Earnings call transcript: Veolia Q2 2025 shows resilience, growth prospects

Veolia Environnement VE SA reported its financial performance for the second quarter of 2025, highlighting a robust first half with revenue reaching €22 billion, a 3.8% increase excluding average price. The company’s EBITDA rose 5.5% like-for-like to €3,367 million, while current net income improved by 12% to €762 million. According to InvestingPro data, the company maintains strong financial health with an overall score of "GOOD" and has consistently paid dividends for 25 consecutive years. The stock currently trades at $34.10, showing a 16.7% gain year-to-date, with analysis suggesting the stock is currently undervalued based on Fair Value calculations.

Key Takeaways

• Veolia’s H1 2025 revenue reached €22 billion, up 3.8%.
• EBITDA increased by 5.5% like-for-like to €3,367 million.
• Current net income rose 12%, excluding last year’s capital gain.
• Strong growth in Latin America (+10.5%) and hazardous waste treatment.
• Leverage ratio stands at 3x with net financial debt at €20.8 billion.

Company Performance

Veolia demonstrated solid growth in the first half of 2025, driven by strategic acquisitions and efficiency improvements. The company reported a 3.8% increase in revenue, reaching €22 billion, with significant contributions from Latin America and the hazardous waste sector. The focus on water and waste management innovation has bolstered its competitive position, maintaining resilience across various geographies.

Financial Highlights

• Revenue: €22 billion, up 3.8% excluding average price
• EBITDA: €3,367 million, up 5.5% like-for-like
• Current EBIT: €1,034 million, up 8.1%
• Current net income: €762 million, up 12% excluding last year’s capital gain
• Net financial debt: €20.8 billion, leverage ratio at 3x

Outlook & Guidance

Veolia confirmed its 2025 guidance for a 9% net income growth, with ambitious targets for 2027, including a 10% average current net income growth and ROCE above 9%. The company plans to execute a share buyback program to neutralize employee shareholding impacts, reflecting confidence in its long-term prospects.

Executive Commentary

Estelle Brasinov, CEO, emphasized, "Veolia is all about resilience and growth," underscoring the strength of the company’s business model. CFO Emmanuel Manning noted, "We are perfectly on our trajectory to less than three times [leverage] at year end," highlighting financial discipline and strategic focus.

Risks and Challenges

• High net financial debt could impact future investments.
• Regulatory challenges, particularly concerning water tariff increases.
• Market saturation in core services could limit growth potential.
• Macroeconomic pressures affecting global operations.
• Integration risks from recent acquisitions.

Q&A

During the earnings call, analysts inquired about potential margin pressures in France, to which the company responded confidently, indicating no significant concerns. Questions also focused on the PFAS treatment market, where Veolia expressed a positive outlook. The company reassured investors about its ability to maintain H2 performance in line with H1 momentum.

Full transcript - Veolia Environnement VE SA (VIE) Q2 2025:

Conference Moderator: morning, ladies and gentlemen. Welcome to the Veolia H1 twenty twenty five Results Conference Call with Estelle Brasinov, 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 Thursday, 07/31/2025.

I would now like to turn the conference over to Estelle Raschanov. Please go ahead.

Estelle Brasinov, CEO, Veolia: Thank you, and good morning, everyone. Thanks for joining this conference call to present Veolia’s H1 key figures, and accompanied by Emmanuel Benning, our CFO. I’m on Slide four for the key takeaways. First and foremost, our H1 twenty twenty five results are very strong, with Q2 performance in line with Q1. Those results are perfectly in line as well with our annual objectives and enable us to fully confirm our guidance for the year.

In a rather challenging environment, this performance is really a testimony to the strength of our business model of resilience and growth, with a successful combination of stronghold and booster activities and a diversified international portfolio. As you know, the Veolia Value Creation model is fueled by three levers: Growth, Performance and Capital Allocation. Those three levers were again successfully in action in H1, and I will detail each of them in a minute. Regarding capital allocation, I would like to highlight that H1 has been particularly dynamic with €2,200,000,000 of net M and A, invested mainly in our boosters, while keeping debt under control, of course. This includes the buyout of CDPQ’s 30% stake in Water Technologies, enabling us to accelerate value creation, as well as nearly $300,000,000 in targeted acquisition in healthless waste treatment in The U.

S, Brazil and Japan. Those excellent H1 achievements confirm the relevance of our Greenup growth priorities, as the challenges related to health, resilience, competitiveness and sovereignty are all the more crucial and confirm the sustained demand for our services. I’m now on Slide five. Our H1 key figures are once again very strong. Revenue reached EUR22 billion, up 3.8% excluding average price, which are essentially pass through for us, as you know.

