Earnings Call: Q2 2021

Jul 29, 2021

Ladies and gentlemen, welcome to Veolia Conference Call on H1 2020 1 Results Publication with Antoine Frerot, CEO Estelle Brachianoff, COO and Claude L'Aurelle, CFO. I now hand over to Antoine Frerot. Sir, please go ahead. Thank you, and good morning, ladies and gentlemen, and thank you for attending this conference call on the OEAS first half 2021 results. I am this morning with Estelle Brachlodolf, our CEO and Claude Laruelle, our CFO. And during this presentation, we will first give you an update on the progress of our acquisition of Suez Group And we will then give you the details of our first time results, which are record results. Then of course, we will answer your questions. So I am starting on Slide 5, Showing the main steps of outstanding offer for SUEZ, which is progressing on schedule. On May 14, the Board of SUEZ and Veolia reached a final agreement enabling the launch of tender offer for the remaining 70% of Swiss shares at €20.5 per share, dividends included. On June 29, the Board of Suez formally approved our offer and recommended That their shareholders bring their shares. As you know, for antitrust reasons, we cannot keep all of SUEZ's assets must be in France. During our negotiation with the Board of SUEZ, we added some other international assets to the French ones Subject to the joint approval, we have agreed on scope for this new Suez of about €7,000,000,000 revenue. Also on June 29, we received a binding offer of 10 point €4,000,000,000 of enterprise value for this new SUEZ from a consortium of investors Composed of Meridiam, GIP and La Caisse de depot. With this operation, Veolia will add Nearly €10,000,000,000 of international revenue to its current perimeter. On July 20, The French Stock Exchange Regulator, IMF, approved our tender offer, which was then opened on July 29 that is today. Therefore, any Swedish shareholder can now bring their shares to the offer And the tender offer will be closed after EU antitrust clearance. Our objective is to finalize both The tender offer and the diluted share of new sales by the end of the year. This operation comes at a time When environmental priorities have never been higher on the agenda of both our municipal and municipal clients. As we have already indicated, we will proceed to a rights issue of €2,500,000,000 To maintain our financial flexibility for the future growth of the combined group, our objective is clearly to maintain a solid growth trajectory and to I now move to Slide 6. There are 4 main ways in which the acquisition of SUEZ will create value Stronger growth, a greater ESG impact, higher value creation for shareholders And delivery of significant synergies that have already been identified. These 4 levers I'll explain in the next slides, but let me give you another view. In terms of growth first, The acquisition of SUEZ will create a group with €37,000,000,000 in revenue, a global leadership and worldwide which a unique service offering and set of know hows and larger client base, Making then it the undisputed leader of the ecological transformation. This merger will enable us We grew faster in our priority segments, but also in new businesses such as water reuse, Recycling of waste flows or water management for neutral clients. In terms of ESG impact now, the complementarity of our expertise and know how will strengthen our ability to make a difference In tackling the main ecological challenges raised, moving towards the circular economy, protecting biodiversity Reducing climate impact. Our 2 groups are already leaders in sustainable development and the combination will make us Even stronger. For shareholders now, the operation is highly value creating with the current EPS acquisition of 10% in year 1 and 40% in 2024. Our dividend policy will be maintained with a payout of around 70%. This EPS attrition will of course come mainly from the synergies Generated by the merger, I can confirm the objective of €500,000,000 in 4 years, which will come From sharing all best practices, continued operational efficiencies, volume internalization and leveraging of the group size in procurement. On Slide 7, You can see the growth impact of the merger with a photo of the new group based on 2019 pro form a figures. The New Veolia will be about 40% bigger with revenue of about €37,000,000,000 All geographies will expand, except for France since we are mainly buying through the international assets. France in the new group will now present about 15%. Europe We'll remain unchanged at 35% going at the same rate at the combined entity that is by close to 40%. And growth will be stronger than average in the 2 other segments, Threat of the World, up 43% and Global Business up 73%. On Slide 8 now, You all know how much time I have spent over the years on giving Veolia a purpose, Drafting it in 2018, presenting it at the AGM in 2019 and then rolling it out Within the whole company. That is because I do not believe that the business can be suitable unless there is a lasting balance between the interest of all its shareholders. This slide gives you a few examples of our capacity to positively