Earnings call transcript: Veolia Q1 2025 revenue growth and strategic moves

Veolia Environnement VE SA reported its financial results for the first quarter of 2025, showcasing a steady revenue increase and strategic acquisitions. The company’s sales reached €11.5 billion, a 3.9% rise excluding energy prices, while EBITDA climbed 5.5% to €1.695 billion. According to InvestingPro data, Veolia maintains strong financial health with an overall score of 3.03 out of 5, labeled as "GREAT." Despite these positive figures, Veolia’s stock saw a 2.06% decline in pre-market trading, reflecting investor concerns over broader market conditions.

Key Takeaways

• Q1 2025 sales rose 3.9% to €11.5 billion, excluding energy prices.
• EBITDA increased by 5.5%, reaching €1.695 billion.
• Veolia acquired a 30% minority stake in a Water Technology business.
• The stock price fell 2.06% in pre-market trading.
• Strong performance in hazardous waste sectors in Europe and the US.

Company Performance

Veolia’s performance in Q1 2025 was marked by significant revenue growth and strategic acquisitions. The company strengthened its position in the water technology sector with a notable acquisition and secured major contracts across various industries. These moves are part of Veolia’s broader strategy to enhance its technological capabilities and expand its market reach.

Financial Highlights

• Revenue: €11.5 billion, up 3.9% excluding energy prices.
• EBITDA: €1.695 billion, up 5.5%.
• EBIT: €915 million, an 8.4% increase.
• Net financial debt reduced to €18.8 billion.
• Leverage ratio decreased to 2.75.

Earnings vs. Forecast

Veolia reported an earnings per share (EPS) of €0.51, aligning with market expectations. Revenue also met forecasts at €11.5 billion. The financial results reflect the company’s robust operational strategies and market resilience.

Market Reaction

Following the earnings announcement, Veolia’s stock price experienced a 2.06% decline in pre-market trading, closing at €32.46. This movement places the stock near its 52-week high of €37.10, with InvestingPro analysis suggesting the stock is slightly undervalued based on their proprietary Fair Value model. The company has demonstrated impressive momentum with a 19.62% year-to-date return and maintains a strong dividend track record, having raised dividends for 5 consecutive years. For deeper insights into Veolia’s valuation and 8 additional exclusive ProTips, consider exploring InvestingPro’s comprehensive analysis tools.

Outlook & Guidance

Veolia reaffirmed its 2025 guidance, projecting 5-6% organic growth in EBITDA and €350 million in efficiency gains. The company also aims for cumulative synergies of €530 million by 2025, positioning itself for long-term growth with a 10% CAGR in net income by 2027. InvestingPro data reveals strong fundamentals supporting these targets, with a healthy P/E ratio of 19.11 and an impressive dividend yield of 4.32%. Detailed analysis of Veolia’s growth potential and comprehensive financial metrics are available in InvestingPro’s exclusive Research Report, part of their coverage of over 1,400 top stocks.

Executive Commentary

CEO Estelle Braschonov emphasized the company’s resilience, stating, "Our resilient and growth business model enables us to fully confirm our guidance." She also highlighted Veolia’s strategic alignment with macroeconomic conditions, asserting, "We are very largely macro immune."

Risks and Challenges

• Potential fluctuations in energy prices could impact revenue growth.
• Integration challenges from recent acquisitions may affect short-term profitability.
• Global economic uncertainties could influence market conditions.
• Regulatory changes in key markets could pose operational challenges.
• Currency exchange rate volatility might affect financial results.

Q&A

During the earnings call, analysts inquired about the strategic rationale behind the Water Technology business acquisition. Executives confirmed it aligns with the company’s Greenup plan, expecting €90 million in additional synergies. The acquisition is projected to be accretive from 2026, with minimal forex impact on net income.

Full transcript - Veolia Environnement VE SA (VIE) Q1 2025:

Conference Moderator: Good morning, ladies and gentlemen, and welcome to the Veolia First Quarter twenty twenty five Key Figures Conference Call with Estelle Braschonov, CEO and Emmanuel Manning, CFO. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on 05/07/2025. I would now like to turn the conference call over to Ms.

Estelle Brechelof. Please go ahead.

Estelle Braschonov, CEO, Veolia: Thank you, and good morning, everyone. Thanks for joining this conference call to present Veolia’s Q1 key figures, and I’m accompanied by Emmanuel Leining, our CFO. First and foremost, our Q1 twenty twenty five results are very strong, and I’m on Slide four. And this is in spite of a rather challenging environment. They are perfectly in line with our normal objective and enable us to start 2025 with great confidence and fully confirm our guidance for the year.

These results illustrate once again the strength of winning formula, resilience and growth. As you know, the Veolia value creation model is a combination of three levers: growth, performance and efficiency and capital allocation. In 2024, which was the first year of our Greenup plan, we were already very active in terms of capital allocation with EUR 1,000,000 divestiture of non core assets and EUR 600,000,000.0 reinvested, leading to a balance sheet headroom. In Q1 twenty twenty five, we decided to accelerate value creation using part of this headroom, with the acquisition of a 30% minority stake of CDPQ in our Water Technology business, thus achieving full ownership. This strategic move is fully aligned with Greenup’s strategic program and priorities, Watertech, as you know, being identified as a growth booster and priority for investments, as well as North America.

We will be able to deliver EUR 90,000,000 of additional synergies and unlock full potential for innovation and development. This buyout comes at a reasonable price with a twenty twenty five EV EBITDA multiple of 11 times post synergies. This investment is a strategic and very international activity, allows us to secure future earnings growth. I’m now on Slide five. Our Q1 key figures are once again very solid.

Sales reached €11,500,000,000 up 3.9% excluding energy price, which are essentially pass through for us, as you know. EBITDA increased by a substantial 5.5% on a like for like basis to EUR 1,695,000,000.000, fully in line with our 5% to 6% guidance and show a margin improvement of 60 basis points. Current EBIT was up plus 8.4 to €915,000,000 demonstrating good operating leverage. Net financial debt is well under control and even down year on year to €18,800,000,000 And our leverage ratio is also down from 2.88 last year to 2.75 this year at the end of the quarter, perfectly in line with our target of the leverage ratio below three times at year end. Our resilient and growth business model as well as our solid Q1 performance enable us to fully confirm our guidance despite macro uncertainties.

I’m now on Slide six. Ultimately, Veolia stock is really a combination of resilience and growth as demonstrated in the last few years. We’ve managed to increase our results quarter after quarter despite volatile energy price, difficult macro in Europe, political and geopolitical uncertainty, higher inflation and interest rates. This is thanks to our winning formula based on four key features: Enhanced growth first, in particular with our growth booster Second, a worldwide footprint with France only 20% of the group and 3038% outside Europe. Third, a continued value creation with EPS and ROCE, of course, growing very fast.

And ROCE has been hit 8.8% post tax at the end of twenty twenty four, which is three twenty basis points above our weighted average cost of capital. Finally, Veolia, as a world leader in automotive service, is a unique combination of businesses, Westwater and Energy. On Slide seven, we remind you of the unique characteristics of Veolia’s business model. We have no direct exposure to tariff or very minimal. Since our activities are multi local, we do not import or export any goods or only insignificant amounts.