EBITDA increased by a substantial plus 5.5% on a like for like basis to EUR 3,367 million, fully in line with our 5% to 6% guidance and shows a margin improvement of 50 basis points, thanks notably to our recurring efficiency gain, complemented by the last synergies coming from the sales acquisition more than three years ago. Current EBIT was up plus 8.1% to EUR 1,000,000,008 and 34,000,000, demonstrating good operating leverage. Current net income reached €762,000,000 up apparently by plus 4.3%, but in reality up by more than 12% if we exclude last year’s capital gain from the divestiture of SADI in France. So quite a remarkable performance down to the bottom line. This means we are very confident in our 2025 guidance.

Net financial debt remains well under control and leveraged at three times. We are perfectly on our trajectory to less than three times at year end with the usual seasonality. Our solid H1 performance enables us to fully confirm our guidance. I’m now on Slide six. In this uncertain time, ZEULYAS stands out as a powerful combination of resilience and growth, as demonstrated over the last few years.

Remember, we managed to increase our results quarter after quarter despite volatile energy prices, difficult macro in Europe, political and geopolitical uncertainty, higher inflation and interest rates, just to mention a few recent shocks. And why is that so? Let me insist on a few elements of our winning formula. One, our diversified geographic footprint, and we make sure we are in the top three in each of our countries. Two, our very local activities with cities and industries rather than governments.

Consequently, we are immune to the current trade war and bear no forex transaction exposure, only transaction in our accounts. Three, we have protected business models, with 70% of revenue automatically indexed and solid pricing power for the remaining 30%. We have long term contracts, eleven years on average, and more than 90% renewals. And 85% of our revenue are quite macro immune. This is clearly the case of our municipal activities, but also largely of our commercial and usual activities, even in the waste business, as detailed recently during our waste deep dive.

Our customer base is spread out from pharma to hospitals, micro e to retail and on all continents. And we are very agile with extra cost cutting when needed. And fourth, finally, our differentiation is reinforced by our ability to combine our different businesses, talking about waste and energy or water and energy, which makes us quite unique to our customers. And as you know, 25% of Veolia’s revenue stems from the combination of two or more businesses. And now on Slide seven.

As you know, our value creation and EPS grows from three pillars: top line growth, performance and capital allocation. And I’m going to go through them one by one, as always, to illustrate how they’ve each contributed to our performance in H1. And I’m starting with growth and growth on our strong goal activities on Slide seven. We registered very solid revenue growth of those Strong Goals with plus 3.4% excluding energy price, and this was fueled by our three activities. Let’s start with Water Operations.

Revenue increased by 3.6. We continued to benefit from good indexation and have achieved successful tariff renegotiation in Spain, as well as rate case approval in our US regulated operations, which protects altogether our future margins. We also enjoyed good commercial momentum in Europe with a few new contracts in France, for instance. Solid waste. Revenue grew by plus 1.5% or 2.1%, excluding LG price, despite a sluggish macro.

This is thanks to good pricing and a high renewal above 90%. In particular, we signed in Q2 the renewal of our Energy from Waste contract in the Greater Porto area for another ten years, totaling €178,000,000 backlog, including innovation to enhance decarbonized energy produced. Revenue from district heating networks increased by plus 5.1% excluding energy price, which is faster than last year. Thanks in particular to a favorable weather impact, but also to new connections with network extensions. Let’s now have a quick look at each of the boosters’ performance in H1, and I’m on page eight.

Those boosters have performed very well, with plus 8.9% growth in H1, including targeted tokens, prioritized, as you know, in Greenwood, but would have been still very good organically. As expected, Water Technologies rebounded significantly in Q2 in terms of revenue and EBITDA, but also from an order book point of view, confirming the strength of our Technologies portfolio. As we explained earlier in the year, Q1 apparent stability was due to a very high comparison base in 2024 and to the timing of contract delivery. In Q2, revenue increased by plus 5.4%, with still a very high comparison build in Q2 twenty twenty four. Bookings amounted to 1,200,000,000 in Q2 alone, which is up 50%, so five-zero, versus Q1, and reached €2,000,000,000 for H1, comparable to last year.

And our pipeline, I must say, is very healthy. This will fuel revenue growth in the coming quarters. As the Sweat revenue increased by plus 5.4%, I would like to highlight in particular the continued strong growth in Europe, up plus 5.8% despite the industrial macro, which is a good demonstration of our relative immunity to macro, as explained earlier. We have also delivered solid growth in The U. S.

