2008, First Half Results

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2008-08-07

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2008, First Half Results

  1. 1. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 FIRST HALF 2008 RESULTS
  2. 2. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Disclaimer Veolia Environnement is a corporation listed on the NYSE and Euronext Paris. This document contains "forward- looking statements" within the meaning of the provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside our control, including but not limited to: the risk of suffering reduced profits or losses as a result of intense competition, the risks associated with conducting business in some countries outside of Western Europe, the United States and Canada, the risk that changes in energy prices and taxes may reduce Veolia Environnements profits, the risk that we may make investments in projects without being able to obtain the required approvals for the project, the risk that governmental authorities could terminate or modify some of Veolia Environnements contracts, the risk that our long term contracts may limit our capacity to quickly and effectively react to general economic long-term changes affecting our performance under those contracts, the risk that Veolia Environnements compliance with environmental laws may become more costly in the future, the risk that currency exchange rate fluctuations may negatively affect Veolia Environnements financial results and the price of its shares, the risk that Veolia Environnement may incur environmental liability in connection with its past, present and future operations, as well as the risks described in the documents Veolia Environnement has filed with the U.S. Securities and Exchange Commission. Veolia Environnement does not undertake, nor does it have, any obligation to provide updates or to revise any forward-looking statements. Investors and security holders may obtain a free copy of documents filed by Veolia Environnement with the U.S. Securities and Exchange Commission from Veolia Environnement. This document contains "non-GAAP financial measures" within the meaning of Regulation G adopted by the U.S. Securities and Exchange Commission under the U.S. Sarbanes-Oxley Act of 2002. These "non-GAAP financial measures" are being communicated and made public in accordance with the exemption provided by Rule 100(c) of Regulation G. 2
  3. 3. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Disclaimer This document does not constitute an offer of securities in the United States or in any other jurisdiction. Securities may not be offered in the United States without registration under the United States Securities Act of 1933 or an exemption from registration. Veolia Environnement does not intend to register the offering described in this document or to conduct a public offering of securities i the U i d S d bli ff i f i i in h United States. A French language prospectus relating to the French offering has been approved by the French Autorité des Marchés Financiers under number 07-180. Copies of the French prospectus are available in France from Veolia Environnement or from authorized financial intermediaries. The French prospectus contains a section that describes certain risk factors p p that investors should take into account before making any investment decision. The offer and sale of the securities described in this document may be restricted by law or regulation. No offer will be made in any jurisdiction or to any person except under circumstances in which such offer may lawfully be made. This document contains certain information relating to the valuation of certain of Veolia