Good morning, ladies and gentlemen, and welcome to the Veolia 9 Month 2024 Results Conference Call with Estelle Brachlianoff, CEO, and Emmanuelle Menning, CFO. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on November 7th, 2024. I would now like to turn the conference over to Ms. Estelle Brachlianoff. Please go ahead.
Thank you very much, and good morning, everyone, and thanks for joining this conference call to present Veolia's results for the first nine months of 2024, and I'm accompanied by Emmanuelle Menning, our CFO. Our nine-month results are once again very good and perfectly aligned with our annual targets, which we fully confirm with confidence. In a complex environment, these results are the fruit of our operational agility and ability as well to seize new opportunities for growth, building on resilient foundations, what we call our strongholds. They are an excellent start for our GreenUp strategic plan, as these figures match our ambition and strategic choices with enhanced growth for booster activities and geographies. Going through the numbers, as you know, EPS growth for Veolia comes from three pillars: top-line growth, efficiency and synergies, as well as portfolio transformation. First, growth.
In the first nine months, we have enjoyed very solid growth, and our revenue has increased by + 5.1% excluding any price, with enhanced growth in our three booster activities, which are up + 6.9%, as well as in our three booster geographies, up + 6.4%. Please note that our Q3 revenue growth was even stronger than in H1, up + 6.7%. Second, operational performance with efficiency and synergies, both ahead of targets. Efficiency gains reached EUR 296 million compared to an annual target of EUR 350 million. Regarding synergies, we reach our annual target at the end of Q3 with EUR 411 million cumulative synergies already delivered since day one of the merger. We are therefore raising the 2024 target of synergies, with cumulative synergies from day one now expected above EUR 430 million. Third, capital allocation, with the continued pruning of our portfolio and accretive investments.
EBITDA increased by substantially +5.6% on a like-for-like basis, in line with our annual guidance of +5-6% to EUR 4,936 million. Margin was up 72 basis points compared to last year. Net financial debt is well under control and in line with our target of a leverage ratio below three times at year-end, close, in fact, to last year's level. These results allow me to fully confirm with confidence our 2024 guidance in all its components, and now I'm on slide five. In the nine months, we delivered solid revenue growth of +5.1% excluding energy price, thanks to very solid performance across all our businesses. On one hand, our stronghold activities have grown by 4.4% excluding energy price.
Revenue from district heating and cooling networks was impacted by lower energy price, as expected, but with protected margin, as you know, while water operation and solid waste enjoy solid revenue growth. On the other hand, our booster activities have grown by +6.9% excluding energy price, driven by water technologies and hazardous waste activities. In terms of geographies, Australia, the Middle East, and the U.S. performed particularly well at +6.4% growth, and each above +6%, aligned with the high ambition laid out in our GreenUp plan for those booster geographies. As you know, around 80% of our turnover now comes from outside France.
On page six, you have a focus on the performance of our stronghold activities, which did very well in H1 and actually at the end of Q3, with + 4.4% revenue growth excluding energy price, after + 3.4% at the end of H1, so it's even better. Water operations revenue progressed very well, + 4.3%, with high contract renewal. In particular, the SEDIF contract was EUR 4 billion of backlog over 12 years. Volumes were contrasted, slightly down in France and Spain due to weather conditions, but better in Central and Eastern Europe and in the U.S.. Regarding prices, we obtained a + 15% tariff increase in Barcelona starting in April, which, which while at the same time we successfully completed most of our rate case negotiation in the regulated water activities in the U.S., most of them leading to double-digit water price increases.
District heating networks were up + 0.8% excluding energy price due to mild weather in Central and Eastern Europe, but would have shown growth if we had excluded weather effects. Solid waste revenue progressed very well, by + 6.5% at constant scope and forex, driven by pricing and volume slightly up, notably in France, Germany, U.K., Australia, and LatAm. C&I volumes were good despite soft macro, thanks to a proactive commercial action, both market share gains and pricing efforts. Recycled material price picked up a bit, which is encouraging. We continue to be very selective in municipal collection contracts, as you know. On page seven, a focus on the performance of our GreenUp booster activities in nine months, which have grown by 6.9%, perfectly in line with the average mid to high single digit aimed at in our strategic plan.
Water Technologies, to start with, grew strongly by + 13.5% to EUR 3.6 billion revenue in the first nine months, a very satisfactory performance in terms of sales, earnings, and backlog. Bioenergy and energy efficiency activities reached EUR 3.1 billion, up 0.8%, and I'm happy.
Excuse me, ladies and gentlemen, please stand by. Our conference will resume momentarily. Excuse me, ladies and gentlemen, please continue to stand by. Your conference will resume momentarily. Thank you.
Hello. We are back. It looks like we had a problem of connection, so I was on slide eight, and I'm gonna come back to where I was to focus on Water Technologies, which has been presented in more detail in our latest deep dive a few weeks ago, and I'm very pleased by our high level of bookings at 3.3. It looks like nobody can hear me, so if yes, that's it.
I hope everybody can listen to me. So I'm very pleased by our high level of bookings in water technologies. I'm on slide eight at EUR 3.3 billion for the first nine months, which include key successes in our five priority offers: micropollutants, wastewater reuse, minerals recovery, ultra-pure water, and desalination. As you remember, we've enjoyed a big success in desalination in Dubai at Hassyan, as well as last week in Morocco. And in both cases, we're talking about super-large plants, actually in the top three worldwide. We have also signed several projects for ultra-pure water worth EUR 350 million, and our pipeline remains very strong. Water technologies are expected to strongly contribute to the GreenUp plan.