impact Our clients' activities and more generally shape a greener and more sustainable world. By combining the competencies and lines of business of Vergia and SUEZ, Vergia will move in further aid In terms of responsible sustainability leadership. Slide 9 Give you details on the key financials of the transaction, which as you can see are Very favorable to Veolia shareholders, but also to Sreed's current shareholders. At €19.85 Plus €0.65 of dividend paid by SUEZ on July 8, so a total price of €20.5 per share, We are making a very attractive offer to SUEZ shareholders. But as we will have to sell assets That we cannot return for ambiguous reasons worth €10,400,000,000 Veolia will keep a very strong balance sheet With leverage ratio at or below 3 times. It is this balance between purchase price And selling price of the different assets that makes the operation very positive for our shareholders With an EPS accretion of 10% in 202240% in 2024. And this balance also enables us to maintain a generous dividend policy with a payout ratio of 70% and dividend growth in line with EPS. This is what I wanted to share with you Regarding the acquisition of SUEZ, everything is progressing on schedule. And now let me hand over to Estelle, our CEO, who will explain We are preparing for the integration of SUEZ. The preparatory work is progressing very fast as you can see, So that we can be ready to implement the integration program at the very beginning of 2022, once we have obtained of course The EU antitrust clearance and closed the tender offer. And I will then be back to tell you about the RECOR first half twenty twenty one results. Estelle, please. Thank you, Antoine. We certainly are preparing to use great details of our settlements that will make the merger with SUEZ a Success, starting with the synergies, of course. From the start of the project, we have done a great deal of work centrally at Veolia To prepare synergies, this work has been accelerated since we signed the agreement with Suez. This top down approach will be complemented very soon by bottom up work. We will be in a position in the next few days Start sharing in great details with the various PUs and sanctions via detailed workshops. This method will ensure that we will finalize detailed targets with real buying from the managers who will be Very soon in charge of delivering them. Overall, our goal is to have the maximum prepared in advance of the closing. On day 1, each country will have a finalized and detailed synergy plan and be able to start implementation immediately or shortly after, provided, of course, antitrust currencies have been granted. I'm now on Slide 11, and you can see our €500,000,000 of synergies will come from different geographies and different categories. Just to give you some color about the work we are doing around those synergies and how varied they can be. I would identify 4 groups of countries from the highest level of cost synergies expected to the lowest. In the first categories, we have countries such as Australia or the UK, where Veolia and Suez have a strong presence In a common activity, in this case, solid waste. In those countries, we will derive synergies from very operational merger plans. Typically, we will be talking about route optimization, fleet management or energy from waste availability and maintenance. On the other side of the spectrum, in some countries, we barely have a common presence and synergies will be minimal. A typical example would be Japan, where Veolia is really strong and SUEZ barely presents. You could find the opposite situation in Thailand. In between, we have countries where both Veolia and Suez have a strong presence, but not in the same type of business, such as Spain or Belgium. We nonetheless have some work to do in order to merge our country organization and build a common team with 1 country head, 1 CFO, 1 HR Director for all activities. Of course, whatever the countries, Some common synergies will be found in an increased spending base, which allows us to target a high level of procurement savings. I'm now on Page 12. And I would say The portion of the merger is, of course, not only a question of synergies and relates to many different work streams from people engagement and bonus schemes to IP Stem convergence, just to name a few. As Antoine committed to back in September last year, we have started working with Heidrick's to help us assess the talent within both Veolia and SACE in order to compose the new combined group leadership. This work is well underway and a very useful tool. I would say we are, all of us, very impatient to bring the 2 teams together In order to build the foundation for the new group combining Veolia and Feys with the aim of becoming the global champion for Equiniti Group Transformation. The model I just described very briefly to you, Ram synergies, is really quite illustrative of our multi local approach for operational issues, combined with a central approach for key strategic teams as well as a strong central steering and governance for this merger. The best is probably to illustrate this method through a graph, and I'm on Slide 13. You