We are protected against inflation with 70% indexed, solid pricing power for the remaining 30% as we’ve shown over the last three years. Our activities are very largely not dependent on GDP. This is clearly the case of our municipal activities, but also partially with the commercial and industrial activities, which are very spread over different type of customers from pharma to hospitals, microelectronics to retail and all that on all continents. In terms of our municipal client base, we enjoy long term contract with eleven year average still remaining and more than 90% renewal rate. You can see on this slide our largest contract expiry schedule.

Altogether, we estimate that only about 15% of our revenue is exposed to macro, mostly in C and I waste. Last but not least, our resilience lies also in our proven agility and capacity to boost efficiency and cost cutting when needed. Of course, I will add to that list that we benefit from a diversified geographic footprint on all continents. In terms of political exposure, our contracts are always local contracts. We are never dependent on subsidies or national or federal contracts.

Finally, our strength is reinforced by our ability to combine our different businesses, for instance, Waste and Energy or Water and Energy, which makes us quite unique to our customers. I’m now on Slide eight. As you know, our value creation lies in three pillars: top line growth, performance and capital allocation. And I’m going to go through them one by one to illustrate Q1 results, starting with growth on Slide eight. We registered very solid revenue growth of our strong goal.

This is plus 3.9% diluted in energy price, fueled by our three activities. Starting with Water Operations. Revenue increased by plus 3.3%. We continued to benefit from good indexation and have achieved successful tariff renegotiation in Spain as well as rate cases approval in our U. S.

Regulated operations. We also enjoyed good commercial momentum in Europe. Solid Waste revenue grew by plus 3% despite sluggish macro. This is thanks to good pricing, a high renewal rate above 90% as well as very successful offers. In particular, we signed in Q1 a new high-tech material recovery facility in Canberra, Australia, totaling million dollars over twenty years.

District heating and cooling networks revenue increased by plus 4.9%, excluding the unit price. This is faster than last year, thanks in particular to a favorable weather impact as well as contract extensions. We continue to invest to decarbonize our assets with double digit IRR and expect to open a new cogeneration facility in Posen by year end, replacing the Cold Fire facility. On Slide nine, let’s have a quick look at each of the booster’s performance in Q1 twenty twenty five. Water Technologies revenue was stable in Q1.

This stability is temporary. It is due to a very high comparison basis in Q1 twenty twenty four and to the timing of contract deliveries. In the last few weeks, we signed key contracts in WaterTech, which will fuel revenue growth in the coming quarters. Starting with the significant contract we’ve won to provide the technology to supply ultra blue water in the semiconductor industry in the Midwest in The U. S, followed by sixteen years of operation for a total backlog of $550,000,000 all that using our patented ZWeed technology.

We were awarded as well a new contract to provide technology to help the San Francisco Wastewater Treatment Plant to produce biogas and reinject it into the gas grid, thanks to our Mengas technology. Again, patented. In both cases, we are in the priority offers, as showcased in our deep dive on this activity last October. I’m very pleased as well to see our technologies remove sulfur from offshore oil and gas, that is FPSO, which was again super successful with 170,000,000 additional orders in Q1, notably in Brazil and The Emirates. Health Dust Waste revenue increased by 5.6%.

We are very satisfied with continued strong growth in Europe, up 5.1% despite the industrial macro, which is a good demonstration of our relative immunity to macro, as I explained earlier. We’ve delivered continued solid growth in The U. S, up plus 8.5%, with plant shutdowns early in the year, and started new operations in Saudi in the Jubai Complex. In Bioenergy, Flexibility and Energy Efficiency, revenue was up plus 16.7 excluding energy price and including our new targeted acquisition, fully in line with our Greenup plant priorities, in particular, flexibility asset in Hungary. Organic growth was still plus 6.1%, which is very good.

Let’s now deep dive on Slide 10 in our second lever of value creation, which is performance and efficiency. This slide shows our first quarter performance in terms of both. On the left hand side, you have efficiency, where we achieved €91,000,000 in gains, in line with our annual target of €350,000,000 Efficiency gains at Veolia are not discretionary, the cost cutting programs, of which you could question the continuity. They are rather composed of a very operational and diversified series of initiatives in our thousands of plants, from process optimization, energy efficiency to upselling our digital gains. Digital is a prime example to show how we constantly look for new efficiency levers.

Digital gains already represent 15% of operational efficiency, but we are now moving quickly to Gen AI. And the new partnership with Mistral AI, a worldwide first, is a good illustration of this. In terms of cost synergies derived from the Suez merger, we’ve achieved EUR25 million in Q1 for a cumulative total of EUR460 million since day one, in line with our objective of $530,000,000 by year end, which as you know we raised last February. The third pillar, and I’m on slide 11, is capital allocation. And this morning, we announced the acquisition of CDPQ’s thirty percent stake in WTF for EUR1.5 billion, translating into an EBITDA multiple of 11x post synergies.

This acquisition is fully aligned with the Greenup strategic plan and with Wassa Tech as a priority booster. It is indeed a very logical step, which will unlock more value for our shareholders by enabling full integration and enhancing operational performance. We will be able to extract additional rebate cost synergies of EUR 90,000,000 by 2027. But there is more to it. After merging WTS and VVT, we will, in fact, maximize the operational control of the asset, unlock its full potential for development and innovation, fully controlled cash flow and capital allocation to pursue our growth trajectory in Water Tech.

This strategic move should therefore enhance the value of our Water Tech activities. We fully maintain our balance sheet headroom and our leverage will remain below three times at year end, allowing the group to retain strategic flexibility. Finally, this operation will be accretive to our current EPS from 2026 and enhance our ROCE. On Slide 12, you see the simplification of the group structure after the merger of VVT and WTS. The removal of minority interest will enhance our control of our Watertech operations in terms of synergies, but also cash flow and tax optimization.

We will be the sole decision maker, especially as far as strategic decisions such as capital allocation are concerned. This full integration will enable us to enhance operational performance and to unlock full potential for development and innovation. Slide 13. Transaction is very straightforward. We signed an agreement with CDPQ yesterday to buy out the 30% stake in WTS for $1,750,000,000 or cash out secured at 1,500,000,000 representing an EBITDA multiple of 11 times, including additional synergies of €90,000,000 A few words on those synergies.

They all relate to operating costs impacting EBITDA and are derived from a simplified corporate structure with our WaterTech activities, leading us, for instance, to remove SG and A costs, as we do not need to maintain a double government structure as today, both at WTS and VVT level. That being said, there are additional financial benefits to take into account, such as the potential for tax optimization as well as dividend leakage and cash optimization. What matters here is the very low level of execution risk to deliver these additional operations synergies, in light of our deep and intimate knowledge of the asset, as well as our strong track record in extracting synergies as highlighted by the Swiss merger. Overall, the transaction will be accretive from 2026 and contribute to group ROCE increase. We will finance this acquisition through our available net cash position at group level.

For CDPQ, the divestment after eight years is part of their normal investment process. For us, it is the opportunity to invest in the merging of our two WaterTech subsidiaries, thus unlocking significant value. We expect to close the deal by the June. On Slide 14, you will see this acquisition will further strengthen the group position in Water Technologies activities, which is one of our three strategic boosters as well as enhance our position in North America, which represents half of WTS business today. You remember from our deep dive last October that the combined VVT and VWTS as a fully merged and integrated entity is the world leader in water technologies, with combined revenues of EUR 5,000,000,000 in 2024 and a global footprint, 40% in The U.