And if I talk about the objective of the GreenUp plan for the water technologies, we expect to grow revenue by 6%-10% per year, three times faster than the market, to grow the EBITDA around 10% per year with margin expansion and ROCE increase as well. Our performance in the first three quarters fully confirmed this value creation. Our investments have been prioritized in GreenUp plan to support growth of our boosters, as you know. By 2030, water tech revenues are expected to grow by + 15% at least. I'm now on slide nine. Among the five priority offers within water tech, we've identified pollutant removals such as endocrine disruptors or PFAS as a key growth area. As you know, Veolia is championing deep depollution via our water technologies and hazardous waste activities, both key to ensure protection of human health.
Our surveys show that there is a key priority for population across the globe. We recently surveyed Americans, for instance, about PFAS chemicals in water, and 70% of Americans said they were worried about its presence in their water. Veolia has a unique offer as the only end-to-end solution from detection to disposal, which is beyond PFAS, a new offer that we launched a few weeks ago. PFAS is a fast-moving market with new legislation in Europe, in the U.S., and in Australia, which requires a high level of expertise. We are confident that combining waste water sorry activities, water technologies, as well as hazardous waste know-how and assets is a unique winning formula. Hence, we target EUR 1 billion revenue from PFAS and new pollutant treatment by 2030 as new legislation is implemented. This compares to around EUR 200 million expected for 2024 and zero in 2022, so this is fast-moving.
I'm now on slide 10. And now let's deep dive into our second level of value creation, which is operational performance. At the end of September, we achieved EUR 296 million in savings in line with our annual target of EUR 350 million, with a high retention rate of 49%. They include specific action plans launched earlier this year in France, China, and Spain, following disappointing results in 2023. And those action plans are bearing their first fruits. We've developed new tools as well, using AI, for instance, in e-billing and call centers. Efficiency and agility are part of our DNA, and I cannot see any end to us finding new sources of efficiency. Slide 11. In terms of tapping into the reservoir of cost synergies derived from the Suez merger, we are ahead of schedule and have achieved EUR 96 million in the nine months.
In total, we reached EUR 411 million of cumulative synergies at the end of Q3 since day one, meeting our initial 2024 target of EUR 400 million ahead of schedule. We are therefore raising the 2024 target to over EUR 430 million cumulated at the end of the year. It's worth noting that the global plan of EUR 500 million, which you remember is very ambitious, as it was designed for a larger perimeter, including notably Suez waste activities in the U.K., which we finally had to divest for antitrust reasons, has remained unchanged. After the first benefits that typically came from HQ mergers, followed by operational efficiencies, 44% of savings now come from standardization procurement in our key countries, in addition to 36% that still comes from operational efficiencies, particularly within water tech. I'm now on slide 12.
These strong nine-month results allow me to fully confirm our targets for 2024, and we are very much in line with our GreenUp objectives. The financial and non-financial objectives of our strategic plan are summarized in slide 12. They include current net income growth of 10% per year on average, with dividend growing in line with EPS. I now hand over to Emmanuelle, who will detail the nine-month 2024 result before we take your questions.
Thank you, Estelle, and good morning, everyone. As Estelle already highlighted, Veolia continues to navigate successfully in a complex environment. With EUR 32.5 billion revenue for the nine months, we experience solid organic revenue growth of 5.1%, excluding energy prices, with an excellent performance in Q3, up 6.7%. It is driven in all our businesses, first by our differentiating offers, allowing good commercial momentum and good volume in waste and water.
And secondly, thanks to the proactivity of our teams to deliver strong pricing with increased indexation on our long-term contracts and the continued impact of price increases on non-indexed businesses. EBITDA is significantly up at EUR 4.9 billion, a strong + 5.6% at constant scope and forex. Nine-month EBITDA growth is fully in line with the annual guidance range, which makes us very confident for the rest of the year. Thanks to the operating leverage, current EBIT is growing faster at EUR 2.6 billion and is up by 6.4%. Net financial debt amounts to EUR 18.9 billion. We expect a net debt at year-end in line with the leverage ratio of last year, fully in line with our guidance at below three times. We continue to demonstrate the strength of our business model, combining stronghold and boosters, seizing growth opportunities, and adapting when necessary to deliver quarter after quarter.
Let's take a closer look at revenue. You can see the outstanding performance of our revenue growth in Q3 with strong water, strong waste, and resilient energy. If you exclude the energy price impact, the combination of our three businesses delivers a strong revenue growth year-to-date of + 6.7% at constant scope and forex, which reflects good volumes and pricing effects. Let's take a deeper look at each business. Water is up + 6.5% year-to-date and + 6.9% in Q3 only, with good tariff indexation in all geographies, consistent volumes, and strong activities in water technology. Waste is up + 6.4%, with very encouraging commercial and industrial volumes in France, U.K., and Germany, despite soft macro conditions, and energy is up + 0.8% year-to-date, excluding energy pricing.
Q3 revenue is stronger, up +5.8% after –0.8% in H1, thanks to increased volume in Central Europe without any adverse weather impact and good energy services activity in Northern Europe and in the Middle East. On slide 16, you have the revenue bridge detailing the different effects and showing our top-line intrinsic growth of +5.4%. And you will see that it is even stronger at EBITDA level. Forex has an impact of –EUR 586 million due largely to lower Latin currencies. Scope impact is –EUR 582 million and includes three divestments: the non-strategic construction business in France, SADE in March. The non-replicable sulfuric acid regeneration business, RGS, which closed early August. And the last Suez antitrust remedies, Lydec, in early September. These divestments are partially offset by your [uncertain] , notably Hofmann, a waste management company in Germany, which is already generating synergies.
