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Veolia announces further cutbacks

Global utility giant Veolia Environnement (VE) has announced further cuts in the face of worsening global economic conditions.

The French multinational, parent of the Veolia Environmental Services UK (VES UK) waste management operator, reported a net profit of €153m for the first half of 2012.

Its global waste management business, Veolia Environmental Services, posted a 1.6% decline in revenue to €4,481.9m to June 20 2012.

The company said the decline was mainly due to:

  • a challenging macroeconomic environment and, in particular, a slowdown in growth in the second quarter combined with lower recycled raw materials prices
  • the implementation of restructuring in certain geographies

VES UK reported a 2.4% decline in revenue (-7.4% at constant consolidation scope and exchange rates) “due to lower PFI construction revenue and structural decline in landfilled waste volumes, all within a difficult macroeconomic environment”.

The group said it will cut investments by €500m in 2012/13 and slash costs by €270m in 2013, €500m

Following a series of profit warnings the company announced at the end of 2011 a €5bn (£4.3bn) divestment programme and cost cutting measures; an increase on initial objectives of €220m and €450m respectively.

Veolia Environnement in numbers

  • Revenue: €14.8bn, +1.6%
  • Adjusted operating cash flow: €1,383m, -9.7%
  • Net income: €153m
  • Divestment: €1,626m
  • Net financial debt: €14.7bn, down from €14,764m at June 30 2011.

Antoine Frérot, Veolia Environnement chairman and CEO said: “Throughout the first half of 2012 we have progressed on the deployment of the strategic plan presented at our December 6, 2011 Investor Day, in particular the divestment program, the transformation of our organization and cost reductions.

“First half 2012 revenue increased, despite the deterioration of the economic environment, in particular in Italy and in France, which weighed on the Company’s results. In this difficult context, we have decided to increase our cost reduction efforts and reduce investments. These additional measures allow the Company to confirm its 2012-2013 objectives and the outlook for the New Veolia.”

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