Despite planned shutdown of Bowhafar earlier in the year, and we started new operations in Saudi Arabia in the Dubai complex. Only China is still lagging behind in terms of price, but we start to see some rebalancing in volumes. In Bioenergy, revenue was up plus 21.8 excluding energy price, but including our new targeted acquisition. And if I were to go to organic growth, it would still be plus 6.6%, which is very good. Now let’s dive into our second level of value creation, which is performance and efficiency.

I’m now on slide nine, which shows our first half performance. In terms of our yearly efficiency plan, we’ve achieved EUR198 million in gains, in line with our annual target of EUR350 million. As you know, this is a recurring lever embedded into our operations and therefore one we can count on for years to come, not to say forever. Efficiency gains at Veolia are not discretionary cost cutting programs of which you could question the continuity, but rather they come from a diversified series of initiatives in our thousands of plants across the globe. In terms of cost synergies derived from the SWEIS merger, we’ve achieved CHF47 million in H1, for a cumulative total of CHF482 million since day one.

This is in line with our objective of CHF530 million by year end, which, as you know, we raised a year ago. I’m now on slide 10. The third pillar of value creation and EPS growth is capital allocation, with a priority to our boosters when using our balance sheet headroom as per our strategic plan, Greenup. You will see a powerful H1 in that respect, notably in Watertech and Hazus waste. I want just to highlight that the EBITDA increase in H1 of 10% in those two boosters gives us confidence that these are good investments to sustain future earnings.

In H1, we’ve been successful in crystallising €2,200,000,000 of acquisition. First, in Water Technologies, with CDPQ 30% stake in WTS for 1,500,000,000 an operation which will be accretive to our current EPS from ’26 and ROCE enhancing thanks to €90,000,000 cost synergies by ’27. But there is more to it. A merger of WTS and VVT allows us to gain full operational control of the asset, unlocking its full potential for development and innovation. In hazardous waste, on top of our continued strong organic growth, we signed five bolt on acquisitions in Q2 for a combined EV of €300,000,000 and good multiples, notably in The U.

S. And Japan for those acquisitions. Of course, we maintain our balance sheet discipline, and our leverage will remain below three times at year end, allowing the group to retain strategic flexibility. I’m on slide 11, and you know this slide, which summarizes our enhanced ambition in water technologies, as detailed in our deep dive last November. We aim to grow our water tech operations by an average of 6% to 10% per year from 23% to 27% and increase our EBITDA even further.

Including the additional synergies derived from the buyout of the CDPQ minority interest, the EBITDA CAGR for the period will now be above 10% per year, with ROCE increasing gradually. Slide 12, and you also know this slide, which summarises our strong ambition for hazardous waste business as detailed in our last deep dive. This is thanks to supportive megatrends, notably health protection, nature protection, industrial reshoring and regulation, notably on new pollutants, such as PFAS. Our strong asset base and technologies, as well as our leadership position in the world, as well as in Europe and in The US, further reinforced by new assets to be commissioned as well as stocking acquisition. And as announced during our recent deep dive, we expect top line to grow mid to high single digits, EBITDA to grow by 10% per year on average, resulting in margin expansion at least 200bp, while gross sales should increase by plus 50% by 27% to 9% after tax.

I’m now on slide 13. Our strong H1 results, of course, allow me to fully confirm our guidance for 2025. In particular, I wanted to stress again the strength of our H1 performance in terms of growth. Our booster delivered plus 8.9% top line growth, but also in terms of organic EBITDA performance and bottom line delivery. In H2, we are certainly heading towards the same momentum.

So we are very confident on our 2025 guidance, which is summarized on this slide. And finally, on Slide 14, as a conclusion, I wanted to remind you of our long term guidance, fueled by our three levers of value creation, namely growth, performance and capital allocation, which are the backbone of our Greenup plan, and fully confirm our 2027 objective. They include current net income growth of 10% per year on average over the period, with dividend growing in line with current EPS and ROCE above 9% in 2027. As you remember from our yearly presentation, we decided to launch a share buyback plan from 2025 to 2027, sized to neutralize the impact of the employee shareholding programme, so that going forward, current EPS will grow in line with current net income growth. In a nutshell, Veolia is all about resilience and growth.

I’ll now hand over to Emmanuel, who will detail our H1 figures.

Emmanuel Manning, CFO, Veolia: Thank you, Estelle, and good morning, everyone. The results at the June are solid, fully in line with our annual guidance and allow us to be very confident for the rest of the year. With €22,000,000,000 in revenue, we experienced a solid growth of 3.8%. Taking into account the impact of lower energy prices, revenue was up 2%, showing an improvement in the second quarter at 2.4% versus 1.5% in Q1 and an improvement compared to 2024. Thanks to the operating leverage and the good delivery of efficiencies and synergies, we enjoyed a solid organic EBITDA growth of 5.5% at €3,400,000,000 and a current EBIT growth of 8.1%.