There was a weather impact in H1, essentially in Central Europe, for -EUR 132 million. The main item of the bridge is the impact of lower energy prices for almost EUR 1.2 billion. Meanwhile, recycled prices started to pick up this year, with a positive impact on revenue of EUR 56 million at the end of September. So that the + 5.4% intrinsic growth is fueled by, first, good commercial momentum, resilient volume, and secondly, price and indexation increases. Regarding volume, as Estelle pointed out, activity levels are quite satisfactory in the nine months, contributing to + 1.8% to revenue growth. C&I waste volumes are encouraging, including in Europe. We benefit from several contract wins in waste, notably in C&I business in the U.K., but also in building energy services in the Middle East. Finally, the largest contributor for the nine months is water technology in the U.S. and in Europe.
Regarding prices, we continue to benefit from favorable indexation, and we maintain our capacity to increase prices faster than our cost base, which contributes to + 3.6% to revenue growth for EUR 1.1 billion. On slide 17, you can see the revenue evolution by geographical segment, with water technology revenues growing by 13.5%, with solid growth in all its business lines, whose combination allows high integration capability and cross-selling. Revenue benefits notably from the continuation of desalination projects in the Middle East, as well as strong activity in services and technology, especially in the U.S.. Regarding the rest of the world, all regions are performing well, notably Australia and the Middle East. Rest of Europe revenue is up 4.6%, excluding energy prices and climate, with a strong U.K. performance and strong water activity in Central Europe.
Finally, in France, after a challenging 2023, we continue turning the tide thanks to a specific action plan launched at the end of last year. The combination of our two businesses continues to deliver value creation, and let's start with water, our largest activity, representing 40% of our revenue. Water business grew by +6.5%, driven by volumes and commerce, +2.4%, and pricing, +4.1%. It is thanks to good volume in Central Europe and in the U.S., around 2%. France and Spain were slightly down, -0.5%, due to weather. Regarding contract renewals and win, on top of the SEDIF contract mentioned by Estelle, we also extended our Sofia contract by eight years until February 2034. In water technology, our bookings at the end of September are much higher than last year, amounting to EUR 3.3 billion.
Coming to pricing, we have continued favorable tariff indexation in France, + 4.5% in Central Europe, with double-digit price increase since the beginning of the year, and in Barcelona, where we were granted a [uncertain] 15% price increase in April. Finally, in the U.S., we successfully completed our West Coast negotiation with double-digit increase in New York, New Jersey, and Pennsylvania. Slide 19, moving to energy, you have the detail of our energy business revenue growth. Regarding energy, as anticipated, lower energy prices, electricity prices, to be more accurate, have impacted our top line. Excluding energy price, revenue grew by + 0.8% and by + 2.2% if we also exclude negative weather effects. As you know, our energy margin is well protected.
From the ups and downs of energy prices, as we are providing heating services, which are regulated activities, fully passed through on energy costs, as proven by the significant double-digit heat price increase we have obtained over the past two years. There is only a lag effect as we obtain the price increases over a couple of years. In nine months, we continue to implement in price increases, notably in the Czech Republic. We are also ramping up our large district heating contract in Tashkent. Electricity comes on top as a byproduct from our cogeneration assets, and also we hedge the evolution of the cost of fuel and CO2. We also benefit from our hedging policy and the improved performance of our assets.
As a reminder, and as part of our core program, we started new high-efficiency cogeneration with higher EBITDA, such as Braunschweig in Germany and Přívoz in the Czech Republic. And we have more to come with Poznań in Poland in 2025. Electricity revenue is already fully hedged for 2024, as well as our energy purchases, and we have hedged approximately three quarters of next year. Our visibility is therefore very strong. That is why we expect 2024 energy EBITDA to remain at the high level we reached last year, despite lower energy prices, as shown in the first half. Building and industrial energy services have also performed well, with new contracts in the Middle East and in Spain, offset by lower energy prices in Italy. In the nine months, we signed significant new energy efficiency contracts in Belgium, the Middle East, and Hong Kong.
We have, however, seen a temporary slowdown in industrial customer demand in China and the public. Let's have a look at the waste performance. Waste activities are growing at a faster pace since the second quarter of 2024, by + 6.4%, compared to + 3.4% in 2023 and 5.5% in Q1 2024. This is due to continued pricing power, improved volumes in Europe, and good commercial momentum in Australia and Latin America. Let's take a few examples. Europe is resisting well despite soft macroeconomic conditions. We are winning market share with good pricing. We continue to carefully select our contracts and give priority to value over volumes. France is doing better than last year in terms of volumes, for instance, landfill, and also in terms of profitability. In Germany, we have a strong commercial activity and volume slightly increased after a difficult 2023 and a softening industrial environment.
The U.K. had a strong start to the year with high-performing waste-to-energy activity, good commercial and industrial performance, and 100% of contract renewal in 2024. As our disposals remain well oriented with a strong Q3 in Europe, which we are really proud of as the macroeconomic condition is softening, and the momentum, which is still positive in the U.S. despite the 2023 high comparison basis. The action plan implemented in China confirms our agility. Recycled prices had a positive impact as the increase in carbon price compared to 2023 largely compensates the negative impact of plastic prices. Coming now to EBITDA on slide 21. The EBITDA bridge you see detailed a very solid 5.6% organic growth, fully in line with the annual guidance range. It is fueled by the combination of two factors: the solid underlying revenue growth and strong efficiency gains in energy ahead of schedule.
