(AOF) – Veolia rose 0.3% to 22.93 euros. The world leader in water and waste is on track to receive the green light from the United Kingdom for its merger with Suez. Unsurprisingly, the British Competition and Markets Authority (CMA) nevertheless issued an unfavorable opinion on the merger of Veolia and Suez in the United Kingdom. According to the institution, Veolia must sell several of its activities due to significant competition concerns.
The CMA requests the sale of the waste management services activities and the industrial water operation and maintenance services of Suez in the United Kingdom as well as the mobile water services of Veolia in Europe.
But Veolia had anticipated by announcing last August 8 the signing of a unilateral promise to sell 100% of the capital of Suez Recycling and Recovery UK Group Holdings Ltd, bringing together Suez’s waste activities in the United Kingdom to Macquarie Asset Management.
In addition, Veolia also signed an agreement this summer to sell mobile water treatment services in Europe to the French group Saur.
Regarding the third asset, the management of Suez’s industrial waters in Great Britain, Veolia told Reuters that these activities generated relatively low annual revenues and that therefore they were not significant for finalizing the acquisition of Suez. .
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Key points
– World leader in environmental services, born in 1853;
– Activity of €28 billion, split between water management for 38%, waste management for 39% and energy services;
– Steady increase in international activity: 21% in France, 38% in the rest of Europe, 25% in the rest of the world and the rest in the “Global business” – business services to large companies ;
– Business model based on the complementarity of the group’s 3 businesses in a logic of use and recovery via the circular economy;
– Non-operable open capital (4.5% of capital for Caisse des Dépôts and 4.1% for employees), the 12-member Board of Directors being chaired by Chief Executive Officer Antoine Frérot who, on 1
er
July, will hand over her position as Chief Executive Officer to Estelle Brachlianoff;
– Solid balance sheet after the 2021 capital increase with net debt reduced to €9.5 billion compared to €16.5 billion in equity, and cash in excess of €15 billion which will be reinforced in 2022 by disposals in municipal water and waste in France and in water activities internationally.
Challenges
– Impact 2023 strategy “to be the reference company for ecological transition”: growth of differentiating activities: treatment of hazardous waste, depollution of soil and industrial water, energy efficiency of industries and buildings, recycling of plastics, recovery of bio-waste, industrial ecology offers (circular economy loops, pooling of utilities, etc.) / digital reinvention of traditional businesses – water, waste, energy networks / solid revenue growth, €1 billion in cost savings on 4 years, debt ratio below 3 over the period and 2023 dividend of €1.30;
– Innovation strategy based on 3 pillars: coordination by the VERI R&D center organized into 5 departments – biosystems, environment & health, process engineering, digital innovation and industrial support / Via Veolia open innovation focused on innovative responses to needs precise / global information sharing network with 200 researchers and 200 partnerships and “Open Playground for co-construction of ecological solutions;
– 2020-2023 environmental strategy: reduction of CO2 emissions by eliminating coal-fired power plants in Europe by 2030 / GreenPath, internal platform for evaluating the environmental footprints of solutions / increasing the efficiency of drinking water networks;
– Execution of the partnership with Saudi Arabia in the water and waste treatment businesses;
– Benefits from diversification in the dismantling of nuclear power plants, biomethane, waste treatment, in the United States and Russia (1.5% of revenues).
Challenges
– Favorable impact of raw materials inflation in the energy, plastics, paper-cardboard and recycled metals branches;
– Risks related to the Russia-Ukraine war: 0.3% of revenues in the area (waste and water management activities in Ukraine and Russia) but study by the municipality of Montreal of the group’s commitments in Russia;
– 2022 objective of “solid revenue growth – around €37 billion with the integration of Suez, a 4 to 6% increase in operating profit, net income around 1, €1bn, a debt leverage of 3 and a growing dividend with that of earnings per share, i.e. 40%.
Threat to the European energy system
The leading importer of German gas, Uniper posts 54% of the volumes it buys from Russia. Following the war in Ukraine, the group had to acquire the volumes it lacked on the spot market, the prices of which had exploded. In difficulty, he requested aid from the German state, which raises concerns for all European energy companies. Nevertheless the German RWE and the French Engie reacted by arguing that their situation was very different. RWE stressed that it was less dependent on Russian gas. As for Engie, it benefits from the diversification of its sources of supply, with an increase in the volumes of LNG delivered in France and contracts with Norway and Algeria. The group has also adapted its hedging strategy to strengthen its resilience.