can see our various work streams to prepare for the merger. Each of this work stream represented by a box on this slide, either local or central, has a clear leader in charge as well as a sponsor at exco level. Altogether, we already have around 200 managers Involved directly in this merger plan, both locally and centrally. Although we are preparing intensively for the merger, Our priority remains the existing business and delivering good results. I must say our very strong Q2 results, as Antoine has alluded to, are a testament to this. There will be the foundations on which we will build the global leader of ecological transformation. Thank you, Estelle. And now let's move to H1 twenty twenty one results and I am on Slide 15, Veolia had a very, very good start of the year. Whether it's aspects like that compared to 2020, but obviously Q2 2020 was marked by weeks of lockdowns in the world Therefore, client activities were very much slowed down, if not stopped altogether. H1 twenty twenty one results are nevertheless remarkable. Revenue is up by 11.2%, EBITDA by 31% and current EBIT more than doubled. But for me, The most significant success lies in the comparison between our 2021 2019 performance. I had announced at the beginning of the year that in 2021, we could beat the record 2019 results. And this is indeed the case for all our indicators. Despite lower waste activity levels in some regions, But less and less, but though we are not yet back to 2019 volumes, results are much better. Versus 2019, revenue was up 4.6% at constant forex €13,600,000,000 EBITDA grew by 6.2% to almost €2,100,000,000 Currency EBIT increased by 7.8 percent to €901,000,000 and Current net income was up 49% to €516,000,000 Growth is clearly here and operating leverage is strong, thanks to our strict operational cost management and optimized Cost of financing. All of this has enabled us to reject a very strong improvement in all our P and L statements And Claude will give you all the details in a few minutes. These results are the highest ever registered by Veolia In the 1st semester, they show the adaptation capability of our group of our business models, Our great resilience of our capacity to optimize performance of our operation by generating savings and efficiencies. Just as we are about to acquire SUEZ, Veolia has never been in better shape. This excellent start of the year makes me very confident for the rest of the year and that is why we are raising our 2021 EBITDA guidance to €4,100,000,000 instead of €4,000,000,000 I will hand over again to Estelle, who will give you details on operational trends by business in the first half. Estelle? As Antoine just emphasized on, our results in the first half of the year are very strong at every level really. These results are much better than 2020 with plus 11% in revenue and plus 31% in EBITDA compared to last year in H1. But also well ahead of pre COVID 2019 results, which is an even stronger achievement. As you may remember, after a big impact of COVID in our results in the spring 2020, we managed to get back to pre COVID results as early as the 2nd half of last year, although some revenue recovery were still missing. From the start of this year, We are seeing a rebound in revenue as well and an even stronger rebound in our results. This very strong performance is explained both by our strategic choices and positioning as well as a continued effort in cost cutting and adaptation. In addition, since the beginning of the year, we've benefited from a partly strong rebound in our waste activity with So 15% revenue growth in H1 compared to last year, driven from multi continent release. Volumes almost back to normal. Recyclate price at a very high level, together with the sustained growth in hazardous waste without forgetting continued price increase. Although COVID is not fully over, obviously, In particular, with the 3rd wave in Europe leading to lockdown or virus restrictions, those Performances show Veolia is more than just resilient. We have adapted quickly and strongly, and we are back to growth. To give you now a little more color on this very good set of figures, I thought I should try and explain what this has taken on various business I'm on Slide 17. You will see on the right hand side that almost all our businesses have enjoyed growth in the 1st part of the year compared to 2019, which means we are better than pre COVID levels of activity. The only exception lies in industrial site services where we are unsurprisingly impacted by the production level of strength of our customer hit themselves by cheap Scarcity. Starting with the business which had been less impacted during COVID. Municipal Water is back to normal volumes apart From a few geographies where tourists haven't come back yet fully. Our energy businesses have benefited from favorable, sorry, weather condition in the winter, combined with high energy prices. The rebound of our waste activities is quite impressive, as I just highlighted a minute ago. Our success story in profitable growth in liquid and hazardous waste is really continuing With 5% growth in the U. S. Despite the bad weather