We have limited scope impact amounting to - 4% with the disposal of SADE, RGS, and LIDEC, compensated by the integration of Hoffmann assets in Germany, for instance. Forex impact is consistent with the trend in H1 and reached - EUR 121 million . Assuming the exchange rates to remain at today's level, the full-year impact at EBITDA level would be around - 80 million EUR, and we expect a slightly positive forex impact in Q4. The energy and recycling impact was - EUR 51 million , including energy price - EUR 67 million , which I explained earlier, and was + EUR 16 million due to recycled prices. The weather impact was slightly negative at - EUR 38 million .
Very satisfactory is the fact that our intrinsic growth, which is our organic growth, excluding external factors such as energy or recycled prices or weather, amounted to + 7.5%, and is fueled by volume and commerce impact for + 2.5%, synergies coming from the merger results that we are successfully delivering on target and faster than forecasted. We have reached the yearly target after only nine months, which is remarkable. In terms of efficiency, we achieved EUR 296 million in savings with an excellent retention rate on EBITDA of 49%, and in line with our annual guidance of EUR 350 million . I am pleased to see the specific action plan launched in France last year deliver results. Let's see how the EBITDA increase is fueling current EBIT, which is growing very steadily by 6.4% to EUR 2.6 billion .
Renewal expenses of EUR 225 million are comparable to 2023 due to ramp-up of contract in Europe, in the U.S., and water technologies. Amortization and OFA excluding PPA amounts to EUR 2.3 billion , slightly above last year. Industrial capital gains, net of provision and asset impairment of EUR 133 million, are similar to last year amount, EUR 129 million. As I mentioned in Q2, normally this line should be less significant in Q4, as we are reviewing our impairment and provision as usual at the end of the year. JVs amount to EUR 91 million versus EUR 90 million in 2023, mostly due to de-investment. It is fully stable.
Phase 23 CapEx remains stable and includes EUR 399 million of gross CapEx, of which EUR 45 million is invested in water tech, mobile unit, and plan expansion, EUR 98 million of decarbonization CapEx with good progress on our Poznań project, and EUR 131 million of new hazardous waste projects, particularly in the U.S., the Middle East, and in Germany. Seasonal variation of working capital was higher than last year at EUR 1,179 million versus - EUR 745 million due to base effects and seasonal differences, which will not impact the free cash flow delivery of the year. We had higher payment in 2024 of CO2 quotas for EUR 100 million and received higher advance payment in water technology and energy national scale in Europe last year for around EUR 300 million. Despite this timing effect on working capital, net free cash flow was positive in Q3, + EUR 136 million.
We expect to largely reverse our working cap in Q4 and deliver, as expected, a strong net free cash flow for the full year. Net financial debt reached EUR 18.9 billion and benefits from the cash proceeds from SADE, LIDEC, and RGS disposal, partially offset by the impact of the hybrid debt repayment for EUR 209 million, after the renewal of our EUR 600 million hybrid debt in November last year. Taking into account the seasonal working capital reversal in Q4 and the net cash proceeds from our disposal and a few acquisitions, we expect the leverage ratio at year-end to be in the same range as last year, which was 2.74. On slide 24, you have the detail of the net financial debt variation, where you can see the different effects I have just highlighted. And you have on slide 25 our 2024 guidance, which we fully confirm.
EBITDA organic growth is expected fully in line of the 5%-6% range driven by EUR 250 million of efficiency gains, our new target of cumulative synergy of more than EUR 430 million at the end of 2024. Current net income will be above EUR 1.5 billion, which means a double-digit growth compared to last year. As usual, our dividend will grow in line with our EPS. The leverage ratio will be at a comparable level to last year, below three times, and given our first-class nine-month delivery, we are, of course, very confident for the full year. Thank you for your attention.
Thank you, Emmanuelle, and we're now ready to take your questions.
Thank you. If you do wish to ask an audio question, please press the star one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing star two to cancel. Once again, please press the star one to register for a question. One moment, please, for your first question. And your first question comes from the line of Arthur Sitbon with Morgan Stanley. Please go ahead.
I have two there. The first one is that in your presentation, you talked, for example, about the the ramp-up of the district heating assets in Tashkent. I know you you purchased some assets from Uniper as well in energy. And I suspect there are there are a few more of these. So I was wondering if you could provide us with a quick summary of of the key large assets and contracts that are expected to come online and contribute to EBITDA in the in the rest of the year in 2025 and maybe even 2026. And if you're able to give a sense of their EBITDA contribution, this is this would actually be even more helpful. The second question is on the EBITDA bridge slide 21. I see the volume commerce and work component is at EUR 118 million, which is only EUR 13 million higher than in than in H1. I noticed that the same component shows a good improvement at revenue level in 3Q. So I was wondering if maybe something happened in 3Q between revenues and EBITDA. Was there a negative one-off in 3Q or maybe a positive one-off in 3Q last year leading to harder comps? Just a bit of color on that would be would be helpful. Thank you very much.