Environnement’s recently announced or completed acquisitions. In some cases, the valuation is expressed as a multiple of EBITDA of the acquired business, based on the financial information provided to Veolia Environnement as part of the acquisition process. Such multiples do not imply any prediction as to the actual levels of EBITDA that the th t th acquired b i i d businesses are lik l t achieve. A t l EBITDA may b adversely affected b numerous likely to hi Actual be d l ff t d by factors, including those described under “Forward-Looking Statements” above. 3
  4. 4. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Strong growth in revenue. Increase in cash flow from operations and recurring operating income p g p g Strong increase in revenue at €18,092m: +19.5% at constant exchange 19.5% rates (+17% at current exchange rates) Further robust internal growth: +11.1% Contribution of acquisitions completed in 2007 and early 2008: +8.4% Operating cash flow at €2 151m: +9 3% at constant exchange rates (+6 9% €2,151m: +9.3% (+6.9% at current exchange rates) Recurring operating income at €1 300m: +7 6% at constant exchange rates €1,300m: +7.6% (+5.2% at current exchange rates) Recurring net income at €498m: +3.2% Net earnings per share at €1.09 : -10% (1) (1) Diluted by options 4
  5. 5. 02 01 /0 /0 1/ 6/ 20 0,6400 0,6600 0,6800 0,7000 0,7200 0,7400 0,7600 0,7800 0,8000 0,8200 20 30 07 100 110 120 130 140 150 60 70 80 90 29 07 /0 1/ /0 20 6/ 27 07 20 /0 07 2/ 27 20 /0 27 07 7/ /0 20 3/ 20 Veolia Environnement 24 07 26 /0 07 8/ /0 4/ 20 20 07 25 07 21 /0 /0 5/ 9/ 20 20 22 07 19 07 /0 6/ /1 20 0/ 20 07 20 /0 07 7/ 16 20 /1 17 07 1/ /0 20 8/ 07 20 14 14 07 /1 /0 2/ 9/ 20 12 200 15 07 /1 7 /0 0/ 20 1/ 09 20 07 08 /1 12 1/ /0 20 2/ 07 07 Change in EUR-GBP 20 /1 08 2/ 11 20 /0 09 Price of Brent In $ 07 3/ /0 20 1/ 08 20 09 06 08 /0 /0 4/ 2/ 20 20 08 05 08 07 /0 /0 3/ 20 5/ 04 20 08 08 /0 04 4/ /0 20 6/ 05 08 20 /0 08 5/ 02 20 /0 02 08 7/ /0 20 6/ 08 20 30 08 /0 6/ 20 08 , 02 /0 -0,50 0,25 1,00 1,75 2,50 3,25 4,00 4,75 1/ 20 1,270 1,320 1,370 1,420 1,470 1,520 1,570 1,620 07 Q 13 1- /0 07 2/ 20 07 27 /0 3/ 20 07 11 Q /0 2- 5/ 07 20 07 22 /0 6/ 20 07Source : Bloomberg 03 /0 Q 8/ 3- 20 07 07 14 /0 9/ 20 07 26 /1 0/ Q 20 4- 07 07 07 A volatile and uncertain economic environment /1 Change in EUR-USD 2/ 20 07 Growth in US GDP (as % ) 23 /0 1/ 20 Q 08 1- 05 08 /0 3/ 20 08 18 /0 4/ 20 08 Q 02 2- /0 08 6/ 20 08 Investor Relations – First Half 2008 Results – 07/08/2008
  6. 6. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Well-managed long-term growth (€m) 2,151 18,092 2,012 1,910 15,462 13,941 13 941 +19.5%(1) +9.3% (1) +11.6% (1) +5.6% (1) Consolidated revenue (2) Operating cash flow 1,236 1,300 1,129 482 498 381 +7.6% (1) +3.2% +9.8% (1) +26.6% Recurring operating income Recurring net income(1) At constant exchange rates(2) Revenue from ordinary activities under IFRS 6
  7. 7. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Revenue(1): Double-digit organic growth 1,312 –102 198 –229 18,092 –60 765 (€m) -391 1,709 281 68 671 5,988 353 15,462 447 238 5,221 5,085 Water W Waste 4,196 Energy services 4,049 Transportation 3,321 2,970 2,724 H1 2007 Internal External Foreign H1 2008 growth growth exch. impact(1) See definition p. 6. +11.1% +8.4% -2.5% +17.0% 7
  8. 8. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Consolidated revenue (1) for Veolia Water by activity (at current exchange rates) in €m 5,988 6,000 +14.7% 5,500 5,221 5,000 5 000 4,500 4,000 +6.4% 3,895 3,660 3,500 3 500 3,000 2,500 2,093 2,000 2 000 +34.1% +34 1% 1,561 1,500 1,000 500 0 H1 2007 H1 2008 Veolia Water - Total Veolia Water - Operations Veolia Water – Works & E&C(1) See definition p. 6.
