Where will Veolia’s water growth come from?

Published November 9th, 2017

Veolia shares narrowly outperformed a flat CAC40 index earlier this week after the company revealed its third-quarter numbers, which showed EBITDA up 4.8%, helped by solid commercial momentum which saw revenues rise by 4.3%.

Despite third-quarter contract wins such as a €400 million wastewater operating contract in Valenton (France), the year-to-date numbers for the group’s water business are rather more sobering.

While revenues in the energy and waste businesses are respectively up 9.4% and 6.7% YTD – partly driven by scope additions as a result of acquisitions – water revenues have risen by a mere 0.6% over the same period. Higher volumes were offset by negative tariff indexation and unfavourable contract renegotiations, compounded by a reduction in construction activity, although bookings at the Veolia Water Technologies division are up 10% year-to-date.

With organic growth flatlining, it raises the question of whether Veolia will turn back to M&A to grow its water business.