S, Thirteen Percent in Asia Pacific, 13 Percent in Africa and Middle East, and 8% in Latin America. We serve over 8,000 clients in 44 countries. We hold more than 4,000 patents and have 11 dedicated resource centers. We are now the only player present on all along the value chain in the complementary four business lines, which are projects, technologies and products, services and chemicals, allowing us to select the correct go to market package depending on country or client type. On top of that, as part of Veolia, our Water Technologies segment benefits from combination opportunities with our other businesses and segments as demonstrated in our PFAS unique offer, for instance.

We have set ambitious growth targets for 2027, which, of course, are further enhanced by the acquisition of CDPQ minority stakes for all this for this activity. We aim to grow our WaterTech operation by 6% to 10% per year between 2023 and 2027 on average and increase our EBITDA even further. Including the additional synergies I’ve described, the EBITDA CAGR for the period will be now above 10% per year, with ROCE increasing gradually. Slide 16 summarizes our three levers of value creation, namely growth, performance and capital allocation, which is the backbone of our Greenup plan. Our very solid Q1 results, the strategic acquisition of CDPQ’s minority stake in WTS, combined with our unique positioning, a combination of resilience and growth, enables me to fully confirm our strategic plan green up and associated objective.

They include current net income of growth of 10% per year on average over the period, with dividend growing in line with EPS and ROCE above 9% in 2027. As you remember from our yearly presentation a few weeks ago, we decided to launch a share buyback plan from ’25 to ’27, sized to neutralize the impact of the employee shareholding program so that going forward, current EPS will grow in line with current net income growth. In a nutshell, Veolia is all about both resilience and growth. I now hand over to Emmanuel, who will detail our Q1 figures.

Emmanuel Manning, CFO, Veolia: Thank you, Estelle, and good morning, everyone. The results for the first quarter are solid and allow us to be very confident for the rest of the year. We have demonstrated for many quarters now that even in a complex economic environment, Veolia is able to deliver growing results. With €11,500,000,000 in revenue, we experienced a good solid growth of 3.9% excluding energy prices. Taking into account the impact of lower energy prices, revenue was up 1.5%, which is quite ahead of Q1 twenty twenty four.

Thanks to the operating leverage and the good delivery of Efficiencies and Synergy, we enjoyed a solid organic EBITDA growth of 5.5% at 1,695,000,000 and a current EBIT growth of 8.4% at €915,000,000 Net financial debt reached 18,900,000,000.0 down compared to last year and lower than expected. As a result, our leverage ratio was 2.75 times below last year and well below our guidance of 1.3 times. Our balance sheet is accordingly very strong, which gives us a lot of flexibility in terms of capital allocation and allows us to easily maintain a leverage below three times after the financing of the acquisition of CDPQ minority interest in WTS. You can also see on the slide the detailed ForEx impacts, which were positive in Q1. I also remind you that we operate in local currency, meaning that our exposure is linked only to translation and not to transaction impacts.

As you saw in previous year, the ForEx impact at EBITDA level was very much offset down the line, meaning at current net income. Moving to slide 19, you can see the revenue evolution by geographical segments. I will start with Water Technologies. Revenues were stable in Q1 due to high comparison basis and the timing of project delivery. Q1 twenty twenty four was particularly high as we recorded revenue from the delivery of big projects at the WTS, for instance, project for Semiconductor Industry in Texas at Samsung in Austin as well as identified one off linked to end of contracts.

We are very confident for the rest of the year and you saw this morning our very strong commercial momentum with the signing of new contract to produce ultra pure water for a large semiconductor client in The U. S. And to treat water in the energy sector to supply injection water treatment solution for offshore production units in Brazil. In the Rest of the World, revenue was up 5% with all regions performing very well. North America continued to enjoy solid hazardous waste performance and good water activity.

Hazardous Waste revenue was up 8.5% in Q1. Asia had a solid growth of 4.1%, thanks to some recovery in Mainland China. Latin America grew double digit, thanks to Good Waste volumes and pricing. Rest of Europe revenue was up 5.5% excluding Energy prices. In Central Europe, the impact of lower Energy prices in district heating activity was much lower than last year, minus €249,000,000 compared to minus €628,000,000 in Q1 twenty twenty four.

Electricity prices are down 9.4% on average, but heat prices are now almost stable. In Northern Europe, we registered again solid performance in The UK and Belgium in both Energy and Waste activities. In Southern Europe, the quarter was excellent and revenue was up double digit. Finally, France and Hazardous Waste Europe was flat in Q1 with lower solid waste volumes and indexation, offset by a very strong hazardous waste activity. Now let’s take a look at our performance by businesses.

I will start with Water. Water revenue was up 2.4%, fueled by the strong Water operation, up 3.3%, while Water Technology was temporarily stable due to the timing of project delivery and high comparison basis as mentioned earlier. Water Operations benefit from good designations with continued price increases in Spain, Central Europe and in the regulated U. S. And Shield and Water operation, while indexation was back to zero in France due to lower electricity prices.

Volume were on a very good trend, France plus 0.5%, Spain plus 1.2% with the end of drought situation in Andalusia and Catalonia and Central And Eastern Europe increased its volume by plus 3%. Moving to Waste. Activities grew by 3.7%, a solid pace, although lower than last year due as expected to lower indexation. Volumes were resilient, up on average by 1.2% like last year. Commodity impacts were non significant and comparable year on year with lower electricity prices in Q1, partially offset by increased recycled material prices.

The strong All Solid Waste revenue was up 3%, driven by tariff increases in all geographies. Regarding volumes and commercial development, Europe was mixed with good volume in Germany, resilient in The UK, slightly down in France, while volume was strong in the rest of the world. The booster hazardous waste had a very strong quarter in almost all geographies, In Europe, plus 5.1% as well as in The U. S. Revenue were up 8.5%, thanks to favorable mix effect and good commercial momentum.

Finally, moving on to Energy, I am on slide 22. Excluding the Energy price impact, growth was faster than last year, up 5.3%, thanks to good volumes, helped by a colder winter. Heat prices were on average almost stable compared to last year and electricity prices lower as expected. Strong activity in Energy Efficiency, up 6.1% on a like for like basis, with strong sales momentum in Spain, Belgium and in The Middle East. As I have just explained, Energy revenue is sensitive to Energy prices, which were down as expected again in Q1, but to a much lesser extent than last year.

To illustrate the solid performance of the third quarter, we will go on slide 23. It shows our revenue bridge and explain our organic growth of plus 3.9% excluding energy prices, which is stronger at EBITDA level, thanks to our operating leverage. ForEx impact was positive, plus 42,000,000 mainly due to the appreciation of The U. S, Polish, British currencies. Scope was negative by minus €271,000,000 mainly due to the impact of last year disposals.

We expect scope impact to turn positive in the second part of the year. The impact of Energy and Recycled prices were much lower than last year, as expected, minus 2.2% compared to minus 5.8% in Q1 twenty twenty four, and include the impact of lower Energy prices, slightly mitigated by the positive effect of recycled prices. The weather effect amounted to plus €110,000,000 due to a harsher winter at the beginning of the year in Europe. Commerce and volume contribution was comparable to last year, plus 1.6%, driven by sales momentum and resilient volumes. And finally, price effects were as expected lower in 2024 than in 2024 due to lower inflation and continued to 1.5% to top line growth.