  9. 9. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Breakdown of revenue (1) by geographic region (€m) Δ at Δ at Internal current constant growth FX FX +9 1% 9.1% +9.1% 9.1% +6.8% +6 8% +21.3% +23.5% +7.7% +8.7% +23.0% +8.5% +29.7% +34.9% +25.4% 25.4% +64.6% +68.4% +66.9% VE Group +17.0% +19.5% +11.1%1,002 1,300660 1,086 H1 2007 H1 2008 Consolidated revenue (1) in H1 2008: €18,092m (1) See definition page 6 9
  10. 10. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Impact of translating currencies into euros The net impact at June 30, 2008, of variations in foreign exchange against the euro was: Revenue, a negative impact of €391 million Operating cash flow, a negative impact of €49 million Operating income, a negative impact of €30 million 10
  11. 11. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Impact of foreign exchange on revenue during the first half of 2008 Impact on Currencies Main divisions impacted revenue concerned Waste >50%, Transportation >25%, USD by -€195m Water >20% Waste >60%, Water >15%, GBP by -€195m Energy ~15%, Transportation < 5% -€391m Non-€ European by +€79m Water ~30%, Waste ~20%, Energy >40%, Transportation <10% Asian by -€52m Water ~60%, Waste >25%, Energy ~5%, Transportation >5% Water >60%, Waste >30%, Other countries by -€28m Energy ~5%, Transportation <5% Water -€101m, Waste -€229m, Energy -€1m & Transportation -€60m 11
  12. 12. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Impact of foreign exchange on operating cash flow in H1 2008 Impact on Operating cash Currencies concerned Main divisions impacted flow f USD by -€22m Primarily Waste y GBP by -€36m Primarily Waste and Water -€49m Non-€ European by +€18m Primarily Energy Asian and other countries Primarily Waste and Water by -€9m Water -€16m, Waste -€44m, Energy +€12m & Transportation -€1m €1m 12
  13. 13. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Impact of foreign exchange on operating income in H1 2008 Impact on Operating Currencies concerned Main divisions impacted income USD by -€11m Primarily Waste y GBP by -€26m Primarily Waste and Water -€30m Non-€ European by +€13m Primarily Energy Asian and other countries Primarily Waste and Water by -€6m Water -€11m, Waste -€29m Energy +€9m & Transportation +€1m 13
  14. 14. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Impact of rise in fuel costs on operating income: €36 m Net impact H1 08 Coverage Mechanism & Commentary g y cost (e) H1 Around 2/3 of total costs benefited from indexation 08/H1 07 Water NS NS Approx. 66% of costs are indexed or hedged. primarily impacting €183m -€15m (1) waste collection and transfer activities activities. Municipal Europe: contractual indexation formulas on either monthly, quarterly or annual basis Waste Industrial Europe: major LT industrial contracts indexed (particularly in UK); i UK) stronger i impact on ST contracts partially compensated b i ll d by fees North America Solid Waste: fuel surcharge generally with 30 day delay Energy NS NS 70% of costs are indexed €276m -€21m French passenger transportation: indexation on the majority of contracts Transpor Germany, Netherlands, Scandinavia (ex-Sweden), Pacific: Full or t partial (e.g. Germany) indexation typically with annual revision Sweden: no indexation North America: managed by municipality or indexed by contract (1) Based on 2007 scope. Rise in fuel costs had around €5m impact on the division’s total acquisitions 14
  15. 15. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Operating cash flow ( ) (€m) H1 2008 Δ current Δ constant H1 2007 FX FX Water 867 904 +4.3% +6.2% Waste 678 715 +5.5% +12.0% Energy services 359 432 +20.3% +16.8% Transportation T i 129 146 +12.5% 12 % +13.4% 13 4% Holding (21) (46) - - Total G T t l Group 2,012 2 012 2,151 2 151 +6.9% 6 9% +9.3% +9 3% 15
  16. 16. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 From recurring operating income to operating income ( ) (€m) H1 2007 H1 2008 Δ current Δ constant H1 08 margin FX FX Water 574 597 +3.9% +5.8% 10.0% Waste 389 405 +4.0% +11.5% 8.0% Energy services E i 251 290 +15.7% 15 7% +11.9% 11 9% 7.2% 7 2% Transportation 48 63 +31.0% +29.9% 2.1% Holding -26 26 -55 55 - - - Total Group recurring operating income 1,236 1,300 +5.2% +7.6% 7.2% Non-recurring it N i items +36 36 +6 6 Total Group Operating income p g 1,272 , 1,306 , +2.7% +5.0% 7.2% 16