Thank you very much. So I guess on the first question, I'm not gonna be able to give the full list of the contracts we have won which have an impact on acquisitions. I can give a flavor of that, but in a way, this is all bundled into our bridge of revenue and EBITDA and what we call intimacy and growth. Listing still, you know the one you've mentioned, Uniper is not yet in the account. It's not closed yet, so there is nothing and we expect it has been a bit delayed by the antitrust you know you know duration to get the authorization, so we will have more probably earlier next year, something like that, you know the result of Uniper. So that possible, but nothing in the result so far. In terms of Tashkent, it's really a ramp-up thing, as in we started last year, but you know the perimeter is growing, and so are the results every year, and it will grow again next year, but other stuff you haven't mentioned still in the energy and district heating.
This year, we enjoy the positive effect of our decarbonization in Braunschweig, where we invested in the last few years and which is bearing fruit in EBIT, EBITDA, and everything else. Next year, we'll have probably the Poznań one, or not probably. I don't know why I said probably. We'll have Poznań, which is the next one in the line of our decarbonization plan, which, as you know, has double-digit IRR. That's what we've presented in our in our deep dive related to the energy business earlier in the year. So the energy business is profitable, has good return. So is our decarbonization agenda on those. And I'm very pleased to see that, you know as we said, the the ups and downs of the revenue of energy in the world has almost no impact on our result, as we've demonstrated this year.
And it will be the same next year because it's a structural choice of very specific activities we have. In terms of the base effect comparison, Emmanuelle, maybe?
Yes. Hello, Arthur. We are very proud of this Q3, which are, of course, at EBITDA level fueled by the strong revenue growth that you have seen in waste and in water. You have noticed that I think that it's in the bridge on page 21. You were mentioning some effect compared to June. It's true that when you look at the bridge, we are very proud of this Q3 and very proud of our intrinsic growth of + 7.5%. We have been able to compensate all the negative effects coming from external factors as forex or weather or recycled or commodity price by all the action that we have taken on synergies and efficiency, as well as volume and pricing.
We have slightly less volumes compared, I think, to the percentage we had at the end of June, and it's coming from less work and, as mentioned by Estelle, weather regarding water, which were not super favorable. But even with that, we are able to generate a very, very high intrinsic growth at 7.5%, making us comfortable for the rest of the year and allowing us to fully confirm our guidance at EBITDA and net results. So basically, water volumes you know link with the work is the answer to your question.
Thank you very much.
Your next question comes from the line of Olly Jeffery with Deutsche Bank. Please go ahead.
Thank you very much. I just wanted to start by talking about the efficiencies. You've had a very strong Q3 in your retention rate. When we think about the full-year efficiency program of EUR 350 million gross and an average retention rate of 40%, you know that would go into net efficiency of EUR 140 million. You're already ahead of that at Q3. Can you just explain a little bit about what's happening this year? Why are you managing to secure such a high retention rate? Does this mean that kind of going forward, that perhaps 40% is a bit conservative given in in every quarter you've been ahead of that? And then just coming to the synergies, that's obviously going very well. You've lifted the target to EUR 430 million. If you do that, thinking you know you have been w ell in excess of EUR 150 million EUR 115 million for the full year. With EUR 500 million accumulated target, complying EUR 70 million for next year, is it fair to say you would consider that you know relatively conservative?
I know it's a finite reservoir, but you talk about that in terms of what you can get from that, but at this stage, would it be fair to regard that as conservative with EUR 70 million left in the tank for next year? Thank you very much.
So two different questions, so first, on efficiency, you know before answering precisely to your question, you've seen on page 21 of the bridge that basically half of our you know result growth comes from efficiency and synergy. and the half from growth, as in top-line growth, and you know I think that's important to have the global picture in mind in that respect, so it's really two engines that we are fully on in Veolia. Back to your question on efficiency and retention rate, you're right. It was higher than the average 30%-50% we've enjoyed in the last few years.
And the main answer to that is because we are agile and launching a specific plan when it's needed. So we have the usual efficiency plan, but a very specific one on top when it's needed. It was needed given the disappointing result of 2023 in France, in China, or specifically in Spain. And that's what's bearing fruit. So in a way, that's what explained the agility is what explained the 49%. In terms of synergies, you're right. It's a limited reservoir contrary to the efficiency, which is really ongoing, and I was about to say forever, as far as I can see. And so the limited reservoir will have an end. We expect the end to be next year. I I'd rather be on the delivery side than commenting on anything else, as you've seen. Is it conservative?
The only thing I can say is if we can do more, we will, and we'll try to drive this reservoir to the last drop next year. That's for certain.
Thanks.
And your next question comes from the line of Juan Rodriguez with Kepler Cheuvreux. Please go ahead.
Thank you, and good morning. Thank you for taking our questions. I have two on my side, if I may. The first one is on the possible changes that we've seen in taxes in France and the U.S., probably in the U.S. coming. In France, have you included any provisions for your 2024 guidance? And at the same time, we know your international companies, so France and U.S. can actually cancel out. But in your 10% net income guidance as well, do you include any provisions on on the tax side on that side, and the second part is in the synergy levels. You already signaled you raised the guidance. On this part, you're already at the midpoint of your 5%-6% range. Can you give us some clarity on what you've seen in the operating performance so so far in October to have a better idea of what the end of the year or Q4 might look like? And we can expect something between the mid range, the high range, the lower part of the range. Thank you.