On page 24, you have the usual EBITDA bridge detailing our organic growth of 5.5% in line with the annual guidance between 56%. Essentially, EBITDA benefited from three sources, organic revenue growth of plus 3.9%, operational efficiency and sales synergies. The ForEx impact amounts to €11,000,000 scope was minus €30,000,000 Weather was favorable by plus €16,000,000 due to a colder winter in the first quarter twenty twenty five. Commerce Volume Work effect was favorable at plus €22,000,000 plus 1.4% in line with revenue impact. Efficiency gain of €91,000,000 generate plus 2.3% in additional EBITDA, hence a very good retention rate of 42%.

Synergies amount to €25,000,000 especially thanks to optimization in purchasing and in the Water Technology activities, leading to cumulative amounts of €460,000,000 perfectly in line with our objective of €530,000,000 by the end of twenty twenty five. Going down to current EBIT. This slide illustrates perfectly the operational leverage of our business model. Currency EBIT grew by 8.4% in Q1 to €915,000,000 at a higher pace than EBITDA. Renewal expense of €74,000,000 were comparable to 2024.

Amortization and offer were slightly lower than last year due to perimeter and slightly up at constant end ForEx. We had slightly lower industry old capital gains, provision and other. JVs were stable. Net financial debt reached €18,900,000,000 at the March, lower than expected and down €142,000,000 compared to last year, thanks to strong free cash flow generation and dynamic asset arbitrage launched last year to quickly secure home of maneuver to achieve green up ambitions. As a result, our leverage ratio was 2.75 times, below last year and well below our guidance of under three times.

Our balance sheet is therefore very strong. Both rating agencies confirm strong investment grade rating after full year results. It enabled us to finance the acquisition of CDPQ minority interest in WTS with our available cash position while maintaining a leverage below three times afterwards. As a conclusion, we are very confident for the rest of the year, which is based on solid foundation. We fully confirm our ambitious guidance for 2025, including WTS acquisition, continued solid growth of revenue excluding energy prices for EBITDA organic growth between plus 56% more than €350,000,000 of efficiency gain more than €530,000,000 of cumulative synergy at the end of twenty twenty four, current net income up 9% at constant Forex, leverage ratio below 3x.

And as usual, our dividend will grow in line with our current EPS. Thank you for your attention.

Estelle Braschonov, CEO, Veolia: Thank you, Emmanuel, and we are now ready to take your questions.

Conference Moderator: Thank you. Session. Your first question is from Alex Ranger from Bank of America. Your line is now open.

Alex Ranger, Analyst, Bank of America: Good morning and thanks for the question. I’ve got three, please. I mean the first one is on the 30% acquisition from CDPQ. I’m just wondering if you could give us some background and color on why CDPQ was actually willing to sell their 30% stake. I remember in the past, and that’s been something that is discussed heavily with investor over the years, it seems like the structure was a bit at a standstill with perhaps CDPQ expecting a buyout or even a listing of the Watertech division overall.

Any color on the process there would be super interesting. And then a second one still on M and A. I think if I’m not mistaken, still have €1,000,000,000 net of M and A left in your greener plan, which I suppose you will still use depending on opportunities and be relatively flexible on that. But any area you would focus on specifically? And I’m saying that because I feel like the energy booster is actually the one performing the best at the moment.

You already addressed WaterTech with CDPQ. So would that make sense to actually increase exposure there, especially given your ambition to become number one across your different segment by 02/1930 in your different energy verticals? And I’m wondering that as well, if you are already or expecting to see actually growing order on flexibility and some of the local and backup generation you mentioned you had for hospital and critical infrastructure in the wake of the recent blackout in Spain? And lastly, one on numbers. Mindful, the guidance is at current ForEx and that ForEx actually had a positive impact in Q1.

But you also have in your guidance an absolute EBITDA guidance for 2027 of ’8 billion euros and more, which arguably would include ForEx. So given the recent moving in currency and Valeo predominantly being euro denominated, any color you would give us on FX impact expected for the rest of the year at current rate? And if any impact, would that mean you need to restate at some point the EUR 8,000,000,000 absolute EBITDA guidance for 2027? Thank you.

Estelle Braschonov, CEO, Veolia: So three questions. We’ll take the first two and then have Emmanuel answering the third one. I cannot answer on why CDPQ has sold now as opposed to other option. It’s after eight years of them having all this participation. So it looks like a normal cycle to them.

That’s what they’ve said very officially. I can tell you why it’s the right moment for Veolia. That I can comment upon. Right moment because we’ve very said clearly for a while now that water technologies were super important for us and an area where we wanted to invest and reinforce our presence. You may remember the deep dive in the WaterTech business where we invited a few people in Hungary Last October.

That’s one of the key boosters in our Greenup strategic plan. So it’s very strategically aligned with what we’ve prepared the ground for. And I must add that in terms of timing, the euro versus dollar makes it so that the acquisition not only is good in terms of multiple, 11x now compared to the American peers, for instance, is a very reasonable price, plus plus the dollar’s relative weakness is good in terms of us being in euros, as you know. So very the right time for Veolia altogether, very strategic move for us, and I cannot answer on behalf of CDPQ. In terms of M and A, you’re exactly right.

We still have room for maneuver for additional M and As going forward to complete the Greenup strategic plan, as Emmanuel highlighted. It didn’t came by chance. As you know, we’ve anticipated on the Agile last year by selling nonstrategic asset. And I always said that we had three pillars of value creation, top line growth, performance and balance sheet. We’ve anticipated last year, we’ve been agile, which gives us room for maneuver not only to do the CDPQ acquisition today, also CDPQ stake, sorry, into WTS, plus potential other opportunities.

So any areas, yes, and we’ve been very clear in our green hub strategic. So it boasts all the three boosters. So WaterTech has the waste and the Bioenergy flexibility as well as outside Europe. So I may emphasis again on the fact that this acquisition today not only enhances value in the WaterTech, but as well outside Europe, in particular, in The U. S, but elsewhere as well.

So I think it’s an important one. So everything which creates value and is with one of the three boosters will be a good candidate for potential M and A. So it has to be both strategic and creating value. Are we done with the what to take? Not necessarily.

We may have tucking ideas going forward. Again, if they create value and are very complementary in our portfolio of technologies, why not? Health and Swase could be good candidates as well. As you know, we are a leader as well in this industry, creates value, and we’re very happy with this business as well as, again, Bioenergy and flexibility. Commenting on the blackout in Spain, you’re right.

It makes to the forefront and the headlines of the newspaper the importance of flexibility as a market, which I understand is quite a technical one, so not necessarily understood by the general public. Of course, it is by you. And we are already a big player in Europe, in France, in Northern Europe, in Italy, in Eastern Europe as well. Not yet specifically on this specific area in Spain, but we have quite a good series of activities in energy in Spain. So why not developing the flexibility in addition?

That’s something, as you can imagine, we have a look at. In terms of the ForEx, I will say I won’t comment on anticipation because two months ago, there was a consensus on EUR 1 equals EUR 1 very soon. Now it’s very different. So it’s moving very fast. So I won’t comment on the anticipation of at the end of the year, the anticipation at the end of twenty twenty seven, it’s even more risky.

I will confirm the 2027 guidance. And with regard 2025, Emmanuel? Yes.

Emmanuel Manning, CFO, Veolia: So as mentioned earlier, you know that Veolia has absolutely zero transaction exposure. When we operate in a country, we all the costs and the revenue are in the same currency so that we have only translation exposure. Three elements mainly which are important to have in mind. So the first element on top of local currency, so no transaction impact is that our guidance at EBITDA level is at constant scope and ForEx. And finally, as you saw in the former year, the FX impact at EBITDA level was very much offset down the line to current net income.

