Veolia Environnement Adr

Today, Thursday, July 30th, 2026. I would now like to turn the conference over to Ms. Estelle Brachlianoff. Please go ahead.

Thank you, and good morning, everyone, and thanks for joining us for this conference call to present Veolia's H1 results, and I'm accompanied by Emmanuel Mening, our CFO. We'll start on slide four, and let me start by highlighting the key achievements of the first half. We delivered a new semester of strong performance with another improvement of our EBITDA margin and an excellent 10.4% growth in current net income, well in line with annual guidance. Given the volatile geopolitical and macro environment, these results show how much Veolia is standing out, with resilient growth quarter after quarter. This is showing the strength of our model with a strong combination of stronghold and booster activities, an international presence and a rigorous operational execution. If anything, this semester has shed a light on the importance of water security. In the context of recurring heat waves, dissemination units become geostrategic and data centres hitting wall of acceptability in arid regions. Our unique positioning as a powerhouse of ecological security and resource sovereignty has become even more precious. This semester was moreover a good illustration of the active portfolio transformation designed to enhance value creation and boost growth. We will have rotated more than 8 billion euros of assets in four years through targeted acquisitions such as cleaners, closed earlier than expected early June, and Asset Debt Vestitures which I expect to sign 500 million euros this year. Last but not least, our excellent H1, the good beginnings of cleaners within Veolia and our confidence in our business model allows me to improve our full year guidance. When I expect to grow current Medicom by at least 8% including and not excluding cleaners. Our grid up trajectory is of course fully confirmed. Now let's look at our H1 results, and I'm on slide 5. Revenue reached €22,193,000,000, up 1.5% at Constant Scope and Forex, and excluding energy prices as usual. EBITDA came in at €3,552,000,000, this is up 5% at Constant Scope and Forex, in line with our guidance. And a very good performance given the complex macro and geopolitical environments, and this is, of course, in the absence of any contribution of social energy we enjoyed previously. Noteworthy is our EBITDA margin expansion of another 70 basis points, reaching now 16%, which is an increase of 120 basis points in two years. This margin improvement quarter after quarter is fueled by two levers. Our strategic choices towards more international and technology driven activities, as well as our continuous operational efficiencies. This is €195 million this semester alone. Current EBIT was up 6.4% at Constance Open Forex, demonstrating strong operating leverage. Our net free cash flow improved significantly by €164 million compared to H1 last year, driven by strict management of capital expenditure and working cap requirements. Net financial debt stood at €24.5 billion, including Cleaners Acquisition as anticipated. We are perfectly on track in terms of leverage, slightly above 3 at your end. These results give us strong confidence for the full year 26 and even raise our guidance. On slide 6, you can see a snapshot of our unique strategic positioning which gives us confidence not only for this year's performance but for very long. Belia provides ecological security, supplies essential services, and therefore contribute to Vissou's sovereignty. Our proprietary solutions and technologies help secure access to water supply, which is as critical as oil, if not more, as we see now very strikingly in the Middle East, with desalination plants being targeted or even with data center permits being rejected in arid locations. Our solutions also give access to an untapped reservoir of local energy at fixed price instead of imports. and help secure supply chains, thanks to the circular economy. The disruption we've experienced recently with respect of our moves is another testimony of the strategic importance of our services for our customers. Last but not least, our solutions protect health when we depollute and decontaminate, as when we treat PFAS, for instance. We have built with Veolia a unique environmental security powerhouse, addressing critical needs for our clients. In terms of business model, and I'm now on slide 7, Veolia offers a unique combination of resilience and growth. And I say this has been tested and demonstrated quite a lot in recent years, with results growing quarter after quarter, when simultaneously we faced inflations, trade wars, economical downturns, and more recently the war in Iran. In parallel, we enjoy our international presence and environmental services leader operating 44 countries across five continents which gives us firepower to lead in technology and innovation thanks to our 14 R&D centers and over 5,000 patents. This enables us to offer unique integrated solution combining wastewater and energy services and combining the strength of our infrastructure-like strongholds together with our agile boosters. Slide 8 illustrates in a trial how strong our model is. with strong results delivered despite external headwinds after the strike in Iran and a confirmation therefore of our positioning. The crisis in the Middle East led to delayed projects such as new destination plants or oil and gas effluent treatment. Paradoxically, on the other hand, the war has reinforced the importance and critical nature of those same projects and I would expect anything but an enhanced pipeline eventually. As a direct consequence