• Revenue Growth: Increased by 5.1% excluding energy prices.
• Booster Activities Revenue Growth: Up 6.9% excluding energy prices.
• EBITDA: Increased by 5.6% on a like-for-like basis to EUR 4.9 billion.
• EBITDA Margin: Up 72 basis points compared to last year.
• Efficiency Gains: Reached EUR 296 million against a target of EUR 350 million.
• Synergies: Achieved EUR 411 million in cumulative synergies, raising the 2024 target to above EUR 430 million.
• Net Financial Debt: EUR 18.9 billion, with a leverage ratio target below three times.
• Water Technologies Revenue Growth: Up 13.5% to EUR 3.6 billion.
• Net Income Target: Expected to be above EUR 1.5 billion for 2024.
• Dividend Growth: Expected to grow in line with EPS.

• Warning! GuruFocus has detected 6 Warning Signs with VEOEF.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Veolia Environnement SA (VEOEF) reported a solid revenue growth of 5.1% for the first nine months of 2024, excluding energy prices, driven by strong performance across all business segments.
• The company achieved efficiency gains of EUR296 million, nearing its annual target of EUR350 million, with a high retention rate of 49%.
• Veolia Environnement SA (VEOEF) raised its 2024 synergy target to over EUR430 million, having already achieved EUR411 million in cumulative synergies by the end of Q3.
• The company's EBITDA increased by 5.6% on a like-for-like basis, aligning with its annual guidance of 5% to 6% growth.
• Veolia Environnement SA (VEOEF) confirmed its 2024 guidance, expecting net income to exceed EUR1.5 billion, reflecting a double-digit growth compared to the previous year.

Negative Points

• The company faced challenges with lower energy prices impacting revenue from district heating and cooling networks.
• Weather conditions negatively affected water volumes in France and Spain, contributing to a slight decline in those regions.
• Veolia Environnement SA (VEOEF) experienced a temporary slowdown in industrial customer demand in China, affecting its energy services segment.
• The company reported a negative impact from foreign exchange fluctuations, amounting to EUR586 million.
• Veolia Environnement SA (VEOEF) had to navigate a complex macroeconomic environment, which included potential changes in tax legislation in France and the US.

Q & A Highlights

Q: Can you provide a summary of the key large assets and contracts expected to contribute to EBITDA in the rest of the year and beyond? A: Estelle Brachlianoff, CEO, explained that while specific contracts like Uniper are not yet closed, the company is seeing positive effects from investments such as the decarbonization in Brunswick. The Tashkent project is ramping up, and Poznan is expected to contribute next year. The energy business remains profitable with a focus on decarbonization projects.

Q: Why is the retention rate for efficiencies higher this year, and does this suggest future targets are conservative? A: Estelle Brachlianoff noted that the higher retention rate is due to specific action plans in response to disappointing results in certain regions. While synergies have a finite reservoir, efficiency improvements are ongoing. The company aims to maximize synergies next year.

Q: Have potential tax changes in France and the US been factored into your 2024 guidance? A: Estelle Brachlianoff confirmed that the guidance of over 1.5 billion in net income remains despite potential tax changes. The impact of new taxes in France is expected to be nonsignificant at the group level.

Q: How does the company view its cost-cutting potential and the impact of hedging on future results? A: Estelle Brachlianoff emphasized that cost-cutting is a recurring effort, while synergies are finite. The company prioritizes investments in growth areas. Emmanuel Menning, Deputy CEO, added that hedging is expected to be neutral for 2025, balancing negative and positive effects.

Q: Can you elaborate on the impact of weather on your results and the potential for recovery in Q4? A: Estelle Brachlianoff acknowledged that weather impacts are unpredictable, but the company's solid performance compensates for negative effects. While Q4 has historically seen negative weather impacts, the company remains confident in its ability to deliver results irrespective of external factors.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.