Ladies and gentlemen, welcome to the Veolia conference call on 2021 annual results with Antoine Frérot, CEO, Estelle Brachlianoff, COO, and Claude Laruelle, CFO. I now hand over to Mr. Antoine Frérot. Sir, please go ahead.
Thank you, and good morning, ladies and gentlemen, and thank you for connecting to this conference call on Veolia 2021 annual results. I am with Estelle Brachlianoff, our COO, and Claude Laruelle, our CFO. During this presentation, I will come back to our acquisition of SUEZ Group, which we have closed last January with our successful tender offer, and to the first steps of the integration. Estelle and Claude will detail our 2021 operational and financial performance, which was outstanding, not only measured against 2020, which was impacted by the sanitary crisis, but also against 2019, which had been a record year of results for Veolia. I will also share with you our objectives for 2022, a year that is standing in a very difficult geopolitical context, but which should not weigh on our operations. I will come back to this point.
We will then take all your questions. Before we discuss our results, I would like to come back for a moment to our announcement regarding the change of governance at Veolia. As you know, the board of directors decided, at my suggestion, to entrust the group's general management to Estelle Brachlianoff starting July 1, 2022, and let me say a word about this decision. 2021 will be seen as a very important year in Veolia's history, an historical year, if I may say. In terms of results, as I was just mentioning, we had our best year in over 10 years. Thanks to our very swift response to the sanitary crisis in early 2020, we were able to offset its adverse economic consequences and then rebound as early as Q3 2020.
We therefore started 2021 at full speed and ended it with record results. 2021 was historical also because we succeeded in convincing SUEZ management and shareholders of the relevance of a merger so as to give birth to the world champion of the ecological transformation. These successes are the results of several years of relentless and continuous efforts, first, to restore the group's profitability, then to launch it on the path of sustainable, profitable growth that you have witnessed. These successes were made possible by an exceptional team and committed, passionate staff of 180,000 employees. I want to thank all them very warmly. The merger with SUEZ is a very important new step.
It builds on the achievement of the past few years, because we are sticking to our priorities, we are maintaining our discipline, and we are focusing on the same objectives which are fully aligned with our purpose. This moment, when Veolia is opening up a new chapter in its history, seems to me entirely appropriate for setting up a new general management to lead Veolia on the road to success over a long time period. Estelle has been part of the transformation from its beginning and has largely contributed to it. It was therefore logical to entrust her with the general management of the new combined entity. She has all the qualities to succeed, and she has a great team to help her. She will have all my support. You all know my strong attachment to Veolia.
The board has therefore expressed the wish that I continue to serve Veolia as non-executive chairman of the board and will propose this to the annual shareholders meeting in June. This is what I wanted to share with you before we begin the presentation. Now I will start by the takeover of SUEZ on slide five. We have officially acquired SUEZ as of January 18, the date of the settlement of the tender offer and of the delivery of the share bought by SUEZ shareholders on top of the 30% stake we had previously bought from Engie. We then purchased the remaining share and have owned 100% of the capital since February 18.
Since the signing of the combination agreement in April 2021, including the acquisition of SUEZ and the divestment of a portfolio of their assets, mostly French, to the consortium, Meridiam GIP CDC, we have had to complete three major projects. First, the financing of the operation. Second, the antitrust process. Third, preparations for the integration of SUEZ employees within Veolia. Regarding the first project, we have completed the delivery of new SUEZ to the consortium for an enterprise value of EUR 10.4 billion, and we have launched a capital increase of EUR 2.5 billion that was largely oversubscribed. This financing structure allows us to start the year 2022 with a pro forma leverage ratio around 3x in line with our standards. The antitrust process was completed quickly in the 17 countries out of 18 where the antitrust authorities decided to review the acquisition.
The most significant market was, of course, the European Union, where we obtained the green light on December 14. This was crucial, as EU antitrust authorization was the only condition precedent to the deal. We were therefore able to close the tender offer and immediately sell the other assets we did not plan to keep to the consortium. There remains only one country, the U.K., where the antitrust process is still ongoing and should be finished during the summer. Finally, the third objective was to prepare for the integration of SUEZ teams that were joining us. They have been arriving gradually since January 19, except of course for employees in the U.K.
Two months later, it is already clear that this first phase has been a great success thanks to the warm welcome we extended, the similarities in our corporate cultures, and a shared passion to address the global environmental challenges the world is facing. The new governance of Veolia has also been announced with an enlarged executive committee and managing committee. Finally, we can fully confirm the financial objectives of the merger, notably EUR 500 million of synergy by 2025 and an EPS accretion of 40% in 2024. On slide six, you have the list of the key projects on our merger agenda that will be implemented in this first year. We have begun to welcome the SUEZ teams that are joining us. They are being trained in our processes, methodologies in all support functions such as finance, human resources or digital.
Integration has also started at the operational level since late January to ensure compliance with the antitrust constraints where applicable. The synergy plans are being fine-tuned in order to ensure they ramp up over the 2022-2025 period. We confirm, of course, the EUR 500 million synergy target, which will contribute to the EPS accretion of around 10% in 2022 and around 40% in 2024. The first synergies will come from both central and local procurements, from the maintenance optimization of our industrial tools, from synergy purchasing, as well as from real estate optimization. Once we have completed this first year of joint work, we will be able to organize an investor day in early 2023 to share with you the group's roadmap that will lead us to the launch of our next strategic program starting in 2024.
Now let's look at the results for 2021, which reached record levels, and I am on page 8. Revenue reached EUR 28.5 billion, an increase of 9.6% at constant Forex versus 2020 and +6.5%, +6.5% versus 2019, which was the previous record level. EBITDA grew sharply by 16% compared with 2020 and by 6.9% compared to 2019 to EUR 4.234 billion, above our guidance of more than EUR 4.1 billion, a guidance which we had raised in 2021 after our very strong first half results. The operating leverage was fully achieved thanks to our strong revenue growth and to EUR 382 million of cost savings above our objective of 350.