in the winter, 14% in Europe alongside an impressive 80% in China, all the figures I've just mentioned being compared to H1 twenty nineteen, so pre COVID. I am pleased to see we are on our way to hit the €3,000,000,000 turnover mark in this activity this year, fully in line with our global strategic targets. Being back to growth is illustrated as well on Slide 18, which lists some of other contracts we've won in the first half of the year. I am patently happy that we managed to keep a good commercial momentum in our traditional municipal water activity, both in France and in Japan, with the 1st portable water concession won in Miyagi, representing 8 €100,000,000 backlog. In Water Technologies as well, our order book is very good. The 2 Recent successes we enjoyed in Louisiana and Australia with our salt crystallizer technology, HPD, demonstrate our real differentiation in this market. This year has also seen the launch of 2 innovative services, in line with our ambition to become the leading provider of solution for ecological transformation, both for municipalities and industries. In the Vendee region, we won the 1st significant water reuse project in France, leveraging our barrel technology, which clearly offers a scalable solution to water scarcity. Considering the Western weather events, I am sure you will understand why this is a promising solution. On Slide 19 now. Back to growth for sure, but we definitely kept our eyes on the goal of cost cutting and efficiency as well. This is yet another quarter of delivering efficiency with EUR 204,000,000 achieved in H1, Combining our annual efficiency plan with our specific COVID related Recover and Adapt plan, which means we are ahead of our annual targets. And let me give you an example with very good results this quarter in this category. It's non revenue water chasing. We are referring here to water volumes, which are distributed through the network and don't generate revenue. This can happen typically for different reasons, either physical leakage in our network, but also commercial leakage with consumers managing to avoid the meter. Digital tools and sensors, combined with AI, are able to identify suspicious consumption and spot Precise locations were to take action. As you can imagine, cubic meters save translating to extra revenue without major extra cost, therefore going almost directly down to the bottom line. Thank you, Estelle. On Page 20 now, you can see the detailed 2021 objectives for Veolia On the standalone basis, of course, that is before combining with Spain. In detail, 2021 revenue is expected above 2019. EBITDA is now expected above €4,100,000,000 meaning growth of more than 12% versus last year. We will generate more than EUR 350,000,000 of efficiency gains as Estelle explained just now. And in terms of balance sheet, we target a net financial debt below €12,000,000,000 and a leverage ratio below 3 times Before merging this phrase, in terms of dividend, we clearly intend to recover our pre sanitary crisis dividend policy As soon as 2021. And I now hand over to Claude, who will detail H1 accounts And we will then take your questions. Claude, the floor is yours. Thank you, Antoine, and good morning, ladies and gentlemen. I'm very pleased to present the H1 figures that show outstanding results, record profitability And record free cash flow generation. As you can see on Slide 22, revenue grew by 4.6% in H 1 compared to the same period in 2019 at constant ForEx, which is remarkable and by 11.2% compared to last year, of course marked by the lockdowns in Q2. Thanks to a strong operating leverage With amplified cost cutting, better waste volumes than Q1 this year and good recyclate prices, EBITDA is well above €2,000,000,000 At €2,081,000,000 and grew by 6.2% compared to 2019 at constant fracs And by 31.4 percent compared with last year with a full recovery in Q2 in almost All our activities as Estelle described earlier. Current EBIT has more than doubled compared to last year to €901,000,000 And is up plus 7.8% compared to H1 twenty nineteen. Current net income has reached record level of €516,000,000 and is up 49% compared to 2019. Thanks to a strong and continuous focus on cash management and lower CapEx spending, our free cash flow generation It's excellent in H1 and positive for the first time at €270,000,000 and has improved by €785,000,000 compared to last year. Leading to a net financial debt at €13,800,000,000 after the payment of Dividends and the acquisition of Odysse. We'll see later in the presentation that our debt is well under control. Moving to Slide 23. We have a look at the Q2 performance by geography, and let's focus on the Q2 2021 column. You can first notice the strong group revenue recovery with plus 19.7% in Q2, leading to a +11.2 for H1. If you compare these figures with 2019, you get plus 6.5 percent in Q2, which is remarkable and shows the dynamism of our activities with the equivalent of 2 years of growth. Let's have a look at the different segments. 