Current net income reached €762,000,000 up apparently by 4.3%, but in reality, up by more than 12%, excluding last year’s €53,000,000 financial capital gain. Therefore, the current net income underlying growth is quite strong, and we are very confident about our 9% growth guidance for the full year. Net financial debt reached €20,800,000,000 at the June, up from December 24 due to the seasonality of working capital and M and A activity and showing a leverage ratio of three times in spite of €2,200,000,000 of net financial acquisitions in H1. We expect the leverage ratio to be below three times at year end and after full seasonal working capital reversal in the second half of the year. You can also see on the slide the detailed ForEx impact, which reversed in Q2.

I remind you that we operate in local currency, meaning that our exposure is linked only to translation and not the conversion impact, largely offset at current net income level by Financial, Tax and Minority. ForEx impact was minus €24,000,000 at EBITDA level and neutral at current net income level. Moving to slide 17, you can see the revenue evolution by geography. I will start with Water Technologies. Revenues were stable in Q1 due to a high comparison basis and the timing of project delivery.

As mentioned by Estelle, Watertech Q2 revenue had a strong rebound, as expected, by 5.4% with a still very high comparison base in Q2 twenty twenty four and an EBITDA increase double digit, leading to a 9% EBITDA growth in H1. Meanwhile, bookings were up 50% in Q2 compared to Q1 and reached €2,000,000,000 at the June, a level comparable to last year, and we expect significant further signing in H2. In Rest of the World, revenue was up 3.7% with all regions performing well. Very strong performance in LatAm, plus 10.5% and AfricaMiddle East, up 6.7%. In Asia, very solid waste activity in Hong Kong and water operation in Japan.

In China, hazardous waste is progressively recovering with volume up, but prices still under pressure. U. S, strong regulated Water and hazardous waste revenue was up 5.3% in H1. In Rest of the World, it was up 5.6% excluding Energy prices. In Central Europe, revenue increased by 5.7%.

Heating activity benefited from a cold winter, while the impact of lower energy prices was much lower than last year. In Northern Europe, we registered a solid activity for Waste in The UK and Energy Services in Belgium. In Southern Europe, the semester was excellent, notably in Spain, and revenue was up by 8.6%. Finally, France and Hazardous Waste Europe was flat in H1 with lower solid waste volumes and indexation and timing of efficiency gain impact. Offset by strong hazardous waste and good water activity, we expect a rebound in H2.

Now, let’s take a look at our performance by business, and I will start with Water. Water revenue was up 3.4%, fueled by the strong gold water operation, while Water Technology rebounded as expected in Q2, up 5.4%. Water operations benefited from good indexation with continued price increases in Spain, Central Europe and in the regulated U. S. And Chilean water operation, while indexation was back to zero in France due to lower electricity prices.

Volumes were on a very good trend, for example, plus 2.6% in France. Moving to Waste. Waste activities grew by 2.4%, a solid pace, but a bit slower than in Q1 due to the slightly lower indexations and volumes. Revenue from the solid waste front haul was up 1.5%, driven by tariff increases in all geographies. In terms of volumes and commercial developments, Europe was mixed, with resilient volume in The UK and in Germany, but down in France, notably in Landfields.

Activity was still progressing in the rest of the world, notably in Latin America and in Hong Kong. Commodity impacts were non significant and comparable year on year, with lower electricity prices in H1, partially offset by the increase of recycler prices. The hazardous waste booster had a very strong semester in all our geographies, in Europe as well as in The U. S, thanks to a favorable mix effect and good commercial momentum. Finally, moving on to Energy, I am on slide 20.

As you know, Energy revenue is sensitive to Energy prices, which were down as expected in H1, but to a much lesser extent than last year. Excluding the Energy price impact, growth was faster, up 5.5%, thanks to good volumes helped by over winter, heat prices were on average almost stable compared to last year, and electricity prices were down as expected. Strong activity in Energy Efficiencies, up 6.6%, with strong sales momentum in Belgium, Southern Europe and The Middle East. The revenue bridge on slide 21 explains the driver of our growth in H1. Scope was negative and reached minus EUR $334,000,000, mainly due to the impact of last year disposals.

ForEx impact reversed in Q2 due to notably the decrease versus the euro and the Argentinian peso, the Australian and U. S. Dollar as well as Brazilian real. The impact was minus €196,000,000 for the first half. The impact of energy prices was as expected, much lower than last year at minus €395,000,000 The weather effect amount to plus 169,000,000 due to a colder winter at the beginning of the year in Europe.