Thanks to the very strong progression of EBITDA, current net income more than doubled versus 2020 and increased by 21% compared with 2019. It reached this year nearly EUR 900 million. Net financial debt decreased by EUR 3.5 billion to EUR 9.5 billion at year end 2021. This decrease was fueled, of course, by the EUR 2.5 billion capital increase, but also by the strong free cash flow generation of more than EUR 1.2 billion, coming notably from very strict working capital and cash collection discipline. We will propose to the AGM of June a dividend payment of EUR 1 per share. On page nine now, we detail our revenue growth in the fourth quarter, which was particularly sustained. Revenue growth was above 10%, which is above our normal growth rate, as I will explain now.
Sales activity and volumes continued to grow strongly by around 5%. Hazardous waste revenue grew by 25% in Q4, partly due to the integration of Veolia. The prices of our services have also been well oriented and have allowed us to compensate for the increase in our operating costs. This is a very favorable factor in the context of accelerating inflation. The main factor which was led to this 10% of new growth level in Q4 after 5.9% in Q3 was the sharp increase in energy prices. I remind you that our contract model, especially cost-plus fee, as well as our purchasing policies, whereby we hedge our energy purchases and sales over a three-year period, enable us to be protected at the EBITDA level and to be passed through.
This rise in energy prices explains why the 10% growth in revenue in the fourth quarter does not really reflect our normal pace, of course. Adjusted for this increase in energy prices, our fourth quarter revenue growth would be 6.4%, which is already very strong. On slide 10, you have the evolution of our net free cash flow over the last three years, as well as our leverage ratio. You can see that in 2021, net free cash flow generation was above the already very high level of 2019, which helped reduce our net financial debt at the end of 2021. The 2.2x leverage benefited, of course, from the EUR 2.5 billion capital increase we launched to finance the remaining stretch here as part of our tender offer, which closed early 2022.
Without this capital increase, our leverage would have been 2.8 x, still below our target level of 3x . On page 11, you see the evolution of the return on capital employed after tax to the group. We recovered our pre-COVID level as early as 2021. With a WACC of 5.2%, valuation amounted to 330 basis points. I now hand over to Estelle, who will give you details about our commercial and operational performance, as well as our ESG performance. Estelle, the floor is yours.
Thank you, Antoine, and thank you for your kind words of introduction. I guess also succession is not unusual in any organization. What is probably not so common is when it happens at a time when the company has never been stronger, and between two executives we who have known each other for a very long time, and have worked together through such exceptional challenges as the one we faced over the last four years. I'm very honored and keen to continue our efforts to become the benchmark company for ecological transformation as a united team and company. 2021 has certainly been an outstanding years in many respects, starting with our top-line growth and new customers win. Allow me to start with that.
Many examples are shown on slide 12 as proof of our differentiating factors and of the attractiveness of our offered services to become more energy efficient, reduce one's carbon footprint or treat new pollutants. We have won no less than 10 newly launched PPPs in Italy, so public-private partnerships, with a new model designed to drastically improve the energy efficiency of public buildings, starting with our wins in Parma and Milano, which account for a EUR 350 million backlog. Our customers are more and more eager to follow the alternatives and local sources of energy that Veolia can provide. Starting with energy from waste, which makes a lot of sense on an island such as Taiwan, where we've won a new contract with the Luzhou plant, a contract of more than EUR 500 million over its duration.
Our partnership with TotalEnergies aims to up the production of green methane from waste or wastewater degradation as an alternative to fossil gas. I'm very proud as well of our cutting-edge innovations, from the rollout of our unique BärEl technology to treating new pollutants in water in Switzerland, or our new vitrification technology with EDF Nuclear. Our top line growth in 2021 has shown a massive rebound in all our diverse segments, and I'm now on slide 13. All those segments are now above 2019 levels and obviously above 2020 as well. Our municipal water activities are really back to normal volumes, apart from a very rainy summer in France. You know that our contract revenues are indexed to inflation. You will remember this activity has shown remarkable resilience in 2020, so the rebound is logically less massive.
Our order book is back to full health in water technologies as well as for SADE waterworks in France. Waste volumes now, they have recovered basically in all geographies, and we have sustained our strong pricing strategy while maintaining a high level of selectivity in low differentiation activities such as municipal waste collection. Both policies are intended to remain key priorities for the time being. Recycle prices have remained very high throughout the year and show no sign of going down so far. Our growth in hazardous and liquid waste has been really strong, as Antoine has mentioned, with a revenue already 10% above 2019 and a faster growth in Q4. Here again, the key factors behind our success in Europe and in the U.S. have been a duo of strong pricing and volume recovery. While we are ramping up new facilities in Asia.
Energy price increases have boosted our revenue from district heating activities in Central and Eastern Europe, and at the same time, our team has been exceptional in its operational performance, as well as in its ability to seize all opportunities to increase power generation via combined heat and power. Our energy efficiency activities have sustained a very strong growth, in particular in Spain, Italy and the Middle East. We've been helped by energy prices as well as a strong track record in those countries in helping our customers reduce their energy consumption by typically 15% without major investments, thanks to digital, artificial intelligence and data compression. Regarding our activities on industrial sites, we've been quite selective here, avoiding FM-like contracts to the benefit of complex excellence management or CO₂ reduction.