1st, France, plus 23.5% in Q2, With the resilient Waterfronts with better volumes and tariff increases and recovery in work associated with our contracts And a sharp recovery of waste France, plus 37.7 percent due to better volumes than Q1, price increases And sharp level of recycler prices. We'll see later in the presentation that its performance is very strong. 2nd, With the outstanding growth for the Q2 in a row in the rest of Europe, plus 20.9%, With very strong growth in energy in Central Europe and the good resilience of our waste activities in Germany. 3rd, overall, the Rest of the World segment, which is still more contrasted with plus 7.7 North America recovering well, plus 7.2 percent and LatAm, plus 26.9 percent and Asia, flat due to disposal in China and Singapore. And 4th, global businesses plus 35.7% at constant scope that continued to perform in line with previous quarters With very good momentum in hazardous ways, good contribution from our construction activities in line with industrial recovery in many countries. EBITDA in Q2 is up 58.8% compared to last year. Moving to Slide 24. You have the usual revenue bridge comparing H1 2021 with H1 2020. Despite a slight negative effect from ForEx due to weak currencies in the Americas, all the other blocks Are contributing to the sharp rebound by 11.4%, driven first by volumes, plus 6.1% due to much better commercial and industrial waste volumes despite wave 3 of COVID in Europe And solid commercial momentum for our construction activities. The second main effect, plus 2.2%, It's coming from energy prices that have increased a lot this year and of course from the recycled prices for EUR 206,000,000 That continued to be at a very good level for all sorts of materials in line with the commodity prices. As we have also told you for quite a long time, We have continued to increase our prices, notably in our waste segment contributing EUR 167,000,000 in H1 Or plus 1.3%. Moving to Slide 25. You have more granularity in our waste recovery. Let's detail the Q2 column, where you can see strong contribution first from volume rebound, Plus 14.5 percent despite some later lockdown in Europe and Australia. All our main countries are contributing to the Strong volume rebound in Q2, for example, France plus 18.6 percent Northern Europe, Germany plus 6.8% or UK Plus 16.8 percent. 2nd, the solid pricing contribution, plus 3.7% in Q2 with West France And hazardous waste Europe leading the effort in line with our policy to gradually increase our pricing especially for C and I selection and treatment. 3rd, recyclates plus 5.7 percent are contributing in all segments and geographies and continue to keep a high level pretty much comparable with Q1. The acceleration between Q1 and Q2 is coming from low level of recyclers in Q2 2020 during the lockdown. On Slide 26, you have more details about the EBITDA evolution between H1 2020 and H1 2021 with the full operating leverage recovery. What do we see as main contributors? First, the massive volume recovery impact for EUR 272,000,000 or 17% increase, Despite the meeting volume in our waste activities. 2nd, the strong cost cutting effect of €204,000,000 detailed by Estelle, resulting from an ambitious cost cutting plan of €350,000,000 for 2020 That is very well advanced and highly contributed. If you add the negative impact of the cost of inflation for minus €119 €15,000,000 and the cost saving effects of €204,000,000 you get a net 5.4 percent impact on EBITDA for those two factors, which is by itself remarkable. In fact, Due to a very cautious management of our operating costs, we are exceeding the sanitary crisis with a lower fixed cost base. You can also notice the favorable impact of the recent acquisition in Central Europe And the positive impact of RecyclaX for €36,000,000 Moving to Slide 27. Let's review now our activities by geography and we start, as usual, by France. France Waterfront revenue in H1, as you can see, is Strongly up, plus 6.5% and almost flat compared to 2019 with tariff increases 0.7%, Works recovery more than offsetting the end of the Toulouse wastewater contract that we experienced in 2019. Weight in France experienced a very sharp rebound in H1, plus 23.5% compared to last year and even plus 6.9% compared to H1 twenty nineteen, in line with Q1, which remains effects. Volume still impacted by lockdown measure, but overall up plus 9.5% compared to last year. Continuous price increases in commercial and industrial collection and treatment and sharp increase of recycled prices, especially in non ferrous metal and cardboard. EBITDA of France is sharply up in line with the resilience in the water activities and the jump in the West business. Moving to Slide 28. Let's have a look at our activities in the rest of Europe. Starting by Central Europe, your revenue increased by 25.6% compared to last year, Many driven by a very strong contribution of our energy D3 heating business, linked with energy price increase, heat tariff up And the integration of the assets we bought last year in Prague and Budapest, which are performing very well. UK revenue increased by 6.6 percent showing a strong reverse trend after a decrease in Q1 due to much Better C and I waste volume after the lift of the lockdown. Thanks to the very solid PFI