  17. 17. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Growth in operating cash flow by division €2,151m (2) €m €2 012m (2) €2,012m €1,910m (2) 904 €1,726m (2) 867 +6.2% +6 2% 826 Water 767 Waste Energy 715 Transportation 678 +12.0% +12 0% 562 507 393 432 321 359 +16.8% (1) Compound annual growth rate 147 150 129 +13.4% +13 4% 146 (2) Veolia Environnement’s operating H1 2005 H1 2006 H1 2007 H1 2008 cash flow, incl. holdings 17
  18. 18. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Growth in recurring operating income by division €1,300m (2) €m €1 236m (2) €1,236m €1,129m (2) 597 €955m ( ) (2) +5.8% +5 8% 574 527 463 Water Waste 405 Energy 389 Transportation T i 307 +11.5% 247 267 290 +11.9% 224 251 (1) Compound annual growth rate 60 74 48 +29.9% +29 9% 63 (2) Veolia Environnement’s recurring H1 2005 H1 2006 H1 2007 H1 2008 operating income, incl. holdings 18
  19. 19. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Operating performance by division The market trend of the past 18 months continued: strong growth in new projects for the construction of facilities: wastewater treatment plants, desalination plants, recycling facilities In France, rise in operating income: good contribution of works and continued operational efforts aimed at reducing costs that outweighed th erosion i ti l ff t i d t d i t th t t i h d the i in volumes recorded in distribution. In Europe the wastewater treatment plant in Brussels began operations First Europe, operations. year of integration of unregulated business interests in the United Kingdom (former Thames). In Germany, growth in the contribution of the Braunschweig contract. Veolia Water Solutions & Technologies: significant increase in operating results in-line with the growth in revenue. 19
  20. 20. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Operating performance by division In France: slight increase in operating income in the sorting/recycling and incineration business lines despite a downward trend in volumes treated, in particular in industrial non-hazardous waste waste. Also contributing was the integration of Bartin Recycling. In Europe: the United Kingdom continued to perform well (new integrated contracts, West Berkshire, Shropshire and Southwark), very good contribution of Scandinavian countries and the Czech Republic. In Germany, integration u de ay o eo a U underway of Veolia Umwelt Services (ex-Sulo). e t Se ces (e Su o) United States: good performance of the solid waste business, thanks to the favorable impact of pricing despite lower volumes; excellent performance of p p g p p industrial services and hazardous waste. Asia-Pacific: significant increase in results in the region (full-year impact of the Taiwan contract) and very good performance in Australia. 20
  21. 21. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Operating performance by division In France, double-digit growth in operating income: positive impact stemming from the increase i energy prices, slightly more f f th i in i li htl favorable weather conditions bl th diti than in 2007 and satisfactory commercial development in the thermal business as well as in specialized subsidiaries. Outside France: favorable weather effect in Central Europe and impact of the contribution of recent acquisitions, primarily TNAI in the United States and Praterm in Poland. Slightly positive contribution of sales of surplus CO2 emission rights quotas, although significantly lower than in 2007. 21
  22. 22. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Operating performance by division Recurring operating income significantly improved despite the impact of the rise in fuel prices and the impact of the end of reduced social/wellfare charges in p p g France High level of performance was maintained in France in urban and inter-urban transportation Significant increase in the contribution from outside France: Germany: turnaround continued, operational optimization and growth momentum (Bremen, impact 2011) United States: further profitable development of transport on demand, improved profitability in transit business, extension of the Boston (MBCR) contract, the Las Vegas contract h b V t t has been extended 3 years t d d Further improvement in profitability in Australia (Melbourne contracts as well as contracts in New South Wales and West Australia) Netherlands: turnaround is under way thanks to operational optimization and y p p renegotiations, impact in H2 2008 and 2009 22