Given the current context, I would like now to dive deeper into the impact of inflation on our business. I'm on page 14. Let me say the inflation is positive overall for the Veolia results, given our positioning, our strategy, as well as our discipline. Starting with revenue, most contracts, actually 70% of those contracts, have a built-in indexation formula, which follows inflation with some lagging effect at times, usually less than a year. For those of our contracts which are non-indexed, so it's typically waste C&I collection or hazardous waste treatment, we are applying tailor-made price increases to our customer base at least once a year and more frequently if needed, in order to fully cover the inflation. We have seen no significant drop in volumes.
Following up with our cost base, we intend to maintain a strong discipline on all operational costs as well as to sustain our track record in operational efficiency. Regarding commodity prices, high material prices have a net positive impact for Veolia, thanks to our waste recycling activities, even when taking into account profit sharing with our customers or the increased cost base of certain purchases. As far as power prices are concerned, Veolia is a net producer of electricity, and we benefit from price increases. On the buy side, our hedging policy means we have secured almost all 2022 power purchases. Looking at coal or gas purchases, here again, our hedging policy means we've already purchased and secured all of our needs for 2022, while price increases to end consumers have already been approved for the year. The same applies to CO₂.
All these neutral or positive effects of inflation on Veolia's performance have been demonstrated in 2021 and will remain in 2022. Moving on now to efficiency and cost cutting, and I'm on slide 15. We have outperformed our annual objective in 2021. These renewed efforts have certainly been a key success factor behind our margin level in 2021 at 14.9%, even slightly higher than in 2019. We have found EUR 290 million of efficiency gains as compared to our EUR 250 million yearly target. As anticipated, those savings now come more from operational gains than from G&A savings, as was the case when we started in 2012.
In addition, we've delivered EUR 102 million of savings with our Recover and Adapt plan. There has been exceptional effort in 2020 and 2021 to help the post-Covid recovery. I'm actually very proud that we've been able to sustain such a high level of efficiency at the same time as we grew our business by 9.6%. How have we done this? We launched a few top-down initiatives across all BUs. For example, leveraging of data to enhance operational performance, maintenance of asset optimization, key comparable asset benchmarking, and closer management of underperforming contracts. We also encouraged a bottom-up approach from our more than 2,000 main sites, asking each single manager to deliver at least 1% of cost savings on their own P&L and monitoring the results, of course.
Moving ahead to 2022, we will share our best practices with our new colleagues and aim to deliver the same type of efficiency gains over a much larger perimeter. This leads to a target of EUR 350 million in efficiency measures. This is of course on top of the specific operational cost benefits we will derive by combining the two businesses of SUEZ and Veolia, namely EUR 100 million of synergies. I'm now on slide 16. Although today we are walking you through 2021 results, let me spend a few minutes now to give you a few numbers and some color about what the Ukraine war means for Veolia and how we've been able to give you guidance, or we will be able to give you guidance, in a minute, with Antoine's speech.
Just to start with some figures. Our activities in Ukraine and Russia are very small, with around EUR 120 million revenue and less than 4.5% of total employees. You will understand that our first priority has been to support our employees in this region and their families as they continue to serve local populations. If I now de-zoom and focus on our Eastern European activities more broadly, from the Czech Republic to Poland and Hungary, we are exclusively providing essential services to the population. We distribute water, we operate district heating, the latter from natural gas and coal-fired cogeneration units, and mainly during the winter season, which is almost coming to an end now. Both activities are very resilient, as we have seen during the COVID crisis, and we don't expect any significant drop in consumption.
With regard to the water or heat tariff charged to the population, they have already been agreed for the year, with a significant increase compared to 2021 linked to inflation. Lastly, we have secured more than 90% of our supply in natural gas for the year and even more than 95% for coal, both in conjunction with leading national producers or distributors. All in all, we consider ourselves globally secured for the year 2022. In addition, I would like to remind you that our distribution contracts are usually designed on the basis of a cost-plus fee model, which means tariffs follow inflation and commodities purchase price, although at times with some lagging effects.
I'm on slide 17 now, and I would like to emphasize that in times of crisis, Veolia's services are absolutely essential and key, and our company has proven to be resilient thanks to our business model and international footprint. In addition to this resilience, the Covid crisis has proven our ability to react quickly and adapt. You may remember that we have been able to come back to pre-Covid levels as quickly as the third quarter of 2020, sorry. With the help of our new plan, Resource, we will adapt to this new crisis and minimize our energy consumption, maximize our energy production, and reallocate some CapEx to allow flexibility, starting with our own asset base, but of course, expanding to our customers. This is what allows us to confirm a guidance for 2022, as said later on by Antoine.
In fact, Veolia produces locally sourced, sustainable energy as well as materials in Europe. When it comes to power generation, in 2021, Veolia has sold as much as EUR 1.2 billion of electricity from our energy from waste or cogeneration units. If you think about natural gas, which in fact is methane, Veolia produces 1.6 terawatt hour of biogas from waste methanization in France alone, and four new sites should be open soon. Altogether, we estimate that 20% of natural gas used in energy plants could be replaced by methane produced from wastewater treatment plants in France if they were all equipped. Finally, the circular economy is a way of localizing the supply chain. When we set up a new battery recycling plant, we actually mine waste to find cobalt and lithium instead of importing those special metals.
If anything, the crisis we are experiencing today is yet another brutal confirmation of the urgent need for ecological transformation and of the need for the kinds of industrial solutions that Veolia already provides and is even expanding through its innovation. Moving on to the next section, you've understood that we are very happy about Veolia's performance in 2021. I also wanted to share with you that this satisfaction goes beyond our sole financial performance. Since 2019, we've been measuring our impact on our different stakeholders and defined 18 indicators to measure our multifaceted performance, which I'll summarize in the colored wheel on slide 19. These indicators are tracked throughout the whole organization in each BU across the globe and have a direct impact on the incentives of thousands of managers.