business model, strong availability At 93.1 percent and good cost control, UK financial performance has recovered very well. Germany also experienced excellent results despite lockdown measure, thanks to restructuring and recycle prices. EBITDA performance of the rest of Europe is very, very strong, plus 35.7% compared to 2020, With a good operating leverage and an outstanding contribution from Central Europe. Moving to Slide 29. We have seen a recovery in almost all region in our Rest of the World segment and a good operating leverage. Let's start by Asia and Focus on China. Chinese activities are up 5.6%, taking into consideration disposal of solid waste assets in Q2 last year. Our hazardous waste business in this country continues to grow very well with volume up 35% compared to last year, Boosted by new sites under operation. India is also growing fast, plus 74%, With new investment in Halaven Swast coming online. Latin America continues to grow at a strong pace Despite the new wave of COVID, which is better handled in many countries. As we told you, North America refineries are running at a higher in Q2 and full capacity as we speak. And the industry is recovering well. Our North America operation are growing by 2.2%. We continue strong performance of our municipal water activities. Australia, despite good weather conditions, Experienced some remaining COVID impact and has not yet fully recovered its nominal commercial and industrial waste volumes. It is also marked by a disposal in the Energy business line. EBITDA of the segment is sharply up 18.4% compared to 2020 with a strong contribution from the high margin business. The comparison with 2019, of course, is strongly impacted by the disposal of our district heating business in the U. S. At the end of 2019. On Slide 30, you have the details of our global business activities. Water Technologies continued to perform well With revenue up 14.1 percent benefiting from a lower level of activity in 2020 and the transformation initiated a couple of years ago focusing on technology and higher margin business. We have booked significant projects for the offshore oil and gas and for the chemical industry in the U. S. With our specialized subsidiaries. Network activities Fully recovered at constant scope after the disposal of our telecom activities in November last year. Hazardous waste is recovering very, very well in Q2 With price increases and better volumes and a record profitability, EBITDA of the segment is also strongly up in line with better revenue and efficiency measures. On Slide 31, Let's understand how the 31% EBITDA increase is doubling our current EBIT at €901,000,000 Renewal expense and D and A are very stable if you compare to the previous years. On provisions and fair value adjustment, We are benefiting from a few industrial capital gains on asset disposal in Scandinavia and also lower insurance provision as we have take strong provision for insurance over the last 2 years. Our JVs have performed much better this year than 2020 And the impact compared to 2019 is mostly coming from the Shanden concession disposal. As a result, Current EBIT is at a record high level and is growing by 7.8% compared to 2019. Moving to Slide 32. Let's have a look at our record current net income of €516,000,000 Almost plus 50% compared to 2019. The cost of net financial debt is a record low level At minus €152,000,000 due to lower interest rates in line with Q1 and also A €20,000,000 positive one off in Q2. Our euro bond borrowing rates continued to decrease and is now below 2%. You can notice the impact of the stress dividend for EUR 122,000,000 voted on June 30 And paid on July 8. It will be of course in our Q3 free cash flow. Our income tax rate is at 25%, in line with our expectation for 2021. On Slide 33, you have the details of our non current item, mostly due to the stress operation For €63,000,000 and the bridge loan cost for the tender offer for €25,000,000 and also specific COVID cost of €31,000,000 in line with 2020. The level of the net income group share is €301,000,000 for H1. Moving to Slide 34. As I told you, we have generated an outstanding free cash flow in H1 Plus €270,000,000 thanks to EBITDA growth, good CapEx management, especially on maintenance CapEx €266,000,000 and very strict cash discipline in all our countries with a strict monitoring at my level. Account receivable management is evolving all our operation manager and new tools like SiteTrade with whom we have a global agreement is implemented in various countries. I have to say that I'm very proud of this strong achievement with continuous messaging on cash awareness At all levels of organization. Looking at the debt level, we can compare June 2021 After our reinvestment in Central Europe with June 2019 before the disposal of the district heating business in the U. S. Thanks to our strong cash management and discounting the €1,400,000,000 for Suez Block acquisition, Our net debt is slightly below 2019, EUR 12,300,000,000 this year compared to EUR 12.4 2 years ago, With the group producing more revenue, more EBITDA and more EBIT. On Slide 35, You can see the details