Veolia Environnement : Operating & Financial Review S1 2023

Operating & Financial Review

Consolidated Financial Statements at June 30, 2023

OPERATING AND FINANCIAL REVIEW 

1	MAJOR EVENTS OF THE PERIOD	5
	1.1	Business and income trends	5
	1.2	ESG Achievements as part of our multifaceted performance	5
	1.3	Changes in Group structure - Strategic Program	6
	1.4	Group financing	8
	1.5	Performance share plans and Group savings	8
	1.6	Changes in governance	8

2	ACCOUNTING AND FINANCIAL INFORMATION	11
	2.1	Key figures	11
	2.2	Group revenue	12
	2.3	Group EBITDA	15
	2.4	Other income statement items	16

3	FINANCING	20
	3.1	Change in Free Cash Flow and Net Financial Debt	20
4	OTHER ITEMS	25
	4.1	Related-party transactions	25
	4.2	Subsequent events	25
	4.3	Risk factors	25
	4.4	Outlook	25
5	APPENDICES	27
	5.1	Combined data as of June 30, 2022	27
	5.2	Definitions	28
6	RECENT EVENTS SINCE THE FILING OF THE UNIVERSAL	31
	REGISTRATION DOCUMENT

• VEOLIA ENVIRONNEMENT / COMMENTS ON THE RESULTS AS OF FIRST SEMESTER 2023

Message from the Chief Executive Officer

Estelle Brachlianoff, Chief Executive Officer of the Group, commented:

"I am very pleased to announce another set of excellent results for Veolia, with strong growth and a new all-time high, despite the unfavorable macroeconomic context. This very good performance, with revenue up 14.2% and current net income up 18.7%, reflects our commercial dynamism and our operational excellence, and confirms our low sensitivity to economic cycles.

These results demonstrate the relevance of our value-creation model and of our strategic positioning, based on the complementary nature of our three businesses (Water, Waste and Energy), our diversified global footprint, with 40% of our activities outside Europe, and our leadership position in strategic markets. They also reflect the Group's new profile and the success of the merger with Suez. In just under 18 months, we have already generated €230 million in synergies and are ahead of schedule. 2023 has therefore got off to a perfect start for Veolia, and the second half of the year should also follow a favorable trend, which means that I can confirm our objectives for the year as a whole and now aim for the top end of the EBITDA growth range.

Our ideal positioning as a leader in ecological transformation, a growth market as illustrated, for example, by the many contracts we have won since the beginning of the year to help our clients cope with the scarcity of water resources, puts Veolia on a sustainable growth trajectory."

VEOLIA ENVIRONNEMENT / AMENDMENT TO THE 2022 UNIVERSAL REGISTRATION DOCUMENT

3

MAJOR EVENTS OF THE PERIOD

• VEOLIA ENVIRONNEMENT / COMMENTS ON THE RESULTS AS OF FIRST SEMESTER 2023

MAJOR EVENTS OF THE PERIOD

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• Major events of the period

1.1 BUSINESS AND INCOME TRENDS

Strong growth in H1 2023

The strong growth in H1 2023 results reflects ongoing good momentum across all businesses, despite an uncertain macro-economic environment. First-half results confirm the Group's ability to deliver strong growth through a resilient and complementary business portfolio and a balanced geographic footprint.

				2023 / 2022 Change
Change at constant exchange		H1 2023		Δ at constant exchange rates &
rates (€ million)	H1 2022	Δ at constant exchange rates	scope
Revenue	20,196	22,755	14.1 %	14.2 %
EBITDA	2,953	3,162	7.8 %	8.2 %
Current EBIT	1,515	1,674	11.2 %	13.3 %

H1 2023 revenue is €22,755 million, up significantly year-on-year: +14.2% at constant scope and exchange rates. Growth was recorded across all businesses and is driven by excellent performance in Water (+8.4%), steady growth in Waste (+3.3%) despite lower recyclate prices and ongoing robust growth in Energy (+41.3%) boosted by higher energy prices.

All business lines reported growth in the first half of the year at constant scope and exchange rates:

• Water activities reported organic growth of +8.4%, driven by good activity levels in Water technologies and tariff reviews;
• Waste activities increased by +3.3% and +6.3% excluding the change in recyclate prices, driven by hazardous waste processing activities, particularly in the United States, Australia and Latin America;
• The Energy businesses grew significantly (+41.3% organic growth), benefiting from further increases in heating tariffs and electricity selling prices, reflecting the higher cost of purchased energy.

Revenue growth excluding the increase in energy prices amounted to +5.2% at constant scope and exchange rates.

H1 2023 EBITDA is €3,162 million, up +8.2% at constant scope and exchange rates. EBITDA growth outpaced revenue growth restated for the increase in energy prices (+5.2%), reflecting excellent operating performance. During the half year, operating efficiency programs generated €187 million and the Suez integration synergies plan €84 million, ahead of objectives.

Current EBIT is €1,674 million, up +13.3% at constant scope and exchange rates year-on-year.

Net Financial Debt is €19,233 million as of June 30, 2023 compared with €18,138 million as of December 31, 2022 and includes net free cash flow before financial investments of -€78 million, a significant improvement on June 30, 2022 (-€304 million), despite seasonal impacts on working capital requirements in the first six months. Net Financial Debt includes the payment of dividends of €787 million to Group shareholders and a negative foreign exchange impact of -€189 million.

VEOLIA ENVIRONNEMENT / AMENDMENT TO THE 2022 UNIVERSAL REGISTRATION DOCUMENT

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