9M23: fully in line, no surprises

Veolia published a solid set of results with a positive contribution from every business unit and led by Energy owing to higher prices notably in eastern Europe. The FY23 guidance was confirmed with EBITDA growth expected to come in at the top end of the +5% to +7% range and a net income of around €1.3bn.

H1 23: steady growth and no surprises

Veolia reported strong organic growth in H1, in line with consensus expectations. The guidance for 2023 remains unchanged from Q1, with an expected EBITDA growth at the upper end of the 5% to 7% range compared to 2022 (c.€6.5bn), while net income is expected to increase by double-digits to €1.3bn.

Q1 2023 : higher energy prices drove Veolia’s Q1 revenues

Veolia beat market expectations by 8% with generated revenues up by +19.9% to €12bn vs Q1 22. Earnings were boosted by a strong energy price dynamic mostly in Central & Eastern Europe which reflected the group’s pricing power and, in our opinion, its ability to pass on the high cost of carbon emissions to its clients. This first quarter of 2023 appeared to confirm that the acquisition of Suez is bearing fruit.

FY2022: All lights on green for the leader in ecological transformation

Veolia reported a historical level of revenue growth, highlighting the successful integration of the Suez assets, combined with a rising energy price context which benefitted the group and confirmed its leadership position in the ecological transformation. The FY2022 figures were above guidance, driven by earlier-than-expected efficiency gains and strong positioning in all the business units – water, waste and energy, Veolia is on track to pursue what it calls the “ecology of solutions”. The foc

Q322: Continuous dynamic trend on revenues, successful integration of Suez

Robust performances in all business segments enabled Veolia to target the top of the range of its FY2022 outlook, further to the synergies generated by the integration of Suez. These results highlighted the resilient business model as well as the capacity for Veolia to adapt in the 2022 environment, but also to generate strong synergies and efficiency gains. The 9M2022 revenues rose 14% to €30,71bn and EBITDA increased by 5.2% to €4.53bn, led by the waste, water and energy activities.

H1 22: navigating troubled waters

There were no real surprises in Veolia’s half-year results which came in at the top-end of expectations amidst a complex environment. EBITDA was up 6.1% in organic terms thanks to commodity prices (waste, water, energy) and the first synergies from the Suez integration, the latter are being well on track to meet the guidance. Overall, Veolia confirmed its full-year 2022 guidance, underpinned by solid operational efficiencies. Our positive view is reiterated.

Q1 22: integration of Suez, a Waste Side Story

For the first time, Veolia released its results including Suez in its perimeter. As a result, EBITDA grew 35% yoy and 7.6% in organic terms to €1,456m. The Waste segment remined the group’s driving force, further strengthened by the integration of Suez, pushed by both higher volumes and prices during Q1. Positive signals on synergies and efficiencies are worthy of note and are reassuring for the ‘new’ Veolia, allowing the group to confirm its full-year guidance. We reiterate our confident stan

FY21: strong cash generation and good signals in the short-term outlook

Veolia released a set of solid FY21 results, slightly above the consensus, especially marked by a strong cash generation which reduced net indebtedness substantially. Although there are good signals in the short-term outlook, both on synergies and earnings accretion from Suez, as well as low Russian-Ukrainian exposure, we will have to wait until early 2023 for the long-awaited CMD. Before that, we remain confident in the businesses’ resilience to inflation to ensure organic growth in the uncerta

9M 21: confirms and reassures on its inflation-proxy status

In line with the performance in H1, Veolia keeps surfing on the great rebound from waste activities to boost EBITDA above 2019’s and net profit to record levels. Even if the line remains blurred between sustainable and conjunctural growth, Hazardous waste and Energy activities were the main drivers, which is clearly reassuring. Note also Veolia’s confidence in its inflation-proxy status and its ability to pass on rising costs. Positive view confirmed.

A Buy & Hold must

We have totally restructured our model on Veolia to incorporate the deal with Suez and updated our investment case. In short, Veolia appears one of the most promising buy opportunities in our Utility coverage with an attractive risk/reward. Growth prospects, earnings accretion, ability to capture value-accretive projects and strong regional footprint are the new keywords. We also see much hidden value in the lack of a clearly-defined ESG story and potentially upgradeable governance structure. Fo

Veolia on its way to a landmark year in all respects

What a year for Veolia. Outstanding H1 21 results, strongly above 2020 and even 2019, are paving the way for a record year for the group. As a result, it upgraded its FY21 EBITDA guidance by 2.5%, an increase that we still consider conservative. The deal with Suez is expected to be completed before the end of the year, in line with the target. Undoubtedly a milestone year for the group, which could become the new French industrial growth story.

