Veolia Earnings Rise 2.5% as Waste Treatment Improves, Targets Confirmed
Veolia Environnement SA, the world’s biggest water utility, increased nine-month earnings by 2.5 percent as sales from waste treatment gained.
Operating income rose to 1.57 billion euros ($2.16 billion) from 1.53 billion euros a year earlier, the Paris-based company said today in a statement. Sales rose 0.8 percent to 25.5 billion euros including a 5.3 percent rise in the latest quarter.
Veolia confirmed its financial targets and reiterated plans to cut costs by 250 million euros this year and sell 3 billion euros in assets from 2009 through 2011.
Veolia and smaller competitor Suez Environnement were among waste and water companies to suffer a slump in earnings in 2009 as the recession forced industrial clients to idle factories, reducing demand. The utility is expecting a pick-up in the volume of industrial waste treatment seen in the first six months to continue through the end of the year, Denis Gasquet, head of environmental services, said Oct. 1.
Veolia today said sales of the environmental services division increased 6.3 percent and accelerated in the third quarter due mostly to higher raw materials prices and “more favorable evolution in volumes.” The water division sales also grew 1.5 percent in the latest quarter after drops in the previous two three-month periods.
Suez Environnement SA last month said nine-month profit rose 13 percent as it sorted more waste and prices for recycled materials gained after a revival in economic growth. Next year will be a “year of growth,” Suez Chief Financial Officer Jean- Marc Boursier said.
Veolia is expected to have a “stabilization of waste volumes” in the third and fourth quarters while the first three months of next year should be the first period of “solid volume growth,” Citigroup analyst Sofia Savvantidou wrote in a Nov. 4 note ahead of the earnings.
Veolia confirmed targets for this year that were to generate positive free cash flow after dividends and growth in recurring operating income, which in March was forecast to rise 4 percent to 8 percent. Asset sales totaled 847 million euros in the first nine months, the company said.
Net debt was 15.8 billion euros compared with 16 billion euros at the end of June.
Veolia has announced an agreement with French state-owned bank Caisse des Depots et Consignations to merge their transport units to create the world’s biggest private operator, along with a plan to list the company called Veolia Transdev.
Veolia spent about 4 billion euros in 2007 and 2008 on acquisitions including German trash-handler Sulo Group and TMT, the waste-management unit of Italy’s Termomeccanica Ecologia. The utility last year wrote down the value of the businesses.
Veolia supplies water to about 110 million people worldwide and collects and manages trash for about 50 million. It provides public transportation in 28 countries and supplies energy in Europe and the U.S.
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