KEY FIGURES FOR THE QUARTER ENDED MARCH 31, 2016

Antoine Frérot, Veolia’s Chairman and Chief Executive Officer declared: “The 2016 fiscal year has started out on a satisfactory note with 5% growth in EBITDA and 16% growth in our current net income excluding capital gains. As evidence of improved operational management, our margins have also continued to improve.  Revenue is down in the first quarter, mainly due to the impact of lower energy prices, but also related to our intent to accelerate the recovery in our construction business.  Excluding these two elements, which had little impact on our profits, revenue increased by 1.6%. This good start to the year allows us to be confident in the achievement of our full year objectives.”   
 

• Revenue declined 3.4% (-1.7% at constant consolidation scope and exchange rates) from €6,305 million to €6,089 million in the first quarter of 2016. Excluding construction revenue and the impact of the decline in energy prices, revenue increased by 1.6% at constant consolidation scope and exchange rates. 

  Exchange rate movements negatively impacted first quarter revenue by €84 million, or -1.3%. The decline in energy prices also weighed on revenue to the tune of €90 million (-1.4%), while lower construction activity negatively impacted revenue by €117 million (or -1.9%).

• In France, revenue was stable in Water, with flat volumes compared to the prior year and indexation of +0.2%. Regarding commercial development, the start of the Lille contract offset the impact of contract renegotiations. In the Waste business, revenue declined by 1%.  The decline in scrap metal activity was partially offset by good performance in treatment activities (incineration and landfill).  Overall, the France segment recorded quasi-stable revenue performance of -0.5% at constant consolidation scope compared to the prior year quarter.
• Europe excluding France revenue declined slightly (-0.7% at constant consolidation scope and exchange rates) but increased 1.2% excluding the impact of lower energy prices and construction revenue. Central Europe revenue was stable, with a slightly favorable weather impact compared to 1Q 2015 for heating, good water volumes, and offset by the decline in energy prices as well as lower electricity volumes sold. Revenue in the United Kingdom was lower by 2.2% due to lower landfilled volumes, partially offset by the startup of the new incinerator in Leeds. Revenue in Germany was stable (-0.7%) with higher revenue in the Waste business (+4.3%), offset by the impact of lower energy prices.
• Revenue in the Rest of the World segment declined by 2.5% at constant consolidation scope and exchange rates. Excluding the impact of energy prices and construction revenue, segment revenue increased 1.5%. Revenue in the United States fell 14.7%, penalized by a very mild winter and lower energy prices, as well as a challenging start to the year in industrial services. At constant consolidation scope and exchange rates, Latin America revenue grew 5.4%, Asia grew 2.6% and revenue in Africa and the Middle East increased 8.5% in particular due to higher electricity demand in Gabon.
• The Global Businesses segment revenue fell 4.3% at constant consolidation scope and exchange rates, with strong growth in hazardous waste (+11.3% in the SARPI business), and a decline in engineering revenue (-6.4%) due to lower construction revenue related to the Sadara and Az Zour North contracts, as well as the cancellation of the Shell Carmon Creek project, and lastly due to lower revenue in the Sade business (-6.8%) due to a delay in international projects.
• By business, and at constant consolidation scope and exchange rates, Water revenue declined 2.2%, with on one hand good activity in the concessions business and on the other hand a decline in revenue from construction activities.  The Waste business recorded satisfactory revenue, with growth of 1.2%, while Energy revenue declined by 4.7% mainly due to the decline in energy prices.

• Solid EBITDA improvement driven by cost reductions, with an increase of 3.0% (+5.0% at constant consolidation scope and exchange rates) from €816 million to €840 million in 1Q 2016.
  • The unfavorable variation in exchange rates negatively impacted EBITDA growth by 1.4% (€11 million).
  • Cost savings contributed to EBITDA growth in the amount of €53 million, in particular due to purchasing savings and operational efficiency.
  • By segment: in France, EBITDA declined in the Water business given weak tariff indexation and further provisions related to the Brottes Law, as well as in Waste due to non recurring favorable items in 1Q 2015. EBITDA in the Rest of Europe segment increased significantly due to cost savings and good performance in Central and Eastern Europe. Rest of the World EBITDA declined due to the impact of the mild winter in the US, partially offset by good performance in Asia.   