Okay. Very clear. And in a way, the two are partially linked. The the global short answer to all your questions is I can fully confirm that we will be above EUR 1.5 billion of net income at the end of the year in Veolia, which is a big increase compared to last year, more than 15% increase compared to last year, which I'm very happy to be able to confirm despite the global complex environment we are in. Going to your more specific question, tax in the U.S., in France, and you're right, we could comment on taxes across the globe. We are a very international company. Less than 20% of our revenue in France and less of our funds employed. You know more than EUR 5 billion in the U.S. You know you're exactly right. You know one may compensate the other.
But you know the only thing I can say is so far, the tax you know the potential new tax in France has n't been stabilized and let's been voted for in the parliament. So it's difficult to comment in very much detail. But our first estimates are non-significant at group level, irrespective even of a potential reverse on the opposite side of a Trump administration when it when it comes. So I can fully confirm the above EUR 1.5 billion in a way, whatever the tax legislation in France comes in terms of conclusion. In terms of in terms of moving parts in a way, because you're right, I've raised raised the synergies for the year. I haven't raised the the guidance in EBITDA. I can fully confirm it, and I can fully confirm the net result despite a lot of adverse elements. So in a way, there is an element of the moving part.
Being able to confirm the more than EUR 1.5 billion net results, which is + 15% again, despite what? Weather, which is not exactly great you know so far, but I have no idea what it's gonna be like in the next few weeks. I guess macroeconomically wise, we don't see any change in trends. So nothing specific here. It's exactly the same in October as what we've seen in the rest of the year. So no change to expect for us. As you've seen, we've had a negative forex as well and a bit of scope. Then probably will be a negative in the tax French element and a positive in everything we do in being agile, including you know raising our synergies for the year and all the rest of it. I think you know the the slide 21 is, I should say, quite striking. The intrinsic growth of our EBITDA is + 7.5%.
But you have a lot of external elements which hasn't helped. And despite that, we can confirm our guidance, which already is relatively narrow, if I may. 5.26% is relatively precise. And again, above EUR 1.5 billion, despite everything I said, I think it's quite a good performance and a very positive sign of our confidence for the rest of the year. So nothing specific to expect for the rest of the year.
Very useful. Thank you very much.
And your next question comes from the line of Ajay Patel with Goldman Sachs. Please go ahead.
Good morning and firstly, congratulations on the results. You're really showing some resilience here. I wanted to ask the questions, maybe what's been asked before, maybe in a slightly different way. If I took the synergy benefits and the cost cutting and just add them together.
And clearly, this year has experienced headwinds in FX effects in particular. We're bringing we're increasing the target for synergies this year, but keeping the overall target unchanged. To bringing forward the benefits of that into this year. Is the message that we still have the same cost cutting potential, but we're just delivering that cost cutting earlier, and therefore we're exchanging a bit of growth from next year into this year? Or is the message that when we take the cost cutting we have and synergies together, the potential we have is much stronger than we target, and then we'll unlock those levers as we go along? I'm just trying to get the tone of where your picture is on cost cutting.
And then the second question I have, just to make things a little bit easier for me, what is a 1% movement in corporate tax impact you for French business and for the US business? Just so I have an idea of scale for any corporate tax changes that may occur, have something in my back pocket. Thank you.
Just a few things. In terms of cost cutting, you've put together something which I would rather, I guess, put on different parts because they have a different category, which is cost cutting and synergies. Cost cutting, it's a recurring one, and you know it will go on. So it's EUR 350 million per year. And in 2025, in 2026, in 2027, you know you will still have the EUR 350 million.
And as I've said, we are able to adjust when it's needed to specific action plan and so on and so forth, and it delivers good results. So that's, in a way, a very recurring engine for growing our results. The synergies is the one which is limited. You know once you've tapped into this reservoir, the EUR 500 million cumulated, it will come to an end at the end of 2025. But again, there is a third element of growing our result, which is growth. That's why, again, I'm insisting on the few elements, the few engines, which you haven't mentioned. So in a way, you know growth, and I'm very, very pleased by the + 5.1% organic growth in the nine months, despite very difficult macros in various geographies, despite everything we've seen, and we haven't been helped in other ways. But we're gaining market share. We have a good pricing strategy.
We enjoy you know good positioning. So I guess happy to answer the question on synergies and efficiency, but if I may, there is another engine you haven't touched upon, which is super important in growing our results. And there is even a third one, which is the allocation of capital. As I said, three engines, top line, bottom line as in efficiency and synergies, and capital allocation. So it's really the three together. That's more the way I see it. And another another way of answering the question I'm very, very often asked, which is how come you have so solid results? I would say quarter after quarter, how come you are you know launching so quickly in a way very promising GreenUp strategic choices despite the global environment, which is complex?
And I really think there is a strategic positioning here, which I would like to mention in a minute in a short version, which is exactly what's underlying our GreenUp strategic plan. What is it? One, wastewater and energy activities. So we are really assembling and combining those three activities and seizing the opportunities when they arise and being very adaptive. Second, we are very international. You've mentioned I've mentioned 80% outside France. It's more than EUR 5 billion in the US. We are growing fast in the Middle East and Australia. So I guess the international footprint of the group is something which is super important as well. And I guess the third one is the demand of the population.
So here, I would say, irrespective of the political turmoil at times, in the end, what's supporting our growth, not only for this year, but for the years to come, is our ability to offer solutions which protect health, which protect cost of living, which help the industries to thrive. They just desperately need water. And we are the solution. So I guess this is a combination of all that, which helps us to deliver results like the one I said. And I think GreenUp choices with boosters and stronghold combined is really a key for me. In terms of corporate tax, Emmanuelle you know .