At the end of Q1, you have noticed the impact, it was positive, plus €42,000,000 at revenue level and plus €11,000,000 at EBITDA level. It’s true that when you use the exchange rate of the last closing, so March 31, we expect it would give an EBITDA impact, which is really slightly negative. So as mentioned by Estelle, ForEx is difficult to forecast. When you look at the EBITDA 2027, the 8,000,000, we fully confirm them. It includes organic growth, efficiencies and M and A and the purchase of CDPQ minority interest in WTS will contribute around EUR 90,000,000 in synergy.

Estelle Braschonov, CEO, Veolia: And in addition to what you said, everything you said kind of partially vanishes anywhere at the net results level. So I think it’s an important additional point.

Alex Ranger, Analyst, Bank of America: Great. Very clear.

Conference Moderator: Great. You. Your next question is from Arthur Sutton from Morgan Stanley. Your line is now open.

Arthur Sutton, Analyst, Morgan Stanley: Thanks for taking my question. One follow-up question on the acquisition so far in the green up plan. I think to be precise, initial acquisition budget was between EUR 2,000,000,000 and EUR 4,000,000,000 between 2024 and 2027. I was just wondering how much you’ve done, you’ve conducted so far, including WTS. I think I get not too far from the 2,000,000,000.

So the low end of that EUR 2,000,000,000 to 4,000,000,000 range. I was wondering if your intention is to stop here. You seem to be running a bit ahead of track here. And so at the end of the day, what I’m wondering is do you need to go further? Do you need to do more acquisitions to reach the 10% CAGR net income guidance by 2027?

Or could you potentially stop here and just rely on what you have today to get there? That’s the first question. The second question is because I think, obviously, there has been some uncertainty on the macro environment. And you seem to say that you’ve been very resilient so far. So I was wondering as well in the second quarter of the year, since especially the announcements on import tariffs early April, what have you noticed in how the business is performing?

And specifically, I think, in Industrial Water and in Waste activities. So

Estelle Braschonov, CEO, Veolia: I’ll start with the global vision of Greenup going forward, and Emmanuel will comment a bit further on the figures and then on the macro as well. So globally, today, we’ve announced major steps in the Greenup plan with the acquisition of a 30% stake of CDPR in the Watertech business. Do we need to do further acquisition? No, we don’t. Do we have opportunities?

Yes, we have. So and do we have room for maneuver? Yes, we have for an extra EUR 1,000,000,000, as we said. So it’s a little bit more the way I would think about it. Do I intend to stop there and to say, yes, that’s it, Greenup is delivered?

No. I’m very happy that the acquisition we announced this morning secures some value creation for Greenup going forward. In that way, you’re right. It secures the trajectory. But we have plenty of opportunities to create value, and we have the room for maneuver, as we explained, to do that.

So maybe on the figures, so the EUR 2,000,000,000 I was mentioning was net of the disposal, right? So Emmanuel, if you

Emmanuel Manning, CFO, Veolia: could go a bit through those figures. Yes, with pleasure. So when we design the Greenup Plan and the Greenup Strategy, as mentioned before, to achieve the EUR 8,000,000,000 target in 2020. Seventh, we have some M and A. The M and A, what we have communicated so far was €2,000,000,000 M and A net.

So it’s acquisition minus disposal. We have been very agile after the launch of Gineup, achieving already €1,000,000,000 disposal. And you have seen with the EUR 1,500,000,000.0 acquisition of WTS plus what we have already bought, we are currently around EUR 2,000,000,000. So EUR 2,000,000,000 minus EUR 1,000,000. We still have EUR 1,000,000,000 room of maneuver or target for Gineup in M and A.

With the acquisition of WTS, it was clearly expected. It was part of Greenup. I think it’s in terms of timing, it’s ideal. And it helps us to simplify the group structure and unlock additional value.

Estelle Braschonov, CEO, Veolia: In terms of the macro, Emmanuel will comment on how April looks like. And basically, no change in the trend as we’ve seen in Q1. Tariffs, we have a very minimal, if not, exposure to tariffs as we are very local in terms of contract, as we said. And we are a service company. So both makes us very, very, I guess, resilient in these uncertain tariff times, which I’m very happy, as you can imagine.

And in terms of macro, altogether, I wanted to comment a bit further on what I said in the call, which is we are very largely immune to macro. We estimate it to 85%. And this is not by miracle. Half of our business is municipal, which is, of course, macro immune. But even on the other half, we have around 20% altogether, which is more like retail and hospitals.

So it’s not municipal as such, but it’s still very resilient. And for the 30%, which is real industry, if you want, we are super diversified in terms of industries and super diversified in terms of geographies. It helps us to say, okay, we have a lot of presence in the pharma and microelectronics, which, as you can imagine, is not in the same mood usually as you would say in other type of more like a traditional industries. So that makes us quite confident as well as our ability to react that we’ve demonstrated in the past and our track record. I just wanted to mention two figures we’ve highlighted, but to emphasis again on them.

Waste, as you know, is 100% industrial customer base. In the first quarter, we’ve had a plus 5.1 revenue in Hazardous West in Europe, that’s plus 8.5% in The U. S. A. I won’t go into circles to say there was not a GDP growth in Europe of 5.1% and in The U.

S, about 8.5 So it’s a very big proof of the disconnect largely of macro versus the earliest performance. But how do you see April on the spring? Emmanuel?

Emmanuel Manning, CFO, Veolia: Thank you, Estelle. So regarding this question on macro and how ACREE is continuing, first element is that we don’t see major change compared to the figure that you are seeing for the April. The main changes that we are seeing is in Water Technology, where we are starting to see the rebound. And you have you may have seen our press release this morning with capital with commercial gain. The second main element where we see a change or it continued off trend is regarding the ROCE prices, which were again up in April 20 in Copacil and OZID Index, for instance.

For the rest of the business, it is continuing. So what we see, it’s continue in other ways, continue to be strong, especially in The U. S, but also no change in volume regarding Europe, where you have seen we were able to have an increase of, for instance, in France, plus 12%. Volumes in The U. K.

And Australia are remaining very resilient. Volumes in Germany are strong. And we were also happy to see a good performance in Asia, especially in China, plus 4%, with good volume in hazardous waste. So no main change continuing on trends. And maybe one last sentence on macro.

On top of everything that Estelle has mentioned regarding our characteristic defining our defensiveness, one element which is interesting, it may be in the bridge where you see that in terms of commercial volumes, we are fully in line with what we where were at the end of Q1 twenty twenty four, so around 1.3%, one point five %.

Arthur Sutton, Analyst, Morgan Stanley: Thank you. Thank you very much.

Conference Moderator: Thank you. Your next question is from Ajay Patel from Goldman Sachs. Your line is now open.

Ajay Patel, Analyst, Goldman Sachs: Good morning. And firstly, thank you for the presentation and for taking my questions. But I just really wanted to keep the picture really simple. In the sense that you have a long term guidance for ’27, ’10 percent growth in net income, which in broad terms is broadly just over 600,000,000 in net income growth from 2023. I wanted to understand this acquisition this morning with the synergies included.

How many millions of net income are you looking to add as a a result of it? And then just to understand what the picture for you in current market environment, that guidance of 10% net income growth was based on constant FX. Could you help us just understand at the net income level, what is the headwind that FX presents? Now I know you have plenty of levers to offset, and this is a very resilient business. But just to understand that potential ad in terms of the acquisition with the synergies included and the potential sort of headwind that the FX presents.