of the war, we incurred higher fuel and chemical costs in our contract. Of course, we rapidly passed through this surcharge through our private clients. We are also, as you know, automatically protected by our indexation formulas in our municipal contracts, with some lag effects and therefore temporary margin squeeze. In order to compensate, we have ensured a strong pace and even a stronger pace of efficiency program delivery and put in place specific action plans. Altogether, given the volatile and complex context, I am very pleased about our 5% EBITDA and above 9% net income growth in H1 and even our ability to improve our four-year guidance. With regard to the long-term group's perspective, the Middle East conflict, recent heatwave in Europe and droughts have highlighted water security was absolutely key and technology security is precious. Looking now at our performance by business line, we see resilient growth and solid EBITDA provision across all our activities. I'm on slide 9 and I will start with our stronghold activities. This is municipal water, solid waste and district heating. They generated €15,992,000,000 in revenue, up 2%, with an EBITDA up 4.7%. In times of uncertainty, our strongholds are solid foundations for our group performance. And municipal water was a real driver in H1, with revenue up 4.1% and EBITDA up 7.7%. Not only have we benefited from a very good volume momentum in all our geographies, but also from a renewed commercial dynamism. When droughts hit, cities face water restriction, or industries realize the cost In H1, we enjoyed in France close to 100% renewal rate of contract and we registered new commercial successes, for instance in Cucuta in Colombia with a 2 billion euro backlog over 20 years. This is a very significant contract. I would like to stress also that we are growing our district cooling offer in France, with more than 100 sites identified, covering 3 million inhabitants, an offer which has gained traction since the heatwave in June. This is illustrated by our very innovative solution deployed in Saclay, where nature is helping cooling down data centres, flats and universities for minimal energy consumption. Now to our booster activities. So this is water technologies, hazardous waste and bioenergy. They generated €6,201,000,000 in revenue, up 4.1%, including tuckings, and excluding projects, with a very solid growth of EBITDA up 6.2%. Regarding water technology, revenue was slightly down due to project delays in the Middle East crisis, which is temporary, as I just explained. And we expect a recovery from H2 thanks to the action plan we've put in place, including pricing initiatives, commercial actions, for instance. Moreover, we see renewed demand and a healthy pipeline. The month of June was very promising in terms of bookings, notably with large microelectronics clients, totalling €343 million of orders in microE. And we will continue our strong EBITDA growth and margin expansion. As the Swiss enjoy solving growth after a first quarter penalised by weather events, as you remember. In the US, we succeeded in closing cleaners early June. and I'm very satisfied with the ramp up of the integration and teams. The month of June was excellent and very promising regarding the rest of the year. You remember we built in parallel our future growth for years to come with five new treatment plants under construction of ramping up across the globe in hazardous waste, which is an additional 486,000 tons of capacity eventually. I'm pleased they are progressing well with the commissioning in the UK in January, and the beginning of the commissioning of the High Temperature Incentor in January and June and a ramp-up which is starting therefore. On slide 11, I'm very happy about the progression of our innovative offers which are on trajectory of reaching each 1 billion turnover by 2030. With regards to AI industries, this is data centers and chips manufacturing, they are in high demand to secure steady water supply for cooling systems, ultra-pure water, and they use large amount of high quality solvents and acids. Data centers are starting to see resistance from local communities to be granted permits given the intensity in resource consumption. And our data center resource 360 new offer helps secure local acceptance and license to operate. We use recycled water technologies and heat recovery, for instance. As explained in our April event in London, we already grew very quickly in those AI industries from 150 A million euros in 2019 to 560 million euros in 2025. And we're now targeting approximately 1 billion by 2030. In H1, we secured multiple commercial successes by leveraging our new offering and technological capabilities, resulting in new contract wins in data centers and microarrays, such as our recent contract with AWS in Mississippi, the one we just announced today in Ohio, and the more than $200 million ultra-pure contract or large micro-e with U.S. cleaners in the water tech. Regarding PFAS and new pollutants, we have also an ambition of €1 billion revenue target by 2030 and we are already very successful. Our recent acquisition of cleaners will enhance our U.S. capabilities with a presence in 50 states. So will the acquisition of the sole remediation specialist in Australia with duplication possible. These innovation-driven growths are testimony of the Group's transformation towards more value-added offers and services. Our international footprint has largely contributed to our good results in H1, and I am now on slide 12. I would like to highlight the continuous standout performance in our regions outside of Europe, which grew by a strong 7.1% at Constance