Absolutely. So as you mentioned.
Although I want to ask you to mention all the corporate tax in all the countries we operate. As I said, it's 40 countries across the globe, but in the U.S. and France, please. Yes.
So to answer your question shortly, around 1% will be a few millions. So the main message is to see that when you look at our net result, the impact that we will have from forex and scope, as well as will be compensated as the impact of taxes by the capital gain positive that we discussed in the last result. And as Estelle has mentioned, what is important is thanks to the raised synergy for the years, we'll be able to face any impact of weather which could come in Q4, even with an October which is not super favorable so far. And it's true that, as mentioned by Estelle, efficiency is our contractual model. What we can do is improve the rendement or profitability or the efficiency, as you see with what we are doing in France, in China, in Spain, and it's not the end.
We are continuing and working on every part of the group where we can find value and improve the margin generation. So 1% of corporate tax equals a few million in the geographies you you mentioned. And altogether, growth and resilience are the two elements of our growing our results.
What I wanna say, if I hear you correctly, is that despite you moving forward the EUR 30 million of synergies that you attained this year to get to the EUR 1.5 billion target, they're you're saying we have and the FX has been around EUR 100 million headwind to you. You have levers in cost-cutting synergies, balance sheet, the portfolio, i.e., the GreenUp program to have full confidence in delivering 10% growth per annum for your plan. Is that fair? Is that the summary of?
No, I guess I may. I think you're some.
No, but. The effect that you are mentioning, it was EBITDA for forex and scope. So it's slightly lower regarding net result. Okay, so I guess what if I thought you were referring to the 2024 guidance, if you're referring to the 2027 guidance, which is on average 10% per year of net result and EPS in line, I guess you know we will have a few moving elements. And everything we do in terms of synergies and efficiency and agility helps us to be able to deliver and be very confident in the delivery of this objective despite you know moving factors around us in a way. So you could see Veolia as resilient and solid despite the environment, the macro environment, the tax environment, the political environment. That's more the way I would see it.
Okay. Thank you.
And we do have a follow-up question coming from the line of Olly Jeffery. We joined. Deutsche Bank, please go ahead.
Thanks. One of our two questions. The first one is just coming to weather. So if I look at the nine months this year and I look at 2022 and 2021, the cumulative negative weather EBITDA effect is basically EUR 200 million. So part of the question here is when we think about Q4, last year, the weather effect was -EUR 35 million at the EBITDA level in Q4. At some point, you know we're having a, you said that you know you said that so far this quarter, it's been you know weather hasn't been favorable. But given we've had consistent negative comps in previous years, does that mean we should expect Q4 for that to be in line with last year because it was negative last year as well?
And then when thinking about next year, if we were to have a normalized weather year, how much of that should bounce back of that cumulative EUR 200 million? I'm just not sure if that's just volume effects, maybe there's a combination of volume and price. And then on internal growth, your internal growth or volume commerce, I mean, that's progressed quite nicely from 2021. In 2021, that was 1.5% for the year, then 2% in 2022. And then it was 3% or 3.3% at the half year for this year. I know that's come back a bit because of water volumes in Q3. But when thinking about Q4, if you had normalized weather, it's 3% the kind of level of volume commerce you'd expect within within the intrinsic growth. I'm just trying to understand if that underlying improvement that we've seen in the last two years can be sustained. Thank you.
So what you say about that. You know there is part of it which is dependent on us and part of it which is not. That's why we call it intrinsic growth of our revenue and EBITDA versus what's not intrinsic and weather is not something we can we can, I guess, have an impact on. You're right. We have negative weather effect in Q4 in the last few years. The Q4 is more impacted by energy weather, if you want, as opposed to in the summer, we're talking more about water weather volume effect. So I guess winter and summer are quite different in that way. Is there an ability for me to predict what the normalized looks like? I'm not so sure I can do that. What I can say is you know we are getting used to weather which are very unpredictable.
But the good news is Veolia is solid enough to compensate when you know we have a negative weather effect. That's the way I would see it. And to be able to deliver such a good and solid result despite, again the, negative weather constantly, and I hope it will reverse in Q4, but I cannot guarantee that. And even if it were not to, then you know everything else we do is enabling us to guarantee, in a way, the result for the year, irrespective of the external factor. That's the way I would see it. Talking about the normalized weather, sorry, I'm unable to do that for you. As we've seen in Valence last week, which was totally flooded following a summer which was super dry.
So the mid-term, if you want, supporting element of everything I said is weather all that is a consequence directly of climate change, and we have to adapt to it. But the good news is for Veolia, adaptation to climate change is exactly the type of solution we've thought of our customers. So if you look at the mid-term, if you want, or over a mid-long period, this is helping our business because the customers are coming to see us to say, "Okay, what can I do regarding weather impact and so on and so forth?" So in a way, it has a positive link, such as winning desalination contract and so on and so forth, or our very good water tech performance. I'm not comparing apples with oranges, but I would say if you de-zoom from a quarter-by-quarter element, there is a very supportive trend supporting our business.
And on the volume and commerce, would you agree with the fact that that volume and commerce, apart from the course we've just had, generally speaking, that underlying is showing steady improvement?
Yes, it is. Yes, it is. I would agree with you. I would agree with you because it's volume, commerce, and in a way, pricing. We can we can add that if you want, which is a sort of commerce as well. Intrinsic growth, as in top-line growth, is 5.4%. Let's say Veolia now is more in those range, where a few years ago, we were more in the 2%-3% type of range. So yes, it's steadily we're gaining market share. We're good at what we do. We have built a leader in our industry, which our offers are very supportive. An example of that would be PFAS.
