Veolia H1 Net Profit Plunges On Charges, Weak Europe

(RTTNews) - Veolia Environnement SA (VE), a French company engaged in water, waste, and energy management, reported Monday a sharp decline in its fist-half net income, that reflected certain charges, loss from discontinued operations, as well as lower revenues due to lower activity levels in Europe. However, on an adjusted basis, the company posted significantly higher earnings.

Looking ahead, Veolia continues to expect to sell 6 billion euros in assets, and reduce its net financial debt to between 8 billion euros and 9 billion euros.

The company continues to expect, assuming an average economic environment, organic revenue growth of over 3 percent per year, after 2013.

For 2015, Veolia increased its net cost reduction target to 750 million euros, including 80 percent in operating income, due to the new accounting treatment of joint ventures.

The company also plans to pay a dividend in 2013 and 2014 of 0.70 euro per share, in respect of fiscal years 2012 and 2013, respectively.

Chairman and Chief Executive Officer Antoine Frérot said, "First half 2013 results reflect the initial impacts of the Company's strategy that has been in place for the last 18 months. ... In view of the progress achieved during the first half of 2013, we are confident in our ability to achieve our medium- and long-term objectives."

For the first half, net income attributable to owners of the company was 3.6 million euros, or 0.03 euros per share, compared to prior year's 162.2 million euros, or 0.32 euros per share. The prior-year's results have been re-presented for the early adoption of IFRS 10, 11 and 12, and divestments completed or in process.

The latest results included net loss from discontinued operations of 16.4 million euros, compared to income of 211.3 million euros a year ago. On a continuing operations basis, earnings were 104.7 million euros, while last year's loss was 20.8 million euros.

The company said the results were hurt by goodwill impairments in the Environmental Services unit in Germany, restructuring charges relating to the voluntary employee departure plan, and costs associated with the early buyback of bonds.

Adjusted attributable net income, which excluded items, was 131.1 million euros in the first half of 2013, compared with 17.8 million euros for the half-year of 2012.

The company noted that the 28.4 percent jump in adjusted operating income was mainly due to significant contribution of joint ventures and associates, the positive impact of the cost reduction plan, as well as the benefit of the closure of the defined benefit pension plan for senior executives.

Revenue declined 3.3 percent to 11.07 billion euros from 11.45 billion euros last year. At constant consolidation scope and exchange rates, revenue was down 2 percent.

In the first half, revenues in the Water division was weak as the positive price impact in France and in Central Europe was offset by a reduction in construction activity. In the Environmental Services division, a difficult macro-economic environment led to a decline in recycled raw material prices and volumes and a drop in activity levels, primarily in Europe.

These were partly offset by growth in Energy Services division revenue due to favorable weather conditions and energy prices in a difficult commercial environment.

In Paris, Veolia shares are currently trading at 10.35 euros, up 0.08 euros or 0.83 percent.

On the NYSE, Veolia shares closed Friday's trading at $13.60, up $0.23 or 1.72 percent.