French utilities firm Veolia Environnement – which owns Veolia Environmental Services in the UK – has seen operating cash flows for its worldwide waste management divisions decline “significantly” due to the lower values for recovered materials and a fall in waste arisings.
In the UK, revenue was relatively flat at constant scope and exchange rates as the multi-annual municipal waste management contracts and the ramp-up of integrated waste contracts offset the decline in industrial waste and landfill volumes
Veolia Half Year Report 2009 The Paris-based company said in its half-year report for 2009 published yesterday (August 6) that its overall operating cash flows had fallen by 4.9% as compared with the figures for the first half of 2008. The decline was attributed to the firm feeling the effects of the economic downturn.
Among the worst hit by the decline in operating cash flow was Veolia’s worldwide waste management divisions, with the firm reporting a fall of 24.4% at a constant exchange rate across all its markets.
Veolia claimed that waste management divisions had been “characterised by a decline in the volumes of mainly industrial and hazardous waste processed” and also falls in the prices of recycled materials, most noticeably paper and metals. Veolia said this had a “significant impact” on the operating performance of the division.
Decline in the operating cash flow – which is the amount of cash the company generates from revenues from customers, excluding long-term investments – were most noticeable in Germany where it was down 18.3%, North America, 10.5%, and, Asia-Pacific, 9.8%. The UK arm was, however, relatively unaffected.
The report states: “In the UK, revenue was relatively flat at constant scope and exchange rates as the multi-annual municipal waste management contracts and the ramp-up of integrated waste contracts offset the decline in industrial waste and landfill volumes.”
The major declines on the waste side of the company were seen in Italy, where Veolia had to write-down assets in the waste management business in Italy and incurred a €35 million (£30 million) impairment charge on assets, which came as a result of a business plan review in connection with ongoing contractual negotiations.
Veolia has now set itself an objective to create €180 million (£154 million) in savings in the remainder of 2009, which will be coupled with an ‘adaptation’ plan for its waste management division that intends to create €100 million (£85.5 million) worth of savings.
Commenting on the results, Veolia Environnement chairman and chief executive officer, Henri Proglio, said: “During the first half we have met the objectives we set for the company. Veolia Environnement is weathering the economic downturn well and continuing its expansion.
“The company has taken a number of vigorous measures to improve its cash generation, an area in which we have already recorded the first effects. At the same time, we are pursuing our strategic development, as illustrated by the negotiations to merge Veolia Transport with [international public transport firm] Transdev.
“Overall, the actions taken and the strong support of all Veolia’s employees enable us to confirm our objectives for the full year 2009 and look to the future with confidence,” he added.
In March, the company revealed that it would look to cut-costs and rein in spending during 2009 to offset the challenges presented by the global economic slowdown. Veolia had reported that the end-of-year results for 2007/08 showed a decline from €928 million (£827 million) in 2007 to €405 million (£361 million) last year (see letsrecycle.com story).