Forex, with a noticeable acceleration in Q2. Outside Europe, our growth is much faster than the Group's average. and a testimony to our asset portfolio internalization. All geographies outside Europe showed commercial traction, notably Australia, Asia rebounding, and a sustainable growth very strong in Latin America. That was accompanied by significant EBITDA progression as well. In the US, we closed cleaners earlier than expected, and I will come back to it. The water technology segment was temporarily penalized by the crisis in Belize, as I explained earlier, but continued to deliver a remarkable EBITDA growth. In Europe, we grew by a solid 2.6%, as France and Europe have shown resilience. I would like now to spend a few minutes on efficiencies, slide 13, because at Veolia, it is the backbone of our value creation process, as our track record shows, and again in H1, with €195 million. Our recurring efficiency plans are enabling us to enhance year after year the profitability of our operations, with commercial efficiency, smart pricing, upselling, cost optimization and synergies. AI and digital gains will even support our efficiency in the years to come. We've started already with 23% of our gains last year sourced from AI and digital, and we are deploying more widely solutions such as Talk to My Plant, enhancing maintenance manager in our waste or wood replants. Regarding synergies and integration processes, we've been successful executing the Suez Acquisition, which bodes quite well for the upcoming progression of cleaners. I'm now on slide 14. Veolia continues its transformation as set in green-ups towards more international and multi-technology driven activities and boosters. These two fuels margin improvement and value creation and enhance the growth profile. We are very are active in strategic portfolio management with €8.5 billion of assets which will have rotated over four years, which is massive. You remember that 2025 was a pivotal year as we successfully achieved the trade integration, but we've also crystallized strategic move with two major acquisitions signed or closed. €1.5 billion invested in water tech. We have already extracted nearly half of the planned €90 million synergy, this is €40 million, including €20 million in H1. and of course 2.5 billion euros with the acquisition of Clean Earth in the US closed early June. Lastly, we announced 2 billion euros of non-strategic asset divestitures by mid-28 and I'm fully confident in this process which is accelerating now. We have processed already ready for more than 2 billion euros disposal and I expect around 500 million euros of signed divestitures in 26. A few words on the landmark acquisition of cleaners in the U.S. This is slide 15. Not only are we doubling our size and growing the U.S. hazardous waste market, reaching the number two position with more than $2 billion of revenues, but we are also building a national platform to offer a full range of the other services throughout the U.S. Integration started at full speed. I'm very confident in our capacity to deliver the $120 million cost synergies by year four, let alone the growth enhancement I expect from this acquisition. The acquisition is dilutive in year one, as you would expect, but we will offset it, as you will see in a minute with our enhanced guidance. And the deal will be accretive as early as year two. Now, Veolia generates more than $6 billion of revenue in the U.S., that is the second Country of the Group. Finally, I would like to say a few words about our guidance on slide 16. The OILIA, as you know, is not used to increasing its targets, but I will do it this time. We now target a current net income growth of at least 8%, even including cleaners and not excluding cleaners. This shows our confidence regarding this acquisition as well as in our capacity to continue to give a growing result in spite of a volatile macro and geopolitical context. I of course confirm as well our brilliant planned trajectory. Emmanuelle, the floor is yours to elaborate on H1 results.

Thank you Estelle and good morning everyone. In the current environment, our results are continuously progressing thanks to solid operational execution and the unique combination of growth and resilience. I will start with revenue, which amounted to €22.2 billion, up 1.5%, excluding energy prices. Organic growth of EBITDA was 5%, and that's with online guidance. It's a remarkable performance, as we no longer benefit from such synergies, and given the temporary negative impact of energy prices in H1. and our EBITDA margin continued to increase by 70BP to 16%. We continued to enjoy a strong operating leverage leading to 6.4% progression of current EBIT with a good quality of earnings. Current net income jumped by 10.4% at Construx, largely in line with our annual guidance, thanks to stable financial charges, which is excellent when considering the higher average net debt linked to our M&A operation. and thanks to a stable and modest tax rate of 25.8%. Net free cash flow increased slightly by 163 million euros thanks to tight capex control. As expected, net debt landed at 24.5 billion euros including the closing of clean earth acquisition and the seasonality of working capital. Worth noting, forex impact reversed in Q2 and became positive thanks to stronger dollars in Q2 and the appreciation of central European currencies. Moving to slide 19, you can see the revenue and EBITDA evolution by geography. Starting with America, APEC and ME, as Estelle mentioned earlier, growth outside Europe was excellent, at plus 3.9% and even plus 7.1% at constant forex, with an acceleration in Q2 at 4.6% and even 9.1% at constant forex.