9
Revenue: €9,740M in 2011, change of +4.9% at constant scope and FX
– improvement in activity level for the treatment of industrial non-hazardous and hazardous waste,
– effect of recycled raw material prices that remained high in France,
– good contribution of activities in the commercial and industrial sector in Germany,
– progress on integrated contracts in United Kingdom.
Adjusted operating cash flow declined to €1,197M (-5.9%)
Energy Services Division
Change in revenue: -0.5% at constant scope and FX
– Positive impact of energy prices,– Negative impact of less favorable weather
conditions across the whole of Europe in 2011 compared to 2010,
– Acquisition of the Warsaw district heating network in the last quarter of 2011,
– Lower electric capacity revenue and subsidies received on the sale of cogenerated energy in Central and Eastern Europe.
Adjusted operating cash flow declined to €598M (-9.2%)
Annual revenue (€M)
Outside FranceFrance
3,413
3,763
2010re-presented
3,515
3,775
2011
7,1767,290
+0.3%
+3.0%
+1.6%
Reconciliation of adjusted operating cash flow to adjusted operating income
Adjusted operating cash flow 3,315 3,152 -4.9% -0.2%
Amortization -1,475 -1,550
Net capital gains 118 85
Provisions, fair value adjustments & other -67 13
Adjusted operating income 1,891 1,700 -10.1% +0.2%
2010 re-presented 2011 current
FXIn €MOf which
FX
Evolution of adjusted operating income
1,692+22
+39
+3
-202
-1461,910
2,056
1,700
-91 -39
-191,891
+67 +10
VTD Adj Op.Income
Dec. 2010Excl. VTD
IFRS5& IAS8
Adj Op.Income
Dec. 2010(re-presented)
FX Operational difficulties
Total FranceWater
UK Water
Sofia AsiaPacificWater
Holdings Other Adj. Op. income
Dec. 2011 (published)
Adj. Op. income
Dec. 2010 (published)
In €M
Net finance costs
Cost of financial debt-€748M vs -€759M
Closing net financial debt reduced to€14.7 billion vs €15.2 billion
Average gross debt: €19.9 billion
Average cash and cash equivalents: €5.7 billion2008 2009 2010 2011
5.6%
4.8%5.1%
5.4%
5.1%
4.0% 4.1% 4.3%
Net cost of borrowing Gross cost of borrowing
Reconciliation of operating income to net income
Operating income -683 1,700 1,017
Financial expense - -804 -804
Income tax expense -184 -355 -539
Share of net income of associates - 12 12
Net income from discontinued operations -3 - -3
Non controlling interests 90 -263 -173
Net income attrib. to owners of Co. -780 290 -490
Adjustment Adjusted TotalAs of December 31, 2011 - In €M
Net income attrib. to owners of Co. per share 0.58 -0.99In €
Controlled investments
-3.7%
Maintenance capital expenditures 1,075 1,094
Industrial investments in growth (excluding operating financial assets) 1,033 1,207
Financial investments in growth 653 466
New operating financial assets 495 367
Gross investments 3,256 3,134
2010 2011In €M
2010 2011
Free cash flow of €438M
Operating cash flow before changes in working capital 3,719 3,353
Repayments of operating financial assets 424 441
Total cash generation 4,143 3,794Gross investments -3,256 -3,134
Variation in working capital 106 -41
Taxes paid -368 -368
Interest expense -808 -771
Dividend -735 -547
Other 86 -39
Divestments 1,241 1,544
Free cash flow 409 438Impact of exchange rates -465 -64
Other -35 114
Net financial debt at December 31 15,218 14,730Change in net financial debt 91 -488
In €M
Divestments: more than €4 billion completed in three years
Divestments announced Divestments completed
Target revision in
March 2011
1,000
2009 2010 2011
1,2911,000
1,2411,000
3001,544
Divestment completed: €4,076M≥ €5 billion
2012 2013
Target: €5 billion of divestments in 2012-2013
Additional net financial debt reduction
Average maturity of net financial debt: 8.7 yearsvs. 9.4 years at the end of 2010
Ratings‒ Moody’s: P-2 / Baa1
stable outlook (February 7, 2012)
‒ Standard & Poor’s : A-2 / BBB+ stable outlook (September 14, 2011)
In €bn
15.215.115.114.7
13.914.7
16.5
<12.0
31-dec-05
31-dec-06
31-dec-07
31-dec-08
31-dec-09
31-dec-10
31-dec-11
31-dec-13
KEY FIGURES AS OF MARCH 31, 2012
29%
32%
39%
31%
39%30%
Breakdown of revenue by Division
1st quarter 2011 re-presented: €7,479M
TOTAL COMPANY
WaterEnvironmental Services
current FX rates Excl. FX & scope
+4.9% +5.3%
+0.3% -0.9%
+8.5% +5.3%
+4.6% +3.4%Energy Services
€2,907M
€2,230M
€2,342M
1st quarter 2012: €7,826M
€3,050M€2,540M
€2,236M
1st quarter 2012 key figures
Q1 2011 published
Q1 2011 re-presented Q1 2012 current
FX
Revenue 8,159 7,479 7,826 +4.6%
Adjusted operating cash flow 997 929 900 -3.1%
Adjusted operating income 636 619 544 -12.2%
Net financial debt 14,511 14,511 15,021
In €M
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
Advancement of cost reduction program
Implementation costsGross savings
6O
-38
75
-52
100
-80Feb. 17, 2012e
Apr. 27, 2012eDec. 31, 2012eBreakdown of net savings by
geographic zone Breakdown of net savings by lever
22%
10%
11%13%5%
14%
12%
13%1%
25%
2%
66%
6%France
North America & Australia
Latin America & Southern Europe
Asia, Africa & Middle East
Central & Eastern Europe
Northern Europe
Corporate HQ
Others
Purchasing
Organizational Efficiency
IT costs
External expenses
Insurance costs
Outlook
2012-2013Transition
period
• 5 Mds€ de cessions• Divestments of €5bn• Reduce net financial debt below €12bn (before FX change)• Cost reduction in 2013: gross impact of €220M and net impact of
€120M on Operating Income• Commitment on dividend policy
€0.70 per share in 2012, paid in cash or shares €0.70 per share in 2013
2014 and beyond:
New Veolia
• Organic revenue growth > +3% CAGR (mid-cycle)• Adjusted Operating Cash Flow > +5% CAGR (mid-cycle)• Leverage of 3.0x (±5%)• Mid-term: historical payout ratio• Cost reduction in 2015: gross impact of €450M and net impact
of €420M on Operating Income