The contribution of Commercial volumes were comparable to last year, plus 1.4%, driven by sales momentum and resilient volumes. Finally, price effects were as expected lower than in 2024 due to lower inflation and contribute plus 1.4% to top line growth. On page 22, you have the EBITDA bridge detailing our organic growth of 5.5%, in line with the annual guidance between 56%. Scope amounts to minus €53,000,000 ForEx EBITDA impact was minus €24,000,000 but its impact was very much offset down the line for EBIT, only minus €13,000,000 and neutral at current net income. Weather was favorable by plus €31,000,000 Commerce Volumes Worked effect was positive at plus 1.4%, in line with revenue impact.

Efficiency gain generated plus 2.3% in additional EBITDA, hence a very good retention rate of 39%. And finally, synergies amounted to EUR47 million, leading to a cumulated amount of €482,000,000 perfectly in line with our annual objective of cumulated €530,000,000 by the 2025. Going down to current EBIT. This slide illustrates perfectly the operational leverage of our business model. Current EBIT grew by 8.1% in H1 to 1,800,000,000 at a faster pace than EBITDA.

Renewal expenses of €157,000,000 were comparable to €24,000,000 Amortization and OFAR were slightly lower than last year due to perimeter. Industrial capital gains, provisions and other were stable and are expected to decrease at year end with fair value adjustments and full impact of IFRS two charges. Joint ventures were comparable to last year. The cost of debt was stable at minus €330,000,000 as well as cost of financing at 3.79%. Other financial charges decreased by €26,000,000 due to variation in ForEx impact.

It was partially offset by a decrease of EUR57 million of net financial capital gains, which included the SAD disposal last year. The current tax rate was flat at 26.2%. Finally, minority interest came to minus €246,000,000 a small increase linked to higher results in Spain and Central Europe. Current net income therefore reached €762,000,000 up by 4.6%, but by 12.5% if we restate last year financial capital gains. Therefore, we are very confident about our 9% growth guidance on the full year.

I am on slide 25. Net income group share amount to EUR657 million, which is stable versus last year as non current items increased by EUR25 million due to a charge associated with the end of a long lasting litigation in Lithuania for minus 35,000,000 Restructuring expenses were stable. Excluding SAD capital gain last year, net income group share increased by close to 10%. Net CapEx amounted to €1,700,000,000 which is stable compared to last year despite having increased gross CapEx from $2,028,000,000 euros to €258,000,000 notably in our booster activities. Net free cash flow amounts to minus €451,000,000 due to working capital seasonal variation of minus €1,170,000,000 which will be reversed at year end, coming from fleet utilization cash outs, scope entries with negative working capital position in H1 and the impact of accelerated repayments of quota fees in Water France.

In Q2 stand alone, working capital variation was almost neutral at minus €24,000,000 leading to a net positive free cash flow of plus €455,000,000 We fully confirm a leverage ratio below three times at your end. As you can see on slide 27, net financial debt is well under control, reached €20,800,000,000 at the June versus 17,800,000,000.0 at the 2024. This increase of €2,000,000,000 is due to usual working capital seasonality and dividend payments, net financial investment of minus €2,200,000,000 which include the purchase of CDPQ 30% stake in WTS, partially offset by cash flow from operations. In spite of significant M and A activity, leverage was at 3.01 times and will decrease to below three times at year end, with a seasonal reversal of working capital variation and strong free cash flow generation expected in H2. In H1, we have successfully issued new bonds, which attracted market interest and was done with very good market conditions.

We anticipate partially the EUR 1,350,000,000.00 IB Bond 26 maturity by issuing a EUR 500,000,000 growing hybrid bond in May. We also issued in June EUR 1,500,000,000.0 in two tranches of seven and twelve years at respectively 3.323.79%. We have also repaid €836,000,000 bonds during the first half and the next maturity of €500,000,000 is in September. Our balance sheet therefore remained very strong. Both rating agencies confirm strong investment grade ratings in H1 twenty twenty five.

Before concluding, I remind you on this slide of our share buyback program, which has been launched to offset the dilution of the employee shareholding program and our upcoming investor events. Our strong H1 results allow me to fully confirm our guidance for 2025. I wanted to underline again the strength of our H1 performance in terms of growth at revenue, EBITDA and underlying current net income. H2 is on track for the same momentum, so that we fully confirm our ambitious guidance for 2025. Thank you for your attention.