You can see on page 20, our 2021 performance assessed against the non-financial KPIs, which could be measured in 2021 because some KPIs have a midterm 2023 target. Veolia continues to benefit from an exceptionally high level of employee engagement with a score of 87% in 2021, as measured through an independent survey of 100,000 employees across the globe. Veolia's employees are now a major shareholder, owning 5% of the company. Our net promoter score has now been measured on 72% of our revenue base. It has reached a level of 43, which is improving year-on-year and is considered a very strong base in B2B. 6.8 million inhabitants benefit from our inclusive solutions to allow access to water and sanitation, even in the most deprived areas.
Although there are still improvements to be made, the company is certainly moving in the right direction, judging from our performance in 2021. When it comes to Veolia's ESG performance and environmental performance in particular, I must say we are in a very unique position. Veolia's business is precisely to bring solution to the environmental challenges of our customers, which I've tried to summarize on slide 21. Climate change, of course, but also scarcity of natural resources, pollution, biodiversity, and food scarcity. Let me give you a few examples. When we enable Solvay to replace coal in Dombasle by RDF, which is a biofuel made from waste, it reduces their CO₂ footprint by 50%. When we recycle plastic or innovate to recycle electric car batteries, we are moving towards a more circular economy and helping contain the depletion of natural resources.
When we develop state-of-the-art waste treatments or develop solutions to treat air pollution or endocrine disruptors in water, it is paramount to human health and protection of underground water. When we reuse water, produce organic fertilizer from sludge, we are helping agriculture to be more sustainable and potentially feed 9 billion human beings on this planet. Lastly, by their very nature, all these solutions are deployed at a very local level and are grounded in the communities we live in. I would like to add a few words about our contribution to the climate change agenda as well. As I highlighted earlier, I'm now on slide 22. Many of our services help our customer reduce their greenhouse gas emissions, and 11 million tons of CO₂ are avoided each year thanks to what we do.
Just to mention a few examples, energy efficiency, plastic recycling, efficient collective heating all have a massive positive impact. If we focus on the EU taxonomy, we estimate that around 80% of our activities are positive or neutral in the green list reviewed by the Commission. Of course, we are committed to reduce our own impact as well and to start now using all available solutions. That is why we've not only committed to exit coal by 2030 from the district heating networks we manage in Europe, but we have actually started investing real cash now in our decarbonization. Beyond, we are exploring how we could accelerate various solutions and reach new frontiers. Turn wastewater treatment plants into production units for power and materials, capture and transform biogenic CO₂ into sustainable aviation fuel or for reuse by neighboring industries, and of course, green hydrogen as well.
As you can see, Veolia is championing ecological transformation and can be a major solution provider for all.
Thank you, Estelle. I move now to page 24, where you can see the key figures of the pro forma combined entity, Veolia plus SUEZ, for 2021. Thanks to our acquisition, Veolia's revenue grew by about EUR 10 billion from EUR 48.5 billion to EUR 58.5 billion. EBITDA increased from EUR 4.2 billion to EUR 5.9 billion, and EBITDA margin progressed by 70 basis points to 15.5%. Combined net financial debt reached EUR 18.2 billion. These figures are before the antitrust related divestitures in Europe and Australia. Now let's move to our 2022 guidance on slide 25. Given the favorable trends at the end of 2021 and in early 2022, and despite the difficult geopolitical context, we are beginning the year with confidence. We target a solid organic revenue growth in 2022 for our combined group.
We aim to reduce costs by EUR 350 million in addition to the EUR 100 million of synergies targeting for the SUEZ merger for the first year in 2022, meaning total EUR 450 million. Regarding the EBITDA guidance, it is first, a range of growth, and second, an organic growth to address the specific context of 2022. We target an EBITDA growth between 4% and 6%. We have set this range in order to take into account the potential economic consequences of the war in Ukraine, provided, however, that it does not extend beyond Ukrainian territory, and provided that the current supply of Russian gas is not suspended.
Given the antitrust process, which is still ongoing in the U.K. on the SUEZ acquisitions, our consolidation scope is not completely known for 2022, so we committed on an organic growth figure. In terms of current net income, this range has only a limited impact, which allows us to confirm a EUR 1.1 billion current net income objective, in line with our 10% accretion target. The leverage ratio is expected around 3x, and our dividend policy will remain unchanged. That is a dividend growth in line with EPS growth. Ladies and gentlemen, as you can see, 2022 will be another year of growth for Veolia. The group is starting this year in good condition and is well equipped to face the inflationary environment, which is generally favorable to us, and also the consequences of the current conflict.
The creation of the world champion of ecological transformation is now underway and on track. I now hand over to Claude, who will detail our 2021 results. Then we will take your questions. Claude, the floor is yours.
Thank you, Antoine, and good morning, ladies and gentlemen. I have to say that I am really impressed by what we have delivered over the last 12 months with a clear focus and a lot of hard work from our team, with record numbers for 2021 and also record free cash flow generation. As you can see on slide 27 for the full- year figures, if we focus on the variation with 2019 at constant Forex, where you can see that the group has fully recovered from the sanitary crisis. Revenue is at EUR 28.5 billion and grew by 6.5%. EBITDA is well above EUR 4 billion, EUR 4.234 billion, and grew by 6.9%, and current EBIT is up 5.3%, thanks to strong EBITDA growth and good CapEx management.
Current net income has reached a record level of almost EUR 900 million and is up 20.9%. In line with our very strong Q3 cash performance, our free cash flow generation is at a record high at EUR 1.2 billion, to which you can add the EUR 122 million dividend that we received from SUEZ in July. All of this leading to a net financial debt of EUR 9.5 billion at the end of 2021, with a significant decrease compared to Q3, of course, with a positive impact of the EUR 2.5 billion rights issue in preparation for the SUEZ acquisition. Let's move to slide 28, and we have a look at the Q4 dynamics by geographical blocks.