  23. 23. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Strategic positions taken in the European waste market over the past 2 years UNITED KINGDOM Cleanaway UK in June 2006: acquisition on the basis of £595m enterprise value and market share doubled in the United Kingdom (15% versus 7% before the transaction) GERMANY FRANCE Sulo (unchallenged S l ( h ll d Bartin Reycling Group in specialist in paper and February 2008 for €190m in plastics recycling as well as enterprise value: N°3 in ferrous organic recycling) in July and non-ferrous metals non ferrous 2007: acquisition for recovery & recycling in France €1,308m in enterprise value (after disposal of container manufacturer) and position strengthened in Germany ITALY (11%) VSA Tecnitalia (ex-TMT) in October 2007: acquisition for €338m based on a 100% enterprise value equivalent; i l i l larger market share in Italy (28% of incineration market vs. 6%) 23
  24. 24. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Integration and performance of Sulo, German unchallenged specialist in paper and plastics recycling July 2007: Acquisition of Sulo, for a total amount of €1,450m in enterprise value Immediate divestment of the container business for €142m First half of 2008: contrasting market developments in Germany Non renewal Non-renewal of contract in DSD Shortfall ~€40m in EBITDA Decline in margins in industrial non-hazardous waste on a full year basis in comparison with Continued strength in the paper market acquisition business plan 2008-2010 action plan: Cost reduction plan: merging of commercial agencies, Increase profitability in industrial waste sorting centers (MRFs) Development of an integrated offering for household packaged waste and industrial on-site 24
  25. 25. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Overview of main acquisitions (2007 – YTD) H1 2008 revenue: €965m H1 2008 operating cash flow: €89m Revenue Acquisition Date of 1st Consolidation and Description H1 2008 Thames non- Consolidated Nov. 28, 2007. Expands non- €80m Water regulated water regulated water activities in the UK activities (UK) VSA Tecnitalia Consolidated Oct. 3, 2007. Largest private €38m (formerly TMT) operator in thermal waste treatment market. Full p j projects online in 2011 (expected revenue of ( p €200m in 2011). Bartin Recycling €136m Waste Consolidated Feb. 13, 2008. #3 in France in (4 ½ months) ferrous and non-ferrous metals recycling. Recycling business with low level of capital Sulo intensity/depreciation. €523m First consolidation, July 2, 2007. German N°2, specialized in packaged waste. TNAI Consolidated Dec. 2007. Largest portfolio of C 00 €172m district heating and cooling networks in the US. Energy In-line with acquisitions business plan in US$. Praterm Consolidated February 1, 2008. Expands heating €16m network activities in Poland. (5 months) 25
  26. 26. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 From revenue (1) to net income ( ) (€m) H1 2007 H1 2008 Revenue 15,462 18,092 Operating income 1,272 1,306 Cost of net financial debt (392) (426) Other financial income (expenses) ( ) ( ) (11) ( ) (9) Tax (235) (227) Equity in net income of affiliates 10 9 Net income attributable to minority interests (143) (150) Net income from continuing operations 501 503 Income from divested operations (8) (2) Net income 493 501 Recurring net income 482 498 (1) See definition page 6 26
  27. 27. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Cost of borrowing (€m) H1 2007 H1 2008 Average net financial debt 14,900 15,614 Cost of gross financial debt 392 422 Cost f borrowing C t of b i 5.27% 5 27% 5.41% 5 41% Cost of borrowing: 5.41%(1) vs. 5.49% at December 31, 2007 (1) Adjustedfor the favorable impact of the unwinding of hedging transactions, the cost of borrowing stood at 5.66% at June 30, 2008 27
  28. 28. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Investments Growth (€m) Financial Operating incl. New Maintenance chge in Industrial projects(1) financial Total consolidation assets scope Water 293 19 186 195 77 770 Waste 367 35 49 357 2 810 Energy services 100 28 81 176 35 420 Transportation 149 22 26 74 2 273 Other 3 (2) 25 17 - 43 Total at 06/30/08 912 102 367 819 116 2,316 Total at 06/30/07 742 93 304 444 132 1,715 1 715 (1) Of which primarily th acquisition of Biothane (Solutions and Technologies) and an increased participation i th A hk l hi h i il the i iti f Bi th (S l ti dT h l i ) d i d ti i ti in the Ashkelon project in Israel in Water; the acquisition of Bartin Recycling Group and other investments in Europe in Waste; the acquisition of Praterm in Energy services and the acquisition of Rail4Chem in Transportation. 28