Estelle Braschonov, CEO, Veolia: So we’ll start by the first part of your question and hand over to Emmanuel for the second part. In terms of the 2027 guidance, you’re right. We guided around 10% average over the period of net income growth. And this included some potential acquisition, including the EUR 2,000,000,000 net of disposal of acquisition we’ve highlighted in a question we had earlier on. So it included already some acquisition.

We used part of this acquisition room of maneuver tube, if you want, today. So I can confirm the 2027 guidance. There is no further enhancements to it, but it’s more a way to secure this guidance, if you want. Hence, securing the growth of our net result and performance over the next few years is what helps the acquisition of the 30% CDPQ that we have highlighted this morning. In terms of 2025, as we said, we confirm our guidance of 25,000,000 including the acquisition of today, despite the ForEx as it is today.

That’s the global picture. In more detail about the net results in ForEx, Emmanuel?

Emmanuel Manning, CFO, Veolia: Yes, with pleasure. So regarding your question, good morning, AJ. We the transaction that we are launching and on which we are communicating It will be accretive for our ROCE. It will be accretive also from 2026.

When you look at net result, it’s taking into account the synergies cost synergies that we will be able to deliver in an asset from which we have deep and intimate knowledge. So very low level of execution, and you know our track record in terms of synergy delivery. It will take also into account tax optimization, no dividend leakage as well as the cost of financing, meaning that it will be accretive from 2026, accordingly to the synergy ramp up. When you’re looking at when you look at the ForEx impact on the at net result level, as you have seen in 2023 and in 2024, it is offset ForEx is offset at the level of net result. So we will have the positive effect contribution of the CDPQ transaction, and we expect a neutral effect of ForEx.

Estelle Braschonov, CEO, Veolia: So altogether, the 10% net income growth on average over the players is with or without good or bad ForEx in a way. That’s irrespective of it. I think that’s an important point for today.

Ajay Patel, Analyst, Goldman Sachs: Okay. Thank you very much for your answers.

Conference Moderator: Thank you. Your next question is from Zach Ho from Jefferies. Your line is now open.

Zach Ho, Analyst, Jefferies: Hi. Good morning. This is Zach from Jefferies here. Thank you for your presentation. Just two quick follow ups from me.

Firstly, regarding kind of your credit metric headroom of VX. I’m just wondering, is there a minimum level that you’re looking to maintain relative to your 3x target? Doing some quick math on the additional CDBQ acquisition, I think you get to quite close to the 3x target by June 2025 when you finish executing on the transaction. I’m wondering if this would be a concern at all from a credit or cash flow point of view over the next few quarters? Or is this not something that you are bothered or like think that this would be a concern at all?

And then the second question would be just a more general one on top line growth. Based on your responses, I think on the previous questions, it kind of sounds like your message is that most of Veolia is most of Veolia, meaning that the existing business and future kind of booster and stronghold growth is mostly macro immune. My question is, on the booster top line level at least, how much of it is contracted or highly visible? And how much of it depends on certain factors like waiting on further demand to come to in places like The U. S, etcetera?

Yes, any color on that would be very helpful. Thank you.

Estelle Braschonov, CEO, Veolia: Okay. So on the the line is a bit blurred. So I hope we will answer precisely to your question because it was a little bit difficult to understand. But leverage on the first one. Emmanuel?

Emmanuel Manning, CFO, Veolia: Yes. Good morning. So regarding the leverage, we fully confirm our leverage ratio, so below three times for the end of the year, including the acquisition of CBPQ minority interest. As you know, we had a very strong and we have a very strong balance sheet after the disposal of last year and including our strong free cash flow generation. So our expectation and what we fully confirm for the rest of the year is strong cash generation.

We will have the free cash flow strong free cash flow generation, and we fully confirm the leverage ratio below three times after the acquisition.

Estelle Braschonov, CEO, Veolia: Fully investment grade, we don’t need to have extra bonds or whatever financing. So that’s what gives us a lot of comfort, as you can imagine. From this call this morning. I just so I will take your second part of your question. So we estimate altogether that on the business of Eulia, you’re right, there is no major difference between the booster and stronghold activities altogether.

We estimate we are around 85% macro immune. So the 15% remaining will be a little bit of the C and I waste dry waste business typically, which can have a little bit more as an effect on the volumes of economy going up or down. And I’m asked a lot, how is that so? As we try to explain, this is what I call our winning formula, which is to be on all continents. We don’t depend on the economy of one country or another.

We are very spread over. We are very spread over various type of industries as well, from pharma to hospital through to more traditional industries, plus we are very active. And again, we’ve proven that with a very good track record over the last few quarters where the macro was not great in Europe typically, and we still have grown our revenue, not only our bottom line, but our top line as well quite consistently. The number I mentioned on the has in Europe at plus 5% and in The U. S.

At plus 8.5 where revenue, not even EBITDA, which is always going faster, as you know. So you’re right. We have a very good winning formula of resilience and growth, which makes us quite uniquely placed in today’s world of uncertainty. That’s why when we confirm not only our guidance for 2025, but even for ’27, it’s a secured guidance, thanks to the acquisition we said, thanks to our foundation, thanks to the strategic sources we make of around 10% growth of net result, whatever the ForEx, inflation, the macro, the tariff and everything we’ve just discussed. I think it’s a good again, stronger foundational, like secured growth of the results.

Just wanted to take an example about The USA. I’m asked a lot about The USA. As you can imagine, over the last few months, we still have a big ambition in The USA. As we said, tariff is not a question for us. We have very local contracts.

And why is that so? What supports Veolia’s growth, if I take a bit of steps backwards? What supports Veolia’s growth is demands of the population. We’re talking here about removing pollutants in drinking water, what the water tech business as well as the health business helps. We’re talking here about supporting industries which are strategic, microelectronics or data center, to actually have a license to operate.

Because without water, you just don’t have a microelectronics or chips manufacturing plant. You just don’t have it. It’s a license to operate. It’s not a nice to have. So pollution or just license to operate, this is what drives the growth in The U.

S. And a good example was the PFAS. We’ve grown from EUR 0 to EUR $2.00 5,000,000 top line, again, in the PFAS removal. And I was asked a lot, okay, what about the new administration in The U. S?

Is it changing your ambition? The answer is no. And it was demonstrated last week with the new EPA manager, Mr. Zeldin, confirmed that his intention was not to go slower, but actually to go quicker in the PFAS removal. So I think all that is a proof by example of what we said about macro.

Zach Ho, Analyst, Jefferies: All right. Thank you.

Conference Moderator: Thank you. Your next question is from Ollie Jeffrey from Deutsche Bank. Your line is now open.

Ollie Jeffrey, Analyst, Deutsche Bank: Thanks very much and good morning. Two questions, please, on the WTS minorities acquisition. The first is, can you please confirm, because I think it would help clarify for everyone to think about in terms of accretion and the PE paid here. When you look at your accounts, the minorities for the WTS global business was $19,000,000 in 2024. What was it or the minorities just to be the WTS part of the business that you bought so we can have a sense of what the net income looks like?

That would be very helpful. And the second question I have is just on the synergy guide you’ve given. I presume historically when you come to guiding the synergies that you would see that as being a fairly conservative estimate and there’s potential headroom to that figure and how things go, just given how you guided synergies before in the past. Is that reasonable to continue that that’s a relatively conservative guide on the synergy front? Thank you.