Strong Q1 21 paving the way for a whirlwind year

Veolia has released a solid set of Q1 21 results. Both revenue and EBITDA were up, even when compared to the pre-COVID-19 level. The Waste business (revenue up by 3.4%) remains the growth driver due to favourable prices, while France (+5.7%) and Europe excluding France (+9%) grew strongly. All FY21 (conservative) guidance was confirmed. As a focus of attention, the deal with Suez is expected to be completed by the end of the year.

And finally Suez did well to resist !

Suez and Veolia have announced an agreement in principle on the key terms of their merger. The deal price is €20.5 per share, i.e. 13.9% higher than the previous Veolia offer and representing a €1.3bn extra cost. This significant premium proves that Suez was right when entering this (now-ended) merciless battle, even if some of the means of defence remain questionable.

FY20 – in line with expectations

EBITDA was down by nearly 10% over the year but was perfectly in line with the consensus. In the first months of FY21, the group is still impacted by lower waste volumes but offset by a positive price effect – in all, FY21 EBITDA is expected to increase by more than 10% to finish above €4bn. The group also intends to restore its pre-pandemic dividend policy. We will slightly increase our figures, but no significant changes are expected.

Good Q3 20, activities return to pre-crisis levels

In Q3, activity regained the level it was before COVID-19, but EBITDA and EBIT were flattish but mainly due to FX and scope effects (they were up by 2.5% and 4.3% respectively excluding these effects). The Q4 20 guidance is confirmed. No substantial change to the target price is expected.

Supreme (SUP LN) - Record performance, EBITDA ~doubled

Supreme’s FY24 trading update confirms a record performance in the 12 months to 31 March 2024. Organic revenue and profit growth across all four divisions has driven Group revenue +45% YOY to £225m, with FY24 adj. EBITDA almost doubling to ‘at least £38m’, driving record levels of cash generation. Supreme is actively exploring complementary M&A, supported by a debt free balance sheet. Trading on an undemanding FY25 PE of just 6.7x, with a 3.4% yield, we believe downside risks are more than price

Morning Note – 22 April 2024

Supreme+ (SUP, House Stock at 125p) - Supreme, Supreme!

Morning Note – 25 April 2024

Vianet Group: FY24 trading update, strategic contract win

Vianet has published a positive trading update for FY24 with turnover up 7.6% to £15.18m, a 3.5 percentage point increase in gross margin YoY, and adjusted EBITA ahead of market expectations. Net debt continues to fall and closed FY24 at £1.52m (£2.1m at 30 September 2023), demonstrating strong free cash flow generation, even without the benefit of the £0.9m tax receipt received in 1H24, which augers well for a final dividend. The company reported a new contract with Wilcomatic Wash Systems, the

SP Angel Spec Sits: FY Trading Update (LTHM)

Vianet - FY24 ahead, strategic forecourt customer win

Vianet’s FY24 trading update shows FY24 revenue +1% ahead of our previous forecast, adjusted EBITA +2% ahead, EFCF and net debt +£0.6m ahead, and a strategic new customer win with prominent forecourt operator Wilcomatic. A robust FY25 pipeline and outlook leads us to reiterate our FY25E forecasts at this point, with the update highlighting: strong progress renewing and winning new customers on 3-5 year contracts as they migrate from 3G to Vianet’s advanced 4G LTE solutions; the successful integr

Headlam Group - Strategy for growth in tougher market

Headlam Group has laid out an ambitious long-term revenue target of between £900m and £1bn, as it seeks to grow its share of the UK floor coverings distributor market. Despite a challenging backdrop due to the low level of residential housing transactions, management is seeking to expand each of its sales channels: Trade Counters, Larger Customers, Regional Distribution and Europe & Other. The FY23 results reflected the more challenging environment and the group trades at a discount to its long-

Norcros (NXR LN) - Sale of Johnson Tiles UK streamlines the business and improves operating margin

Norcros has announced the sale of its Johnson Tiles UK business to the current management team for a consideration of £1.0m, with a further modest earnout based on the equity value of the business, both payable in April 2028.

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

Renewi - Solid trading and better cash generation

Renewi’s FY24 trading update was in line with management’s expectations and its improved cash generation is reassuring for investors. Attention is now likely to turn the strategic review of the UK Municipals with management stating that they remain on track to update markets by the end of June. This could lead to an exit of key liabilities and leave Renewi as an attractive circular economy investment with strong market positions and organic growth plans, which should assist in generating value,

SP Angel Morning View: Copper prices hit $9,700/t as China smelts concentrates for zero charge Tc/Rc

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