Estelle Brasinov, CEO, Veolia: Thank you, Emmanuel. And so you’ve understood a very good set of results with Q2 and Q1 very much in line. So no slowing down and actually a very good commercial sales dynamic, if I think of Brazil, Porto, Bezier or even the plus 50% in the Water Tech order book. And I must say, the summer starts well with a good July. I will let you the floor to questions now.

Conference Moderator: Thank you. We will now begin the question and answer session. We’ll pause for just a moment to compile the q and a roster. And your first question comes from the line of Arthur Sitbon with Morgan Stanley.

Arthur Sitbon, Analyst, Morgan Stanley: Hello. Thank you for the presentation, and thank you for taking my questions. I have two. The first one is on the organic growth profile. Q2, well, H1 was 5.5% at EBITDA level, exactly in line with what was achieved in Q1.

I was wondering if we should be aware of any seasonality, any particularly easy or tough comps in the second half that could make you deviate from that trajectory? Or if so far, it looks like it should be pretty much in line with that level. And the second question is actually on your targets for 2027. Consensus is broadly in line on 2027 recurring net income with what’s implied by your constant FX 10% growth target. I was wondering if you are comfortable with that, so at 1,960,000,000.00.

If you are comfortable with that, given the unfavorable FX recently, should the actual current net income in 2027 be lower than what’s implied by your target? Or the FX impact should be relatively small at net income level all in all? Thank you very much.

Estelle Brasinov, CEO, Veolia: Okay. So two interesting questions. In terms of H1 versus H2, you could expect really the similar type of pace in H1 and H2 in terms of EBITDA and pretty much all the rest. That’s explained in a way on our bridge of EBITDA. Growth, as I said, as in top line growth, we’re very happy that it should go on good pace in H2.

In terms of efficiency and synergies, efficiency is really a recurring one. Synergies of the stress merger could go down a little bit, but on the reverse, as you know, we’ve acquired in the July 1 the 30% stake of CDPQ. So we will have a starting of the €90,000,000 altogether, euros of synergies of this acquisition starting in H2. And in terms of so I guess it gives you a color that we don’t expect anything very significantly different in H2 compared to H1 in terms of progression. In terms of the 2027, I can confirm the consensus.

I can confirm our guidance for 2027. And regarding ForEx, you alluded to it in your question. ForEx, as Emmanuel said, is a translation of transaction for us. And if you go of course, you have a ForEx impact when you go into revenue and EBITDA in, again, transaction or transaction. But if you go down to net results, you have almost divided by five effect.

So it’s one five up, one down to the net results. So we can confirm, therefore, what we’ve said this morning. You know our guidance of EUR 37,000,000,000. Point Emmanuel, you want to Yes.

Emmanuel Manning, CFO, Veolia: Maybe just one sentence on that one. Helo Arthur, Thank you for the question. So regarding maybe the second question you had regarding the 2027 target, fully confident, fully confirmed. The growth, as you know, will come half of it from organic growth. So organic growth and the second part, it can be organic, it can be M and A, of course.

And the second part will come from efficiency with a very strong track record. You have, of course, in mind the fact that we’ll have the additional synergies coming from the combination in Watertech that have been achieved and the closing was at the June. Regarding the ForEx, as mentioned by Estelle, we have an effect down the line, which is very much offset. You have seen the effect at the end of H1, 24,000,000 at EBITDA level, 30,000,000 at EBIT level and neutral and net favorable level. So we see that down the line, we have an effect in net income, which is neutralized.

And as you see our guidance, it has concentrated. So fully confirmed and on a very good pace. Thank you.

Conference Moderator: And your next question comes from the line of Ollie Jeffrey with Scotiabank. Please go ahead.

Ollie Jeffrey, Analyst, Scotiabank: Thank very much. The first question I have is on volumes and commerce growth within EBITDA that was around, I think it was 1.4% in H1. I

Arthur Sitbon, Analyst, Morgan Stanley: know you’ve

Ollie Jeffrey, Analyst, Scotiabank: had a tough comp in the water tech business because of the fast growth in 2024. So can you talk about how you think you see that volume and commerce growth evolving in H2? I presume we should expect to see that pick up as the comp in H2 twenty twenty four should be easier to beat for Watertech. Is that the right way of thinking about it? And then the second question is just, obviously, you’ve had a good result here at the bottom line.

Could you just explain a bit which drivers you think in the business are making you kind of track ahead of where envisage bottom line growth at the start of the year? So what’s gone better in H1 than you initially envisaged to put this kind of strong bottom line growth result out? Thank you very much.

