2. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 2
Veolia Environnement: the recent past
• Early 2000’s: focus on growth (organic and acquisitions)
o Yearly gross capex increased from €2.9 billion in 2003 to €6.9 billion in 2007 (from ~10% to
~20% of total revenues)
• Economic crisis of 2008-2009
o Efficiency Plan
o Asset write-downs
o Initiation of €3 billion asset divestment program for 2009-2011 (actual amount achieved was
€4.0 billion)
• New management end of 2009/beginning 2010
o Complete review of entire asset portfolio
o Launched strategy of profitable organic growth
o Continuation of asset divestment program (target of €3 billion between 2011 and 2013)
• 2011 operational challenges (European debt crisis and Arab Spring)
o Two profit warnings
o Plan to accelerate restructuring December 2011 Investor Day
• 2012 Refocus and deleverage the Company, renewed governance
o Pursuit of reforms with the planned exit from Transportation and French energy businesses
• 2013 Enhanced cost cutting targets, new organization
2
3. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 3
Key 2013 figures
Revenue €22.3 billion
Adjusted operating cash flow
By activity By geographic zone
Water 46%
(€10.2 billion)
Energy services
17% (€3.7 billion)
Environmental
services 36%
(€8.1 billion)
France 51%
Europe excl.
France and
Central & Eastern
Europe 21%
Asia-Pacific 9%
Water 46%
(€833m)
Energy services
13% (€229m)
Rest of world 6%
Other 1%
(€0.3 billion)
Central & Eastern Europe 5%
Environmental
services 47%
(€847m)
€1.8 billion (incl. other -€113m)
Year-end average capital employed
Water 38%
(€4.8 billion)
Energy services
22% (€2.6 billion)
Environmental
services 37%
(€4.5 billion)
Other 3% (€0.4 billion)
€12.3 billion
3
USA 8%
4. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014
Water
• Presence in 48 countries
• Drinking water provided to >103
million people
• Wastewater services supplied to > 73
million people
• ~85/15 municipal/industry customer
mix
• Operations: Operations and
maintenance of water and wastewater
facilities
o Public authority retains ownership of assets
• Technologies & Networks: Design &
construction of installations,
implementation of technological
solutions
• Key growth platforms:
o Countries: Central & Eastern Europe, China
o Clients: Industrial
o Model: move towards light capex
o Activities: large municipal projects, focus on
technologies (particularly industrial sector)
2013 Water Revenue
€10,222M
Oceania 2%
U.S.A.
7%
Other Europe
6%
Central & Eastern
Europe 11%
United
Kingdom
3%
Germany
10%
France
43%
Middle
East
2%Asia
9%
ROW 7%
4
5. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014
Environmental Services
• Presence in 30 countries
• Partnerships with > 750,000
industrial and public sector
customers, and serving nearly 61
million residents
• ~66/33 industry/municipal customer
mix
• Waste collection, sorting and
recycling, processing and treatment
(landfill, waste-to-energy or
recovery) of liquid, solid, hazardous
and non-hazardous waste and
industrial cleaning
• Key growth platforms:
o Countries: U.K.
o Clients: Industrial
o Model: PFIs, movement towards more
recovery solutions, rather than
elimination, in line with market demand
o Activities: hazardous waste,
recycling/recovery
2013 Environmental Services
Revenue : €8,076M
Oceania 10%
North
America
10%
Other Europe 2%
United
Kingdom
21%
Germany
12%
France
42%
Asia 2%
ROW 1%
5
6. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014
Energy Services (Dalkia)
(situation before EDF transaction)
• Dalkia is the joint venture between Veolia
(66%) and EDF (34%)
o Dalkia owns 75,8% of Dalkia International with EDF
• Presence in 27 countries
• Management of 163,000 installations
• Customer mix:
o ~63% commercial (hospitals, universities, retail, offices,
residential)
o ~28% industry
o ~9% municipal
• Energy optimization and environmental
efficiency: solutions encompassing entire
conversion cycle from fuel purchase to sale
of electricity produced
• Three key activities: district heating and
cooling networks, industrial utilities and
energy services
• Key growth platforms:
o Countries: Central & Eastern Europe
o Activities: cogeneration, biomass
conversions/installation, waste heat optimization
2013 Energy Services Revenue*
France: 3 479M€
International : 4 862 M€
6
* Of which 3 756M€ consolidated in 2013 following
implementation of IFRS 10-11: DKI treated as a Joint Venture
Italy
18%
UK & IRL
5%
Central &
Eastern
Europe
37%
Baltic
countries
7%
Other
Europe
15%
North
America
7%
Asia -
Pacific
4%
Rest of
World
7%
2013 International Revenues
7. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 7
The Dalkia France / Dalkia International deal
A deal which clarifies and
accelerates Veolia’s strategy
Veolia Energy becomes a key
company asset
… Dalkia International
operations grow faster, with
higher profitability than Dalkia
France
Transaction favorable to
financial ratios
• Rebalancing Veolia’s profile
• Transaction neutral to the company’s net
financial debt
• Neutral to earnings in 2015, accretive
thereafter (before PPA)
• Closing expected in H2, 2014
Takeover of 100% of Dalkia International & Divestiture of all of Dalkia France
9. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 9
Transform Veolia
1. Refocus and deleverage the company
3. Streamline our organization
4. Evolve our business models to capture profitable growth
opportunities
Improve financial flexibility
Focus the company on our
value-added solutions
Capture highly profitable organic
growth opportunities
2. Reduce our costs
9
10. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 10
2012-2013 Transformation objectives achieved :
asset divestitures
5.0
In €bn
1
0
6.3
Average multiple of 2012-2013 divestitures : 10,7x EBITDA
11. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 11