Estelle Braschonov, CEO, Veolia: So I will take the second question, leave Emmanuel for the first one. But the global picture on the first one is it’s accretive at net income and ROCE level. That’s the short version. But of course, Emmanuel will elaborate a bit with in 2027, it creates value, isn’t it?

Emmanuel Manning, CFO, Veolia: Yes. Oli. Good morning. Absolutely right. So with this transaction, what we fully confirm, it’s accretive.

It will be accretive starting 2026 because due to the timing of the operation, of course, you will have and the ramp up of synergy this year, we expect around CHF 15,000,000 synergies, then next year around CHF 35,000,000 and then CHF 39,000,000. So with this ramp up that this year, it will be very slightly dilutive, but the amount is not significant and we fully confirm the increase of our net income around 9%. Starting in 2026 and in 2027 and onward, it will be positive at EPS level and at ROCE level. Taking into account several elements, of course, the cost synergies, but also the tax optimization, the removal of minority interest having positive impact on all our financial indicators.

Estelle Braschonov, CEO, Veolia: So and I just would like to add that we’ve had a question earlier on the guidance 2027. We commented and confirmed that secured 10% CAGR on net result. We also said that we’ll be above 9% ROCE by 2027 or in 2027. Just want to confirm that again that we haven’t highlighted yet. In terms of the synergies, I was smiling on the conservativeness of the synergies.

It’s the best estimate we have today. What I can say is we have an intimate knowledge of the target. Therefore, it’s a very detailed plan. I wouldn’t qualify it as conservative. I would qualify it as more like secured.

It’s our best estimate today, but I don’t see a risk of execution on achieving this target as we’ve demonstrated as well in the delivering of the strategy.

Ollie Jeffrey, Analyst, Deutsche Bank: Thank you. And then just as a follow-up, could I take the CHF 19,000,000 in the accounts, the minorities for WTS as being representative for the business that you bought or not because that’s the global figure and is not representative?

Estelle Braschonov, CEO, Veolia: I guess the 19,000,000 figure is not I mean, the net result today of our Dupuyt S activity is not optimized. That’s what I’ve tried to say in our in the call, I mean, like above, if you want, or in addition to the EUR 90,000,000 synergies, which are more EBITDA. We have a lot of work on tax optimization in addition, for instance, and all the rest of it, which makes us so that like there will be value creation as well from EBITDA in addition to net results. I’m trying to be clear on that one. Hope I’m clear.

Ollie Jeffrey, Analyst, Deutsche Bank: Thank you. Yes, that makes more sense. You got more benefit coming through below the line. All right. Thank you very much.

Estelle Braschonov, CEO, Veolia: Yes, exactly, exactly. In addition to the EUR 90,000,000. I mean, just to make sure everybody understands, we had to run two different separate structures in parallel. Of course, we were coordinating a lot of things. But in terms of cash flow, in terms of tax, of course, terms of the business we run, we had still to run two separate structures.

So as you can imagine, in addition to costs that we can take away, there is a lot of optimization, which we will stop now.

Ollie Jeffrey, Analyst, Deutsche Bank: Okay. Thank you.

Conference Moderator: Thank you. Your next question is from Felipe Urpatian from ODDO BHF. Your line is now open.

Felipe Urpatian, Analyst, ODDO BHF: Yes, good morning. I have some additional question concerning CDPQ, as you can imagine. The first one is just to well understand the figure you have given in terms of sequential contribution, could you just elaborate about the nature of this operational synergy impacting the EBITDA? That’s the first question. Because as you say, you were running two companies, but the one you have had 70%, you were also well knowing.

Are these initially coming from the merger of the two entities? Or there is some, at the EBITDA level first, some additional things to do you couldn’t do before because of the structure of WTS? That’s the first question. The second one is concerning tax because we are discussing about tax optimization. You have had previously some tax carry forward in The US.

If I’m not wrong, those one were terminating somewhere in ’25. Are you going to optimize the remaining you have had for ’25 because of this deal? Means you will be able to more optimize something starting ’25, Or are you also benefiting from some additional delays due to the steel? And is there any remaining tax carry forward beyond ’25 on The US perimeter? Because I do suppose that it’s mainly The US One and not impacting the French one.

The third question is concerning US business globally, but mainly, I would say, Watertech US global business. The Trump administration has made a quite significant turnaround concerning oil and gas. It’s mainly pushing this activity and renewable is suffering as everyone noticed. Are you starting to see some positive impact from this reversal of going more to oil in terms of industrial water business and water tech? For example, for your mobile treatment units, which are based on refineries and so on.

And the last one is concerning China. You mentioned in the press release a rebound of China. But just to be clear, are we discussing a rebound in terms of profitability, which is linked to, I would say, the efficiency plan you started implemented some years ago in order to optimize the return? Or are you also feeling some macro trend positive reversal, which are on top of your efficiencies, I would say, fueling your growth? Because between end of Q4 and Q5 twenty twenty five, we have a quite strong, I would say, turnaround of the China’s activity you mentioned.

Many thanks.

Estelle Braschonov, CEO, Veolia: Okay.

Emmanuel Manning, CFO, Veolia: So in terms of the tax, Emmanuel? Yes. Bonjour Philippe, so you’re absolutely right. The acquisition of the 30%, it’s not only a strategic move, which is fully in line with Greenup and it will be fully consistent. W is a great asset, and we will be able to generate synergies after fantastic practical with the merger with SWES and in an environment where we have deep and intimate knowledge securing the execution.

But on top of that, we’ll have, as I mentioned, also tax optimization potential. You’re absolutely right. We have it will be mainly in France as we will be able to put in the tax group, so to have a tax integration of the European entities. You know that in France, have a tax loss carryforward, which are above CHF 150,000,000 available forever. In The U.

S, we have more than €300,000,000 taxes carryforward disposal available, but only until the end of twenty twenty six. So the impact on that one will be more limited.

Estelle Braschonov, CEO, Veolia: On The U. S. Business, we have half of the Water Tank business, which is 40% altogether and half of the WTS, which we see in The U. S. But as you know, we have as well a very big presence in The U.

S. In the hazardous waste as well as in water activities, reg and non reg. So it’s a varied set of business. What I can say is, as Emmanuel mentioned earlier on, we’ve seen mean, hazardous waste is the best proxy of how industry is doing in The U. S.

Because it’s 100% industrial. And we’ve seen a plus 8.5 revenue growth in Q1 and a very, very good April. So I cannot comment specifically on the Island Gas, the Beal Baby drill effect, if you want, versus what we see so far is more down to the Pharma as well as Microelectronics. And on the Water Tech part of the business in The U. S, we’ve announced this morning very major contracts.

And one was in The U. S. In the microelectronics business, Voltapur Water and Voltatec. So I would say, so far, we see what drives the growth in The U. S.

Would be more that than the effect of oil and gas. But we have such a varied exposure to the very top of industries that it’s difficult to comment for me a lot further. In terms of China, it’s not only a profitability rebound, it’s a revenue rebound as well. I think we have had a plus 4% in And it’s really more Veolia rather than China altogether. Again, difficult for me to comment on is China’s economy rebounding or not.

What we can say is the revenue has bounced back, which we are very happy about. And in terms of the synergies, sorry, I there is a question earlier on, which I haven’t answered yet on the synergies of the WTS acquisition, what are they composed of? You’re exactly right. We already have delivered with the two separate structure already some efficiencies and synergies, which are including in our performance until now. The additional EUR 90,000,000 because it’s an additional will be basically twofold.