  29. 29. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Free cash flow before new projects (€m) H1 2007 H1 2008 06/30/2008 Cash flow from operations (1) 2,009 2,163 Repayment of operating financial assets 176 194 Total cash generation g 2 ,185 , 2,357 , Maintenance capital expenditures (742) (912) New operating financial assets (132) (116) Change in operating WCR (246) (249) Tax paid (140) (168) Interest paid (320) (369) (2) Rights issue reserved for minority shareholders 15 (126) Investments in current growth and development (397) (469) Asset disposals 181 261 Other 9 9 Free cash flow before new projects = 413 = 218 (1) Cash flow from operations = EBITDA (2) Includes the reduction in capital linked to the terms for the repayment of “drainage” receivables (in the Berlin contract) ( in the Water division. 29
  30. 30. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Changes in net financial debt at June 30, 2008 H1 2007 H1 2008 (€m) Net financial debt at January 1st 14,675 15,125 Free cash flow (413) (218) Investments in new projects 444 819 Dividends paid 501 726 Impact of foreign exchange and other (7) (120) Net financial debt at June 30 15,200 16,332 30
  31. 31. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Debt ratios (1) (€bn) 17 4 16,5 16.3 16 15,5 15.2 15.1 15 14,5 3.5x 14 3.4 x 13,5 3.3 x 13 12,5 12 3 June 30 2007 30, Dec 31 2007 31, June 30 2008 30, Net financial debt _ Net financial debt/(Cash flow from operations + Repayment of operating financial assets) (1) 12-month moving average ratios 31
  32. 32. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Debt management: very solid financial stability Ratings Moody’s: A3/P-2 Stable (confirmed in April 2008) Standard & Poor’s: BBB+/A-2 Stable (confirmed in April 2008) Poor s: 2008 bond issues (total of €1.7bn, maturity ranging from 5 to 30 years) 2008 bond redemption: €1.2 bn, o/w €1bn already redeemed in H1. 2009: €102m Average maturity: 9.6 years [vs. 9.2 years in 2007] Group liquidity: €7.8bn of which €4.0bn in undrawn syndicated credit with a 2012 maturity Net financial debt after hedges Currencies (gross debt after hedges) g g (1) Fixed rate: 64% Other 15% o/w Euro: 72% Euro 66% GBP 9% o/w US D ll / Dollar: 39% o/w GBP Sterling: 84% Floating rate:36% USD 10% 32
  33. 33. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 OUTLOOK AND ACTION PLAN
  34. 34. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 2008 objectives Assumption: economic and monetary conditions as observed in the first half of the year currency parities fuel costs climate economic situation in the United States and in Europe 2008 objectives Increase in total revenue above 12% at current exchange rates Increase in cash flow from operations of approx. 6% at current exchange rates approx Continued increase in the dividend per share: +10% (1) p % (1) To be paid in 2009 for the 2008 fiscal year. Subject to approval of the May 7, 2009 Annual Shareholders Meeting 34
  35. 35. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Results to-date of the 2007-2009 plan 2007 actual 2008 Overview of 2007-2009 objectives estimated Average annual revenue growth > 10% +14.0% >+12% Total amount of allocated investments range between €15bn and €20bn €6.9bn ~€5bn After-tax ROCE: 10% (ex potential effect of timing of acquisitions) 10.9% 10 9% 9-9.5% 9-9 5% 35
  36. 36. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Evolution of the Company’s organization Geographic organization has been strengthened with a focus on 4 regions (E i (Europe/North A /N th America/Asia/Middle East) i /A i /Middl E t) Leadership position consolidated: development of our capabilities, our expertise, our capacity to innovate and our p , p , p y investments in research and development Transversal links and bridge ways set up to take full advantage of our size (institutional representation commercial coordination representation, coordination, shared services and functions, etc.) 36