2012-2013 Transformation objectives achieved :
debt reduction
Net financial debt of €8.2bn at December 31, 2013, down
€2.6bn from Dec. 2012
12. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 12
2012-2013 Transformation objectives achieved :
cost cutting… continuing at a consistent pace
Gross cumulative savings compared to 2011 (€M)
13. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 13
2012-2013 Transformation objectives
achieved : New company organization
More customer-
oriented
Simpler More flexible More efficient
A geographic organization
Strong central steering functions
Two new departments: Innovation and Markets, Technical
& Performance
14. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 14
THE INDUSTRY STANDARD FOR ENVIRONMENTAL SERVICESTHE INDUSTRY STANDARD FOR ENVIRONMENTAL SERVICES
Target the most important environmental markets
Increase the market share of industrial clients in our
portfolio
Focus on the key growing markets
2012-2013 Transformation objectives
achieved : evolve our business models
15. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 15
1) Changes in the Company’s traditional markets
• Markets that currently represent an important share of our revenue
• Adapting our concession model to roll it-out in regions where it still
creates value
2) Seven key growth markets
• Sectors corresponding to new environmental activities
• Sectors where demand already exists and is growing
• Sectors in which there are a limited number of actors with knowledge
and in which Veolia already has business platforms of significant size
Two development axes
16. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 16
POTENTIAL TARGETS
Our municipal model remains attractive
USA
Scandinavia
Benelux
Gulf
Water: Waste: Energy:
Russia
UK
Germany
Asia
• Good opportunities still exist, those of which we must carefully select:
o Some, of exceptional quality, can be financed by the Company
o The best of other opportunities will more likely be financed through partnerships
Canada
Latin America
Poland
Balkans
Japan
17. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 17
7 key growth markets
In which Veolia can stand out
MARKET IN 2020
Estimated value, €bn per year
> €10bnCircular economy Advanced solutions to extend the life of resources
> €10bnNew approaches to promote sustainable urban servicesCreative solutions
for cities
High
margin
Exclusive technology to treat even the most complex types of pollution
and protect resources
Hazardous
pollution
> €5bn
Comprehensive solutions compliant with the highest standards for
complex operations; optimizing and recovering materialsDecommissioning
> €10bn
Improving efficiency and reducing impact; tailored solutions to provide
alternative resources (water, energy)Food & Beverage
> €20bn
Bespoke solutions to optimize and recycle resources
Reducing environmental and social impactsMining
Improving access to resources
Improving production yield
Reducing environmental and social impacts
Oil & Gas > €20bn
18. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 18
2014: a return to growth
• Revenue growth
o Growth platforms
o New contracts
• Around 10% growth in adjusted operating cash flow
• Significant growth in adjusted operating income
• Reduction in financial expense
• Significant growth in adjusted net income
Continued focus on capex management and growing cash generation
2014 Objectives (1)
(1) Excluding FX effects
19. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 19
Mid-term objectives confirmed
(1) Excluding debt reduction €1.4 billion related to the exit of the Berlin contract
(2) Before closing exchange rate impact
(3) Net of implementation costs, of which, due to new accounting standards for joint ventures, ~80% will benefit adjusted operating income.
(4) Subject to the approval of Veolia’s Board of Directors and the Annual General Shareholders Meeting
(5) In cash or shares
(6) Adjusted net financial debt / Operating cash flow before changes in working capital + OFA repayments)
(7) +/-5%
2012-2013 :
Transformation
period
Objectives
achieved
• 5 billion in divestments(1)
• 2013 net financial debt under new accounting standards:
o Net financial debt between €8bn and €9bn(2)
o Adjusted net financial debt between €6n and €7bn(2)
• Cost reductions:
o in 2013: €170 M net cumulative impact(3)
• Extended dividend commitment of €0.70(4) per share in 2013(5)
and 2014(5)
Beginning
2015
• Average organic revenue growth> 3% per year (mid-cycle)
• Average adjusted operating cash flow growth > 5% per year
(mid-cycle)
• Leverage ratio(6) of 3.0x(7)
• Mid-term: payout ratio in line with historic level
• Cost reductions in 2015: €750M net cumulative impact(3)
20. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 20
Strategy was announced and implemented: Veolia is now
transformed
Objectives announced, objectives achieved, with certain objectives
exceeded
Veolia: a pioneer in the ongoing revolution in environmental
services, and re-profiled in order to seize all new opportunities
A strategy of selective, profitable and sustainable growth, which is
already bearing fruit
Conclusion: a new Veolia to drive renewed
growth
21. Veolia Environnement ) Presentation to Investors – Investor Relations, May, 2014 21
http://www.finance.veolia.com
Investor Relations contact information
Terri Anne Powers
Director of North American Investor Relations
200 East Randolph Street, Suite 7900 - Chicago, IL 60601
Tel : +1 (312) 552 2890
Fax : +1 (312) 552 2866
e-mail : terri.powers@veolia.com
Ariane de Lamaze
Téléphone : +33 1 71 75 06 00
Fax : +33 1 71 75 10 12
e-mail : ariane.de-lamaze@veolia.com
38, avenue Kléber - 75116 Paris - France
Ronald Wasylec
Senior Vice President, Investor Relations
Téléphone : +33 1 71 75 12 23
e-mail : ronald.wasylec@veolia.com