A big chunk of it will be just G and A. As in two different structures, you can just merge them. So we’re talking here about real estate. We’re talking here about IT. We’re talking here about structure altogether because we had to have the two separately.

And an additional element is more like operational type of efficiencies because we can do directly a lot of things in terms of purchasing, where we had to keep until now two different boxes, if you want, separate. And we can merge them and go and have extra efficiencies in terms of typically purchasing, to give you an idea. A big chunk is more G and A type. Not the majority, though, it’s just a little bit more than half.

Conference Moderator: Thank you. Your next question is from Alex Ranger from Bank of America. Your line is now open.

Alex Ranger, Analyst, Bank of America: Hi, thank you. Just one actually, not one follow-up, but one extra question, if I may. Just regarding your shareholder structure, you’ve had obviously two big announcements earlier this year, and I think Criteriacasa has already announced that they’ve finalized the acquisition of their 5% stake. But I was wondering if you had any new information regarding the stake BB was building, which was up to 3.5% as well, which seems to be taking a little bit longer than the criteria Kaisa build up. Any color there would be super helpful.

Thank you.

Estelle Braschonov, CEO, Veolia: I can’t remember the dates exactly, but both have already built their stake now for a few weeks. So Caixa is at 5%, and BPI is already at 3.5%, and they have been for a while. I can’t remember the exact date. But they’ve built their stake. Yes, they have.

Zach Ho, Analyst, Jefferies: Okay. Very

Estelle Braschonov, CEO, Veolia: good. Thank right there. I’m very happy to welcome those long term shareholder in the group as in our shareholder base, which they said very clearly support fully the value creation model, the resilient and growth we’ve just described and the Greenup strategic plan. So they clearly said that the reason why they invested was exactly those two.

Alex Ranger, Analyst, Bank of America: Great. Thank you.

Conference Moderator: Thank you. Your next question is from Ollie Jeffrey from Deutsche Bank. Your line is now open.

Ajay Patel, Analyst, Goldman Sachs: Can I please

Ollie Jeffrey, Analyst, Deutsche Bank: clarify with the 11x EV post synergies 25,000,000 in that €19,000,000

Estelle Braschonov, CEO, Veolia: Sorry, it was cut? So if you could repeat because you So the 11 times you want us to comment, but

Ollie Jeffrey, Analyst, Deutsche Bank: The 11 times multiple

Zach Ho, Analyst, Jefferies: Mhmm.

Ollie Jeffrey, Analyst, Deutsche Bank: Full 90,000,000 of synergies is 15,000,000. See the presynergies EBITDA multiple being for the transaction, please?

Emmanuel Manning, CFO, Veolia: Emmanuel? Yes. So to answer your question, we’ll, of course, liaise with you after the call to give you the full detail of the calculation. So have in mind that for the calculation, we are taking into account the EBITDA 2025 and the full year and the full effect of the €90,000,000 cost synergies for the and just in the calculation, you have to take into account also the debt of the entity. The full detail will be sent to you.

Estelle Braschonov, CEO, Veolia: And of course, this compares super favorably with the typical multiple U. S. Peers, which I won’t give you the full list, but you have them there more between fifteen and twenty times. So it crystallizes a lot of value for us.

Ollie Jeffrey, Analyst, Deutsche Bank: May, just on this topic. You spoke about the €90,000,000 of cost synergies at the EBITDA level and further benefits below EBITDA, which boost net income from bringing the minorities in. Can you put a figure on what you see that additional boost below EBITDA being from combining the minorities?

Estelle Braschonov, CEO, Veolia: Emmanuel. So

Emmanuel Manning, CFO, Veolia: to complete maybe the answer that I’ve given before, you’re right. So we’ll have additional positive impact below the EBITDA line. The main one will be tax optimization. As mentioned on the French or the European tax integration group, have a positive contribution of EUR 10,000,000. For The U.

S, we will see because we have until 2026 to implement it. You will have, of course, the removal of the minority interest, which is going to be taken into account. So it’s with this acquisition, you have full security on the synergy delivery. You have additional benefit at net result level. You have absolutely no risk of execution regarding synergies.

It is financed without any bridge loan, without any station, thanks to our strong balance sheet after the disposal that we did last year. So a fully secured operation in an environment that we know deeply and intimately.

Conference Moderator: Thank you. Your next question is from Jenny Peng from Citi. Your line is now open.

Jenny Peng, Analyst, Citi: Thank you very much. Two questions, please. Firstly, with regards to the transaction. Obviously, you paid 11 times for an asset, which is being absorbed into the company where it trades at six to seven times EBITDA. Is there views and thoughts emerging on how Veolia could make some of this value that you have at the group more visible, I.

E, maybe on the completion of the merger of the two water tech businesses spin out of minority enlisting it, or something of that effect to show the value of the core business that sits within Veolia? So that’s the first question. And then secondly, when we look at the EBITDA growth, the 5% to 6% in the medium term, are you able to give us a sense of what is the underlying organic growth of the business, ex ing out all of the M and A that’s coming through, also synergies has historically been a big part of that driver. So when we look at the underlying business growth, is it fair to say it’s low single digits? Thank you.

Estelle Braschonov, CEO, Veolia: So two different questions. So on the first question, I would see it quite differently. I think the transaction today highlights precisely the value within the Veolia stock and the potential for growing our value further. As we explained with the various different multiples. Plus, so it enhance not only the Watertech business value, but the value of Veolia altogether.

I will highlight again the word combination. When we talk about PFAS, we’re talking about WaterTech and Hazardous Waste. When we talk about the CEDIF contract, we talk about another book in Hazardous Waste sorry, in WaterTech, which was helped by municipal water type of contract. So a lot of things are intertwined within So I would argue that today’s transaction highlight the value potential creation for Veolia even further that we’ve seen so far. In terms of the 5% to 6%, I would suggest you refer to the bridge because we give exactly the detail quarter after quarter of exactly your question, Jenny, on what comes from the top line growth, what comes from the efficiency and synergies and what comes from M

Emmanuel Manning, CFO, Veolia: and A. So we have all

Estelle Braschonov, CEO, Veolia: the details quarter after quarter for 2024, for ’25 so far and so on and so forth. But altogether, if you think of value creation as in EPS value creation, you have a big chunk which come from top line, a big chunk which come from efficiency and synergies and a big chunk which comes from M and A, like what we’ve announced this morning. So depending on the quarter, I wouldn’t say it’s a third, a third, a third because, of course, you have different quarters. But you would think of the three as really three important levers. I won’t mention only one of those.

And those are the three which helps us to be able to confirm the 10% CAGR of net result irrespective of all the different element of the environment, the macro, the ForEx or whatever, as we discussed this morning in detail as well as the ROCE above 9%, which is well beyond our watch, which at the end of twenty twenty four, you remember, stood at 5.6%. So we are creating value, and we intend to go on exactly in the right direction. And of course, all that with being with the lever under three times.

Jenny Peng, Analyst, Citi: Thank you very much.

Estelle Braschonov, CEO, Veolia: It looks like we don’t have any other questions. So we’ll end now. And you’ve understood that we are very happy not only about the quarterly results, we are very confident for the rest of the year and very happy about the value creative transaction we’ve announced this morning, which is very strategic and value creative. Thank you very much.

Conference Moderator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.

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