Estelle Brasinov, CEO, Veolia: So I guess, will start and Emmanuel, maybe on the bottom line elements. So in terms of volume and commerce, if you look at our bridge, Q2 was at 1.6%, where Q1 was at 1.3%. So it’s even slightly higher in Q2 than Q1. We are very happy, again, with the fact that we have a plus 5.4% in Q2 in Water Tech, that’s revenue. And if you look at all the book, plus 50% or EUR 2,000,000,000 altogether, which is not yet translated into the revenue.

So you’re right, we should expect a very good Q2 in Water Tech in particular. I wanted to highlight another one, which is hazardous waste and hazardous waste in Europe. Why do I pick this one? Because Europe has not been exactly great in terms of macroeconomic for industry. And nevertheless, we’ve enjoyed a plus 5.8% growth in just hazardous waste in Europe for H1.

This is exactly what we’ve tried to explain in our Deep Dive on Waste, like we are largely disconnected to macro. So again, volumes, commerce, order book, all that is in either in line, almost slowing down, if not picking up. So really very confident in that respect. Emmanuel, on the second question?

Emmanuel Manning, CFO, Veolia: Elyse. Yes. So your question was on if I’m not mistaken, on the trend of net result in the bottom line with strong net result delivery at the end of H1. So as you have seen, strong net delivery in term of current net income. It grew by 12.4%, excluding last year capital gain, including the site disposal, and we will maintain the same pace in H2, fully confirming our 9% growth.

If you are looking line by line, starting with EBITDA, so you see 5.5% EBITDA growth, 8% EBIT growth and 1212.4% at net result. In Q2, we have been helped, of course, by very strong momentum in Water Technologies, strong rebound. Our order book did plus 50% and is 5% to 6% higher than last year. Second was, of course, the performance in Water, very good volumes in Water at the June, so plus 2.6% for France, but it was also very well oriented in Central Europe and in Spain. What we like also with Estelle is that the momentum in July is also very positive because it is continuing.

The water activities are doing good, and we see also on the waste activity a good momentum in solid waste and in hazardous waste. And then finally, on your question regarding line by line on net result, cost of financial debt was very well under control. No significant change and tax rate at 26% as expected.

Ollie Jeffrey, Analyst, Scotiabank: Thanks very much.

Conference Moderator: And your next question comes from the line of Bartek Kubicki with Bernstein. Please go ahead.

Bartek Kubicki, Analyst, Bernstein: Good morning, and thank you for taking my questions. Also, two issues to discuss, please. First, on France, maybe two aspects. I would like to split it into two. First, when we look at the French municipal water, there is zero tariffs indexation, so I in 2025.

So I just wonder what does it do to your margins, meaning zero tariffs indexation and probably cost increase. Does it mean that margins in Water France are actually shrinking in 2025 versus 2024? And consequently, also given different price indices developments, what do you think will happen to tariffs in France in 2026? And the second part on the French is actually on municipal waste with minus 4.8% revenues year on year. Maybe if you can elaborate a little bit on this one, meaning, is it kind of a new trend, or is it only a temporary decrease in the in revenues in waste France?

So that’s France. And the second aspect on your 9% net income guidance, because right now you are talking about 12.5% net income increase in first half excluding the capital gain from last year. So just to make it clear, 9% includes the capital gain or it excludes the capital gain? Because the capital gain in from the first half twenty twenty four is around three percentage points to the net income increase. Thank you very much.

Estelle Brasinov, CEO, Veolia: Thank you for your two questions. So on France. In a way, you have three elements of France: France Water, France Dry Waste and France and the rest of Europe, Healthless Waste. So to start with the last one, I already commented on it, plus 5.8% on hazardous waste in France and Europe despite a sluggish macro, so super happy about that. In terms of France Water, you have, in a way, three different effects.

One, you’re right, indexation was pretty much flat, so pretty much no indexation. We anticipated that. This is really an automatic indexation rather than a tariff one, if you want. And we’ve done cost cutting and the efficiency program exactly on that front. So don’t anticipate a shrinking in the margin.

We are used to that, and we have we protect our margin in that respect. I must say another element is volume. And we had a quite good June and July, as Emmanuel just mentioned. So don’t anticipate any negative in the shrinking of the margin. We are protecting the margin in France quarter.

In terms of France Waste, as in dry waste or not hazardous waste, you’re right, in terms of revenue being slightly negative. I wanted to comment on the fact that it was not the case in our other part of the business in Waste. So UK, Germany, LatAm enjoyed a growth in revenue. Coming back to France Waste, you have a various effect. First effect on the energy price because we sell energy that we produce from non recyclable waste.