• Current EBIT increased 4.2% (+7.5% at constant consolidation scope and exchange rates) to €413 million in 1Q 2016 compared with €397 million in the prior year period.
  • Growth in current EBIT was driven by the increase in EBITDA. The contribution of joint ventures and associates amounted to €17.4 million in 1Q 2016 compared with €22.4 million in the prior year period due to diverse scope and currency effects.
     
• Current net income amounted to €173 million in 1Q 2016 a decrease of 18% compared to €212 million in 1Q 2015.  Excluding capital gains, current net income increased 16%.
  • Current net income in 1Q 2015 included €65 million in financial capital gains compared with only €3 million in 1Q 2016. Excluding these capital gains, growth in current net income was 16%. Current net income in 1Q 2016 includes €41 million in costs related to the application of IFRIC 21 compared with €43 million in 1Q 2015.

     

• Net financial debt significantly improved to €8,265 million as of March 31, 2016, compared with €8,970 million as of March 31, 2015.
  • Net financial debt amounted to €8,265 million, a significant decline compared to net financial debt at March 31, 2015 due to strong free cash flow generation over the prior 12 months.  Net financial debt increased slightly from December 31, 2015 levels (€8,170 million), due to seasonality in working capital requirements, and includes a favorable exchange rate impact of €252 million. 

Following the satisfactory start to 2016, the Group confirms its outlook.

• 2016 Objectives* 
  • Revenue and EBITDA growth
  • Net Free Cash Flow before divestments and acquisitions of at least €650 million
  • Current net income of at least €600 million

       *at constant exchange rates
 

• Two main objectives for 2018
  • Current net income greater than €800 million
  • Net Free Cash Flow of €1 billion

     

• 2016-2018 Outlook
  • The Group expects a progressive increase in revenue growth to achieve average annual revenue growth between 2% and 3%, based on the current economic environment
  • Average annual EBITDA growth of around 5% per year
  • More than €600 million in cost savings over the period

Veolia group is the global leader in optimized resource management. With over 174,000 employees worldwide, the Group designs and provides water, waste and energy management solutions that contribute to the sustainable development of communities and industries. Through its three complementary business activities, Veolia helps to develop access to resources, preserve available resources, and to replenish them. In 2014, the group Veolia supplied 96 million people with drinking water and 60 million people with wastewater service, produced 52 million megawatt hours of energy and converted 31 million metric tons of waste into new materials and energy. Veolia Environnement (listed on Paris Euronext: VIE) recorded consolidated revenue of €25.0 billion in 2015. www.veolia.com
 
Important disclaimer 
Veolia Environnement is a corporation listed on the Euronext Paris. This press release 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 risk that changes in energy prices and taxes may reduce Veolia Environnement’s profits, the risk that governmental authorities could terminate or modify some of Veolia Environnement’s contracts, the risk that acquisitions may not provide the benefits that Veolia Environnement hopes to achieve, the risks related to customary provisions of divesture transactions, the risk that Veolia Environnement’s compliance with environmental laws may become more costly in the future, the risk that currency exchange rate fluctuations may negatively affect Veolia Environnement’s 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 other risks described in the documents Veolia Environnement has filed with the Autorités des Marchés Financiers (French securities regulator). 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 from Veolia Environnement a free copy of documents it filed (www.veolia.com) with the Autorités des Marchés Financiers.
 
This document contains "non‐GAAP financial measures". These "non‐GAAP financial measures" might be defined differently from similar financial measures made public by other groups and should not replace GAAP financial measures prepared pursuant to IFRS standards.  

Contacts

Group Media Relations
Laurent Obadia
Sandrine Guendoul
Tél : + 33 (0)1 71 75 12 52
[email protected]

Analyst & Investor Relations
Ronald Wasylec - Ariane de Lamaze 
Tél. : + 33 (0)1 71 75 12 23 / 06 00
Terri Anne Powers (États-Unis) 
Tél. : + 1 312 552 2890