You can first notice a strong group revenue increase in Q4, +10.1%, with a strong push of the energy prices, the recyclates, and the price increase in our waste activities. If you compare these figures with 2019, you get +11.3% in Q4, which is remarkable and shows the dynamism of our activities with the equivalent of two years of growth. Let's have a look at the different segments. First, France, +5.2% in Q4. Water France volume was flat in Q4 compared to last year, and we confirm the recovery in works associated with our contracts.
Waste France shows a continuous remarkable performance in Q4, +11.7% revenue growth with good volume similar to Q3, continuous price increase, and even higher level of recyclate prices. Second, Rest of Europe, with outstanding growth for the fourth quarter in a row of almost 20%, with very strong growth in Central Europe and an acceleration coming from our energy business, with a good continued growth in our waste activities in Germany. Third, from the rest of the world segment with +6% revenue growth. North America had a good Q4, +10.5%. Latin America continued to grow at double digits, 11.2%, as Africa, Middle East +18.8%. Asia experienced strong hazardous waste business in China and dynamism in India and Taiwan.
Fourth, Global Businesses back to growth at 1.3% with continued strong hazardous waste, offset by slightly lower technology and networks activity in Q4, but with, as you know, lower margin on these activities. On slide 29, you have the revenue bridge comparing full- year 2021 with 2020. As you can see, the group has well recovered with EUR 28.5 billion revenue +9.6% compared to last year. Three main contributors. First, the volume effect for 3.4% with much better C&I waste volume and solid commercial momentum, as Estelle described in all our geographies. Second main effect, 3.5%, is coming both from energy prices, which have increased even further this year, and of course, from the recycled prices for a total of EUR 904 million.
Recycled prices have stabilized in Q4 and is at a very high level due to the shorter destocking board and higher commodity prices. Finally, as we have told you for quite a long time, we have continued to increase our prices, notably in our waste segment, contributing for EUR 405 million, or 1.5%. Moving to slide 30, you have more details about our waste activities, which is growing by 15.5% year-on-year. As you can see, the Q4 column is not very different from Q3 and from full- year. We have a very high contribution from volumes and also recycled. If you look at the Q4 column, first you see the volume rebound, +4.8% in Q4, good contribution from all our geographies.
On average, we are back to 2019 levels with slightly less C&I volume and more hazardous waste volumes. Second, the solid pricing contribution +2.6% in Q4 with Waste France and Hazardous Waste Europe leading the effort, in line with our policy to gradually increase our pricing. Third, from recycled prices +5.4% in all geographies. Cardboard, for example, is at a very high level, above 170 EUR per ton. The scope effect at the bottom of the table is mostly the OSIS integration that we bought from SUEZ in May 2021. Let's move now to slide 31, where you have more details about the EBITDA evolution with a full pricing leverage recovery and an EBITDA increase of 16% coming from very supportive business trends and high level of efficiency.
What do we see as main contributors? The massive volume recovery impact for EUR 277 million or +7.6% impact with strong waste volumes overall and a good commercial momentum, as Estelle talked about. The strong cost-cutting effects of EUR 382 million, resulting from an ambitious cost-cutting plan of 460 over delivered in 2021. One thing to highlight on the slide is a very positive impact of recycled prices, EUR 113 million, thanks to high commodity prices and high demand for recycled products. As we told you, Q4 is marked by the closing of CO₂ position that had a negative impact on EBITDA, but no impact at EBIT level.
You can also notice the favorable impact of the scope effect for EUR 78 million, which is mostly the impact of the recent acquisitions in Central Europe and in OSIS performing very well. Let's move to slide 32, and we review our activities by geography, and we start, as usual, by France. Water France experienced a rainy and cold summer, as you remember, but registered well with revenue up 1.2% compared to 2020, with tariff increases of plus 0.9% and waste recovery. We expect much higher tariff increase in 2022 that will well cover the inflation of our costs. Waste France experienced a very sharp rebound in 2021, plus 18.3% compared to last year.
As I said, three main effects, volumes +5.7% year- to- date, continuous price increase, and sharp increase of recycled prices. EBITDA France is sharply up at EUR 1.09 billion. If you deduct the EUR 83 million of the one-off item in waste for the three projects that we talked about in Q3, EBITDA is above EUR 1 billion, which is more than EUR 100 million more than 2019. Moving to slide 33. Let's have a look at our activities in the rest of Europe. With an acceleration of growth of almost 20% at constant Forex in Q4, and slightly different segmentation, reflecting the new organization of Veolia. Starting by Central Europe, which now includes Germany.
Revenue increased by 19.6% compared to last year, mainly driven by a very strong contribution of our district heating business, plus 37% linked with energy price increase, which are mostly passed through, as you well know. The integration of the assets we bought in 2020 in Prague and Budapest, which continue to perform very well. Germany also experienced excellent results, despite lockdown measures at the start of the year, thanks to restructuring, high recycled prices and strong energy business benefiting from the cold weather in H1. Northern Europe, including now U.K., Ireland, Belgium, and the Netherlands. Revenue increased by 7.6%, showing a solid rebound due to much better C&I waste volume and the end of the lockdown in U.K. Thanks to the very solid PFI performance, with a record availability at 94.8%, which is a new record for the industry.
Northern Europe financial performance has recovered very well, and we continue to increase our prices to fully cover the inflation. EBITDA performance of the rest of Europe is very strong at EUR 1.73 billion compared to 2020, with an outstanding contribution from Central Europe. Moving to slide 34. We have seen a confirmed recovery in all regions and in the rest of the world segments. We start by Asia. Revenue grew by 1.1% compared to 2020, with strong performance in Taiwan, India, and Korea, offset by disposal in waste activities in China. Our hazardous waste business in this country continued to grow very well. Revenue up 15.4% compared to 2020 and up 53.6% compared to 2019, boosted by new sites under operation. India is growing fast, +38.8% with new investment in hazardous waste coming online.