  37. 37. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Momentum for business growth confirmed Strong organic growth in the period High Hi h number of contract renewals (e.g. France) b f t t l ( F ) Significant commercial successes in the area of privatizations and outsourcing contracts g Strong growth in engineering, design and construction Strong organic growth in the industrial and tertiary sectors g g g y 37
  38. 38. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Cost savings plan: "Efficiency 2010”plan” Savings to be doubled in 2 years In the past 5 years, the Group has launched an efficiency drive and achieved recurring cumulative savings of around €580m in operating income Veolia 2005: €368m saved over 3 years (2004-2006) PACT (Continual Cross Improvement Plan): >€200m over 2 years (2007 – 2008E) Implementation of an "Efficiency 2010” plan aimed at saving €400m over 2 years (2009-2010): €180m in 2009, €220m in 2010, thus €400m in cumulative savings in full year 2011 Action plan covering various fields and having a significant impact (purchasing, operations, assets, support functions) Mobilization of all managerial lines in France and outside France (management, dedicated team, backing by local network) Steering organization in line with the plan’s goals (objectives in terms of savings, monitoring tools, reporting) ) Implementation of best practices on a wider scope Implementation cost of plan: €60 - €80m 38
  39. 39. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Acceleration of the asset rotation program Objective: €1bn in disposals completed or committed in 2008 (compared with recurring annual disposal value ranging between €300m and €500m) At least €1.5bn in disposals in the 2008-2009 period Criteria and approaches chosen: pp Businesses making a marginal contribution Companies or contracts operating in mature markets, with the prospect of lower profitability l fit bilit Non-strategic operational units that have been turned around Development of partnerships Non-operational assets 39
  40. 40. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Control of investments 2008: gross capital spending of around €5bn o/w ~ €1.9bn in maintenance capital expenditures o/w ~ €1.9bn in internal growth investments o/w ~ €1.2bn in external growth investments 2009: gross capital spending of around €4.5bn Thus a total of between €16bn - €17bn over the 2007-2009 period Heightened control of working capital requirements 40
  41. 41. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 2008-2010 Action Plan Priority given to improving ROCE: 10% net at the end of 2010 Productivity improvement Improvement in the contribution of recent acquisitions Implementation of the 2010 Efficiency Plan: €400m in full year 2011 Increasing f I i free cash fl h flow Asset rotation: €1.5bn in disposals committed or completed in the period 2008-2009 Heightened control of new investments. Criteria of IRR ≥ WACC +3% maintained. 2009 capex target: €4.5bn Strengthen geographic organization in order to increase commercial synergies 41
  42. 42. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 APPENDICES
  43. 43. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Appendix First half impacted by moves in currencies Appendix 1 91% of VE’s consolidated revenue at 06/30/08 is in OECD member countries Appendix 2 Breakdown of revenue by division Appendix 3 Operating cash flow margins Appendix 4 Recurring operating income margins Appendix 5 From recurring net income to net income Appendix 6 “Efficiency 2010” Veolia Environnement Efficiency plan Appendix 7 Liquidity Appendix 8 Overview of Operating Financial Assets Appendix 9 Business momentum confirmed Appendix 10 Definition of ROCE Appendix 11 Stability of Veolia Environnement’s long-term shareholder base Appendix 12 43
  44. 44. Veolia Environnement Investor Relations – First Half 2008 Results – 07/08/2008 Appendix 1: First half impacted by moves in currencies Main currencies H1 2007 H1 2008 Δ H1 2008/H1 2007 (foreign currency 1 = € …) US dollar Average rate 0.7496 0.6475 -13.6% Closing rate 0.7405 0.6344 -14.3% 14.3% GBP sterling Average rate 1.4802 1 4802 1.2828 1 2828 -13.3% -13 3% Closing rate 1.4837 1.2622 -14.9% Czech crown Average rate 0.0354 0.0398 +12.4% Closing rate 0.0348 0.0419 +20.4% Korean won Average rate 0.0008 0.0007 -12.5% Closing rate 0.0008 0.0006 -25.0% The average rate applies to the income statement and cash flow statement The closing rate applies to the balance sheet 44

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