Veolia Net Income Rises on Strong EBITDA and Cost Reductions

The Tip Desk · June 30, 2015 · 2 min read

The environmental services provider reported a significant increase in net income for the first half of 2015.

Veolia Environnement, the environmental services provider, reported a net income attributable to owners of the parent company of 352.7 million euros for the half-year ended June 30, 2015, compared to 131.1 million euros for the same period in 2014. The company said this growth was supported by strong results from Transdev Group. Current net income attributable to the parent company reached 321.2 million euros, up from 178.0 million euros in the prior year.

Operating performance improved as EBITDA rose to 1,531.1 million euros, a 10.6% increase in current terms compared to the 2014 proforma figure. The company said this progression was driven by a strong dynamic in Europe outside France, particularly in Central and Eastern Europe due to cost reductions. Growth was also noted in the Rest of the World, specifically in the United States, Latin America, China, and Africa Middle East. In France, EBITDA remained stable in water services due to cost reductions and rose in waste activities.

Revenue for the first half of 2015 was 12,317.6 million euros, compared to 12,009.6 million euros on a proforma basis in 2014. The company said the 2.6% current increase was aided by a positive currency effect of 499.0 million euros. Commercial dynamics were favorable in water and energy internationally, especially in China and the United States. Waste activities saw contract gains in France and the United Kingdom, alongside growth in Asia and the Pacific.

Financial costs decreased as the cost of net financial debt fell to 230.8 million euros from 234.8 million euros in 2014. The company said this decline reflects its dynamic debt management. Additionally, the tax rate fell to 30.0% after adjustments, which the company attributed to higher results in Central and Eastern Europe and the French tax group.

Cash flow and debt levels shifted during the period. Net free cash flow was -76 million euros, an improvement from -169 million euros on a proforma basis in 2014. The company said this improvement resulted from EBITDA growth and the control of industrial investments. Net financial debt rose to 9,223 million euros from 8,936 million euros in 2014. This increase was driven by a negative currency effect of 764 million euros and the payment of the 2014 dividend in cash.

Liquidity was impacted by the June 2015 repayment of an inflation-indexed bond with a nominal value of 1.0 billion euros. The company said it has access to a multi-currency syndicated credit of 2.5 billion euros and a second credit of 0.5 billion euros for zlotys, crowns, and forints, neither of which were drawn as of June 30, 2015.

Veolia said it has already achieved 700 million euros of its 2011-2015 cost reduction goal of 750 million euros.