I've announced we will have probably more than EUR 200 million revenues in PFAS by the end of the year. It was zero two years ago. That's really an example of, yes, the underlying growth of Veolia is improving year on year, irrespective of the external factor. You're exactly right.
Thank you.
And your next question comes from the line of Davide Candela with Intesa Sanpaolo. Please go ahead.
Hi. Good afternoon, good morning. Sorry. And thank you for taking my questions. So I just have one on the water technologies. If I remember well in your deep dive presentation, you said that you can be selective in projects as the demand is basically outpacing your supply.
And given your remarkable growth in the revenue, that is in the low teens, I was wondering if demand will keep pushing, you will be able to catch more and more, or if there are some constraints, I don't know, related to the, I don't know, the operating machine capability or the the workforce or something else, its just just a way to check if you can do more. And of course, you're doing really well . Thank you.
Thanks for the comment. I would I would agree with that. So in a way, is there a bottleneck? I guess there was a little bit in terms of the production of some membrane. That's why we've expanded our plant, typically in Oroszlány in Hungary, and invested accordingly. There was a little bit of bottleneck in the mobile unit. And t hat's why we've invested in expanding our fleet of mobile units, which has above 90% utilization rate. So we are progressively, I guess, you know bottlenecking, if you want. What I can testify is the fact that, as I said, we prioritize investment in the growth boosters. So there is no question of, you know could we be more if we had more money? We prioritize those investments in water technologies, in hazardous waste, in bioenergy because it's good return, good growth, high demand for a long time. And so we don't have any bottleneck in terms of people recruitment, as you've alluded to, or anything else. The only thing was really those production plants and mobile units, which were unbottlenecking.
And I guess another. I'm insisting on the fact that part of our success of the Water Tech is due to the combination with the rest of the business, as in water operations or even hazardous waste when you think of PFAS. So don't think of it as in isolation of the rest of the group. When I said part of us delivering those very solid results comes from the combination of the various businesses as well as the various geographies. If I go on with the various geographies in Water Tech, we used to have very high demand in part of Asia two years ago. We've moved to the U.S., being very agile, which is in high demand. And then we have higher demand in the Middle East, for instance. So we're constantly moving from one geography to another to follow where the demand is.
And I guess multiple businesses, wastewater energy, plus multiple geographies are key to our success.
Thank you.
And your next question comes from the line of Thomas Martin with BNP. Please go ahead.
Hi. Good morning. Two questions, I think. Firstly, on energy. I think you mentioned you've seen a slowdown of new customers in a particular area, I think energy services, perhaps. I didn't catch the details on the segment or the geography. So can you just clarify that for me, please? And secondly, I had a question on hedging. And you mentioned you're three-quarters hedged for 2025, I think. So can you help us understand the magnitude of the potential impact from hedging, the delta, I guess, for 2025 versus 2024? Appreciate that in broad terms, district heating energy costs are largely a pass-through.
But is this three-quarters hedging weighted to, you know for example, energy from water and wastewater, or is it district heating? Is it a whole lot? Presumably, hedging will be a negative at the revenue line in 2025, but is there a material delta at the EBITDA line, please? Thanks.
So I guess first question on the slowdown. So there is no slowdown altogether. There is a very specific situation I'm going to explain. But altogether, we enjoy very strong demand in our energy activities, both our strong goal, which is district heating, and our booster, which is energy efficiency and bioenergy. In terms of district heating, the revenue is impacted by weather and and the price of energy, if you want. But since it's a pass-through, you know what? I don't care so much about it. What I care about is margin.
And we've maintained the margin at a very high level, which we had reached last year, which I'm very pleased to see. So we've demonstrated this year that when I said energy price is largely pass-through, that's what we see in the figures. Thev we we've seen a very high demand in our energy efficiency and bioenergy, which is the booster of activity as well. The only negative we've seen is some delayed project from industrial customers in Asia. So typically, transforming your boiler into a biomass something has shown some delayed sone delay. That's exactly what I was referring to. So very specific industrial customers in Asia, as you would guess the reason behind, you know given the the slow macro environment in industry in this part of the world.
In terms of hedging, so as you said, you know I care more about EBITDA than revenue altogether in terms of revenue, as in, I wouldn't say artificial, but pass-through revenue. I care about revenue, as in growth, as in winning new customers and pricing. But if it's just a pass-through, you know what the important stuff is? Margin. But on hedging, Emmanuelle?
Yes. On hedging, you know our hedging policy. When we are not in a pass-through model, we we are hedging. And as you mentioned, we hedge for next year two-thirds of our of our whole production. So we have moving parts. And at the end of the day, the message is that it's neutral. We have negative effects from lower price for cogeneration, as well as waste to energy in the U.K..
But it is compensated by positive effects on electricity costs, for instance, in France, as well as lower energy costs from coal and gas, for instance. So at the end of the day, what we see for 2025 is that it will be neutral.
Thanks.
And there are no further questions at this time. I would like to turn it back to Ms. Estelle Brachlianoff for closing remarks.
Thank you very much. You've seen that you know a very good set of results showing resilience and growth, which is really the winning formula for us. And we are very confident, and therefore, I can fully confirm our guidance for the full year. Thank you very much.
Thank you. And this now concludes our presentation. Thank you all for attending. You may now disconnect.