Moving to Latin America, it continued to grow at a strong pace, +14.1% at constant Forex, with good commercial momentum and tariff increases. Our North America operations are growing by 5.2%, with continuous strong performance of our municipal water activities. As a reminder, 2019 numbers include the contribution of our district heating that we sold at the end of 2019. Africa, Middle East is performing very well, +12.3% with new BUs contract in the Middle East and solid volumes in Morocco. EBITDA of the segment, EUR 1.002 billion, is up 6.9% compared to 2020, with a strong contribution from the high margin businesses such as hazardous waste. As a reminder, 2019 EBITDA is also including the district heating business in the U.S.
I'm now on slide 35, where you have the details of our global business activities showing a strong rebound. Water technologies continue to perform very well, with high selectivity on new tenders to focus on higher profitability business. Revenue is flat compared to 2020 at EUR 1.5 billion with a good commercial momentum. EBITDA is now above EUR 100 million, which is a real achievement for the BU. If you look at the margin, it has almost doubled over the last four years. The network activities are fully recovered at constant scope after the disposal of our telecom activities in November of last year, and is well-oriented, +5.5% at constant scope. Hazardous waste is performing amazingly well with price increases and more treated volumes, thanks to increasing capacity in our 14 high temperature incinerators, leading again this year to a record profitability.
Regarding our industrial service branch, we have secured the continuity of our activities with Tavaux in Eastern France. EBITDA of the segment, EUR 426 million, is also strongly up in line with price increases, higher margin business, and efficiency measures. Now, let's go down the P&L in the next three slides before we look at the cash flow generation and the debt. On slide 36, you can see how the EBITDA increase is boosting our current EBIT by 41.7%. Depreciation and amortization, EUR 2.3 billion, includes OFAE repayment and of course, the effect of the TRA project, which is accounting for EUR 83 million. EUR 83 million EBITDA contribution has to be deducted in this line, so it has no impact at EBIT level. This is the main difference with 2020.
On provision and fair value adjustments, we are benefiting from industrial capital gains on asset disposal in Scandinavia and also lower insurance provision after a strong provision for insurance over the last two years. Our JVs have performed much better this year, and the impact compared to 2020 is mostly coming from the Shenzhen concession disposal closed in December. As a result, current EBIT is at a record high level and is growing by 5.3% compared to 2019. Moving to slide 37, let's have a look at our record current net income of EUR 896 million, +20.9% compared to 2019. The cost of net financial debt is at a record low level, EUR 343 million.
As we told you many times, we are benefiting from lower interest rates in many countries, leading also to a lower cost of euro debt swaps into foreign currency. As a reminder, we have a EUR 20 million positive one-off in Q2. You can notice the impact of the SUEZ dividend for EUR 122 million received in Q3. Our income tax rate is at 25%, leading to EUR 330 million in income tax expense. Let's move now to the slide 38, where you have the details concerning our net income group share with non-current item increased due to mostly the SUEZ operation and also the contribution of the COVID costs. The main variation with previous year is related to the SUEZ acquisition for EUR 270 million in 2021, mostly financial and legal costs.
As you know, this operation was very complex, and as Antoine explained, the antitrust process had to be carried out in 18 geographies. Moving to slide 39, you have more details about the very strong cash delivery with a record free cash flow of more than EUR 1.2 billion before SUEZ dividend, which is remarkable. After our very strong free cash flow in H1, we continue to perform very well in H2 by generating more than EUR 900 million for the second semester just on the operating side, thanks to strong EBITDA growth, good CapEx management, and very strict cash discipline in all our countries. As you can see on the slide, working capital went down in 2021 by EUR 482 million, thanks to better cash collection.
To continue to fuel the growth of the group, we have increased our discretionary CapEx to EUR 456 million with new projects on plastic recycling, for example, and hazardous waste. Looking at the debt level, it is at a record low level before the SUEZ acquisition, thanks to the very strong free cash flow in 2021 and of course, the impact of the rights issue. Moving to slide 40, you can see the details of the debt variation since the beginning of the year with a net CapEx box at EUR 2.2 billion and the working capital contribution in blue for EUR 382 million. Let's move now to slide 41.
After this record high level of results in 2021, I can fully confirm a strong confidence for 2022 with solid organic growth, organic EBITDA growth between 4%-6%, and a current net income of around EUR 1.1 billion, representing more than 20% growth compared to 2021, confirming the 10% acquisition of the SUEZ operation. As Antoine reiterated, dividend policy is to grow in line with current EPS. Thank you for your attention.
Thank you, Claude. Ladies and gentlemen, we are now all three ready to answer your questions.
Thank you, ladies and gentlemen. If you wish to ask a question, you may press zero one on your telephone keypad. It's zero one on your telephone keypad. First question is from Mr. Ahmed Sherif from Jefferies. Sir, please go ahead.
Yes, morning, everyone. Thank you for taking my questions. I actually have a couple of questions. I just wanted to start with the inflation protection within the revenues. I see a figure you mentioned of 70%, and I just wanted to sort of ask, is that largely simply the inflation indexation from contracts or sort of within the construct of regulation? And does that positive exposure to commodity prices come on top of that? So sort of energy prices and recycling prices, any positive gearing that you have, is that on top of that, or does the 70% include both of them?
Just from an earnings and profitability perspective, is it really the recycling and commodity prices where there's a bigger drop to the profitability of the business? My second question is broadly on your district heating and energy businesses. I mean, you've sort of highlighted, you know, quite substantial sort of tariff or revenue increases and tariff increases, which presumably also mean higher energy costs for your end consumers. I just wanted to understand if there is any sort of regulatory risks around that that are of concern, you know, in the context of broader affordability debate we have right now in Europe. Thank you.