So that’s an automatic effect. But again, we are able to protect our margin. Then you had a little bit of volume decline linked with a bit of macro. But again, what’s important for me is to protect our margin, and we have. So I would encourage you to have a look if you want more detail on the waste activities altogether and how we are able to be protecting our margin to have a look at our deep dive on the waste, where we’ve demonstrated over the years that we can protect our margin.

I must say that even volume wise, H2 should be better in France Waste as we see in July. So I’m expecting a very much better H2 than H1 even on that specific one. On net income, of course, our guidance does include the specific EUR 50,000,000 in 2024. So it’s not it doesn’t it includes everything. But maybe, Emmanuel, you would elaborate on that.

Hello, Architects.

Emmanuel Manning, CFO, Veolia: Thank you for your question. You’re absolutely right. The capital gain was fully taken into account in our 9% guidance. It was spotted last year and well discussed with you and the other analysts. And when we have defined the guidance and the budget, it will all in, including capital gain.

Estelle Brasinov, CEO, Veolia: And as we explained earlier, including ForEx as well. And so it’s all in.

Bartek Kubicki, Analyst, Bernstein: And

Conference Moderator: your next question comes from the line of Zach Ho with Jefferies. Please go ahead.

Zach Ho, Analyst, Jefferies: Hi. Thanks for the time. Yes. Have two questions on my end. Firstly, M and A.

Yes. So I see press reports that EDF is looking to sell their French district heating and cooling business, which I assume is a stronghold type business for EDF. Sorry, I

Estelle Brasinov, CEO, Veolia: we the line was a little bit blurred, so we barely could hear you. So if you could repeat because

Zach Ho, Analyst, Jefferies: Okay. Yes. Can you hear me now?

Estelle Brasinov, CEO, Veolia: Yes. I think we can. But if you can slow down a bit because since the line is a bit blurred, it’s a bit difficult. But please go on.

Zach Ho, Analyst, Jefferies: Okay. I will try. Yes. So I see press reports that EDF is looking to sell their French district and heating and cooling business. Can I just confirm that this is not the type of transaction that you’re looking for?

And on that note, are there any particular booster areas that you will be interested in using the remaining Greenup headroom for? And my second question would be regarding The U. S. Business. I’ll be interested to know what you are currently seeing on the ground regarding rate increases that I think would incorporate the cost of PFAS treatment.

Are you seeing any pushbacks from regulators regarding bill affordability? Or are you really only seeing support from these regulators? Okay.

Estelle Brasinov, CEO, Veolia: Good. Two questions. So on M and A, I’m used to not commenting on potential something one day. So I haven’t seen that there is any specificity apart from press articles, and I won’t comment on press article. In terms of priorities of Veolia, value creation and boosters investment, as you’ve seen in our green up, this is where we have a priority of our investment, like we’ve demonstrated in H1.

In terms of PFAS, the short answer is we don’t see any pushback, neither from potential tariff increase associated with the PFAS treatment nor from regulators. If I detail that a bit more, in terms of regulators or sanitary authorities, because that’s what we’re talking about, it was more than confirmed in Europe. And even in The U. S, the PFAS regulation, I remind you, the PFAS regulation started in The U. S.

During Trump one administration, and this was confirmed by the recent administration and EPA. So no pushback there. It’s more how do we act, what type of pace, what type of threshold, but it’s not an if, it’s how. That’s everything it’s been discussed about. In terms of costs, I remind you that drinking water is already it’s something like one out of 1,000 compared to buying bottled water.

And at times, it’s even of a better quality. So it’s not a question of cost. And altogether, in all the countries we operate, the typical average bill for a family would be 1% of the family, you know, like average income and family spend. So honestly, nothing here in terms of pushback. I guess it’s quite the contrary, we see a ramping up of not only measurement but then solution.

We’ve sold a few very interesting contracts to treat PFAS in France. We are going on with ramping up our revenues in PFS treatment in The U. S. And in Australia in the same way. So it’s really quite the reverse.

Said we would have an objective of EUR 1,000,000,000 revenue by the end of the decade. I’m very confident we should achieve the target.

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

Conference Moderator: And I’m showing no further questions at this time. I would like to turn it back to Estelle Brashanov for closing remarks.

Estelle Brasinov, CEO, Veolia: So thanks very much for today. We are very happy about this very strong set of results. We’re confirming our guidance for the year and for the Greenup twenty twenty seven. And as I said earlier on, very good order book as well as a good start of the summer in July. And I will let you have a nice summer season.

See you in early September for some of you for roadshows or in Poland on the November 25 if you want to hear about decarbonization and different heating. Thank you very much.

Conference Moderator: Ladies and gentlemen, this concludes today’s conference call. Thank you all for joining. You may now disconnect.

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