Estelle?
Yes.
Those are two questions.
To which, if I understand well, divide into others. The first one on the indexation, if I understand it well. On our total ton, over 70% is directly indexed, and the other 30% of portfolio, we just apply price increase year-on-year and at times quarter-on-quarter. On the 70% which is indexed, it's typically municipal contracts, so it's embedded into our contracts. It includes everything, including commodities as in energy we have to buy typically, or fuel we have to buy, or salaries of course, and everything is backed in. It's not on top, so we don't have a specific risk on commodity price linked with those indexed 70%.
On the other 30%, which is typically C&I waste collection or hazardous waste, this is under our stewardship to price increases. Of course, we embed in those price increases the price of commodities, typically the fuel collection. Some price increases are linked with the fuel price having been raised over the last few weeks and months. In terms of the material sales, which is another of your... All in all, the hedging is total, either through direct indexation or through the price increases we apply. It's including all the energy prices. In terms of material prices, it typically applies when we have a shared profit with the local authorities, where, you know, when it goes up, we share the profit of the material sales being up.
When it goes down, we share the negative as well with the local authorities. This is what allows us to have it be not fully passed through. We have 20% which ends up in margin when the material price goes up, which is what we've seen in the bridge as Claude has just explained. In terms of if I understand your question, increasing the price, so do we have a risk with regulators? The answer is no. That's what I've tried to cover in saying all our price increase had been approved for the year 2022 already, so it's behind us. Approved by local authorities or regulators, or make sure depending on the local situation, so we don't have a risk for the year.
In terms of, is it affordable, so basically will people in their flat being still able to pay for the heat, given the price increase? The answer is, yes. If you look at the type of. Of course, otherwise, you know, I guess you have to realize that in the countries we're talking about, the average bill for heating your home is really like something around 50 EUR per month for a family of four persons. So we're talking about EUR 5-EUR 10 more per month, which is significant, but actually super affordable. This is the beauty, if I may, of the model of collective district heating.
It's very much more affordable than individual typically power generated heating you will have in your home, hence the very affordable bill we charge even given the price increase, the tariff increase we just applied.
Next question.
Next question is from Mr. Arthur Sitbon from Morgan Stanley. Please go ahead.
Hello. Thanks for taking my questions. My first question is, if you could please quantify your net exposure to electricity volume, so in terawatt-hour. If you could give us some details on your hedging levels for 2022 and 2023, that would be helpful. My second question would be on your activity levels. I was wondering if you could provide us some color on how they've evolved in the past three weeks with the Russia-Ukraine conflict in mind. The last one would be, we've seen some developments on your Chilean assets, and it seems that there are discussions of potential nationalization.
I was wondering if you could provide us an update on that and how likely the various scenarios are. Thank you.
Okay. Three different questions. About our volume of electricity we sell and we buy, Estelle or Claude?
Yeah. I guess, as I alluded to, we are selling more than we buy. We are net producer of electricity. So, around-
We are hedged for 90%. This is your question.
90% of the sell side, and pretty much 100% of the buy side of it.
We sell for EUR 1.2 billion a year, and we buy electricity for EUR 800 million.
Yes.
Euro a year.
On the 2021 figure base.
Yes. How is the activity for the three last weeks?
I guess if we include the fact that I guess in Ukraine, as you may imagine, you know, like our activities has reduced a little bit, but we're talking very small revenues level. Apart from that, we haven't seen not any specific reduction in activity in none of the countries in Europe we cover.
About Chile now. A new government has been elected with a new president. It is a left-wing president, but with government and general assembly also. We don't think that we will have any nationalization of the water businesses. We will continue to run it as it is the case today with the regulated system of tariff regulation as has been in the past.
Thank you.
Thank you, sir. Next question is from Mr. Philippe Ourpatian from Oddo BHF. Please go ahead.
Yes. Good morning to all of you. I have, in fact, four short questions. The first one is concerning the figure you mentioned regarding the EBITDA of the combined entity based on 2021 figure. The figure you mentioned is EUR 5.9. In your document about the capital increase, EUR 6 billion were mentioned, but they were concerning H2 2020 and H1 2021. It's regarding your strong figure on the various side, is there something negative on the assets coming from SUEZ which explain that there is almost no impact of the H2 2021 on the combined figure? That's the first question. The second one is concerning the volumes, commerce, and works effect.
When I'm calculating the margin between the EBITDA shown in the breakdown and the revenues shown in the breakdown, there is a 31% margin, which seems to be quite high, but very interesting one. Is there something, I don't want to say non-recurring, but why this margin is so deviated versus your average? That's the second question. The third one is concerning the French municipal water. You have given the French EBITDA, but I was wondering if there is any improvement of the French municipal water business EBITDA in 2021, mainly versus 2019, I would say, because it was a trend already recorded, and just the question was, is it continuing? The last question is specifically for Claude Laruelle. Could we have an update about the tax carry forward concerning the French fiscal perimeter and the U.S. one?
Many thanks.
Okay. A lot of questions, Mr. Ourpatian. We begin with from one.
Maybe I start with the tax carry forward.
Last one.
Maybe the last one to tell you that what is remaining so far is around EUR 350 million in both countries, U.S. and France. That's first one. In terms of French municipal water, we have seen an increase in EBITDA, but a small increase in 2021. Because as you know, it was a rainy summer. This is what I said during the presentation. Very low increase in the French EBITDA. Your question about the 31% revenue to EBITDA margin in the waste and volumes. You have to understand that you're comparing with 2020. As you know, you're talking about exceptional year in 2020 and a sudden drop of volumes.
When you are recovering, and you remember that the impact was significant in 2020, so when you're recovering the volumes, you're talking about marginal volume that we're recovering, and it's normal to have a much higher level of margin than the average of the group.
Claude, for the
For the figures, EUR 5.9 billion.
EUR 5.9.
EUR 5.9 billion, meaning that H2 of SUEZ was roughly speaking flat in H2 of what we're receiving.
Okay. Just one additional question concerning the volumes, commerce, and works. As I understood, it's only the volume effect. There is no any impact of, I don't know, more value-added services you sign during the year 2020 or, I mean, contract which has started in 2021, signed beginning or end of 2020. It's only the volume effects. That's correct?
It's a volume effect and also the value add, you know, the truck project effect, the one-off effect. You will find it over there as well, Philippe.
Okay.
In 2, 3. Okay?
Many thanks.
Thank you, sir. Next question is from Mr. Arnaud Palliez from CIC Market Solutions. Sir, please go ahead.
Yes. Good morning. I have just one question about your CapEx program for this year. I would like to know what kind of investment you are planning for this year. Also if you are already taking into account some optimization coming from SUEZ in terms of CapEx. In which businesses do you intend to increase CapEx, especially, is it the case for energy from waste? Do you think that the current situation on energy prices is going to lead to some significant increase in CapEx in this business?
I guess, you know, just to give you some qualitative elements behind, you know, what I just said about the results plan we have now. Basically, we will tend to increase the level of CapEx, which has a very short return and is linked with energy efficiency and locally sourced green energy type of production. As we said, you know, we are producing local energy, local gas, as in biogas. And of course, you can imagine that given the world we live in, this is super good CapEx with very good returns. We intend to speed that up, be it in the Veolia or ex SUEZ perimeter, if you want, as a group as a whole. Same applies with the energy efficiency measures.
We think we can save, you know, a few % here and there by replacing some equipment with more efficient ones. With typically when the price of electricity was what it was a few years ago, was not having a return which was good enough, and now suddenly becomes super profitable for us. That's qualitatively the type of things we will speed up.
In terms of numbers, what you have to do, you have to do the math of the Veolia perimeter and the SUEZ one. In a nutshell, let's say EUR 2.3 billion on our side, EUR 1 billion on SUEZ side. The total CapEx for the whole group will be around EUR 3.3 billion.
Okay. Thank you.
Thank you, sir. We have no other questions. Ladies and gentlemen, I would like to remind you that if you wish to ask one, you may press zero one on your telephone keypad. Zero one on your telephone keypad. We have another question from Mr. Rodrigo Gandara from J.P. Morgan. Sir, please go ahead.
Hi. Thank you. Good morning, and thank you for taking our questions. I have two on my side, if I may. The first one is on the U.K. assets, on SUEZ U.K. assets. Can you please remind us or update us where the discussions are? Because this is the last step of the SUEZ integration. As far as I know, the CMA discussion is more into phase two. How are things evolving in that sense? The second is around inflation, because you signaled that in the industrial segment, you might push ahead of one tariff review on a yearly context, as we see that inflation continues ticking up in 2022.
On the industrial side, how likely is that you can update more than once your tariff review? The second one is on municipalities, 'cause most of the tariffs might have been already agreed for 2022, but we see that inflation this year continues ticking upwards. Can we expect that on the municipal side, that is around 70% that you signal, most of the tariff review on current inflation will be applied to 2023? Thank you.
Okay, sir. I will take your first question, and Estelle will answer the second one. About U.K. and the CMA, we are in a classical phase two of antitrust process, meaning that it says we'll have a duration around six months, and the date of the end of this inquiry is fixed today on July 17. It could stop before if they finish their inquiry before. The volume of the U.K., the SUEZ U.K. business is around EUR 900 million on the total of EUR 10 billion we bought from SUEZ, net of the divestment to the consortium. We don't know, of course, the result of the decision of the CMA.
It and the deal will be perhaps we have to sell a small part of that or a bigger part. We don't know. You have the volume at stake with this inquiry about the U.K. waste business. Is it clear for you? Good.
Yes.
Estelle?
With regard to, sorry, your second question, I guess, I would like to split into really two blocks, the 70% and the 30%. The 70%, which is index, covers basically all our municipal contracts plus some specific private ones. All our municipal contracts, they have you're right, usually a yearly indexation, not a multi-yearly one, so it's every year. We won't be able to negotiate with local authorities the fact of having two or three indexations for the year. But we will have then one in 2023 for the ones which are already, I guess, behind us. But on the cost base, and that's what I was trying to explain, on the cost base, we are fully covered as well on the same basis. We are hedged on the cost base.
We know for certain the revenue, and we know for certain, again, it will be covered and hedged, both on the cost and the revenue side. Yes, there will very likely be a new indexation up in 2023, which will follow up part of the inflation of 2022. That's why there is a little bit of lagging. Again, the fact that we hedge our cost base is the important factor here. In terms of the other 30%, which is typically the private customers, the hazardous waste ones or the C&I ones, we have already started.
If your question was, we will be able to have twice a year, 3x a year, price increase, the answer is yes, because we already have started second, the last part of 2021, and we already are starting this year. In the U.S. or in France, typically, we already have started with more than once a year type of price increase, and we have not seen any drop in volumes. Just to give you one example, in France only, we've seen for the beginning of 2022, price increase in the range of 6%-10%, depending on the regions and depending on the type of services. And that was on top of the price increase we had seen last year.
We are very confident that again, inflation for Veolia is either neutral or positive, depending on the segment.
Okay. We have another question or no more?
We have no other questions. Back to you for the conclusion.
Thank you, ladies and gentlemen, for your presence on this conference call, and have a good day. Goodbye to the next time.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.