of the debt variation since the beginning of the year with the net CapEx booked at 830 €4,000,000 and the working capital variation sharply reduced at €381,000,000 thanks to strong collection in most of our geographies, including Latin America and Africa Middle East. On Slide 36, After this record high H1 results and its outstanding financial performance, I can fully confirm our strong confidence in 2021 and also fully confirm our guidance for the year With an EBITDA now expected above €4,100,000,000 Thank you for your attention. Thank you, Claude. And now we are ready with the same Claude to answer your questions. We have the first question from Andreas Preacher from Berenberg. Sir, please go ahead. Sorry, I was on mute. Good morning, everyone. Thank you for taking my question. Congratulations on a really good set of figures. Just had one question on the working capital seasonal variation reduction to start with, please. Obviously, it's Dramatic improvement. Could you just, sorry, just reiterate sort of how sort of sustainable you think that is going to be in future Yes. What should we be thinking about sort of in terms of sort of full year working capital performance, please? Claude is so proud of this performance that he will answer your question. So yes, thank you, Andrew, for your question. So you have seen that we have made a great progress. And it's first a massive effort on collection, and we know that we have done a lot this Yes, we have done also a lot last year. And as I told you, we are implementing new tools. New tools like Site Thread. What is Site Thread? It's a tool that is implemented as part of the ERP In our systems, and that will enable to improve dramatically the collection on a daily basis for BUs. So with these new tools, we are sure that we will continue to improve the collection of Veolia. It will not change massively Some variation that we have along the year, but the collection for sure will improve. Great. Okay. Thank you. Thank you. We have no more questions for the moment. Next question from Philippe Aupassion from eau de Bereschef. Sir, please go ahead. Yes. Good morning to all of you. Just one simple question, which is more a follow-up. Looking The very amazing results you disclosed for the first half, could you just update us if you have some view and figures About the July activity, mainly, I would say, regarding water because We have some difficulties to have a clear view about the tourism in France. In some areas, there is some new Restriction in some other people are on the beach and I do think that the water consumption is good. Could you have just Some pre figure to reassure us about the fact that the first one will not be on the bracket non resilient Versus the end of the year, even if your level of confidence is quite high as you have upgraded your guidance? Many thanks. You know Mr. Auptuary, the French people with that, but on beaches are on the cities. And so we keep them As clients as the front of the city, as the tourist places. So Claude, do we have some any indication? No, we don't have any clear indication about July. What we see is the June trend was good. So the 2 trend was above last year. So despite the bad weather and no tourism that so we don't expect any issue On the water resilience, water fronts we continue to be very resilient as it was over the last couple of years. So It's really well, we are very confident that the Waterfront results will be very good at current. And not only in France, but also elsewhere. And for example, in Central Europe. May I ask an additional question? Yesterday, in the disclosure of SUEZ concerning The information informative document for the merger, they mentioned that they will give some breakdown of the activity concerning the new SUEZ Somewhere around the 6th August, could you just update us about what's going to be your own diary concerning the Communication about the figure you are going to integrate on top of the revenues based, I would say, not on Specifically 2019, but maybe on 2021 in order to help us to, let's say, generate good and, let's say, Therbaudo with the combined entity. Yes. So we will have at the end of August An updated documentation of our annual documentation that will be filed. And the final one will be mid September. So you will have more visibility on those numbers and the details at the end of August. Yes, but about 2020 or 2021? We will have 2020 full year And we will have KPIs regarding the first half of twenty twenty one. You could imagine that we, of course, enjoy our board results, but we also enjoy the good results of Suez Yesterday, because we will add to the earlier 50% of these results at the end of the year. Many thanks. Thank you. We have a new question from Andreas Fischer. Sir, please go ahead. Okay. Thank you. Yes, just 2 other questions, please. Just one on cost cutting. Obviously, the Performance there continues to be incredibly strong. I was just wondering if you could just perhaps give us a little bit more color on sort of On the new initiatives that you found, if there's sort of new areas of cost cutting opportunity. And then on the just general level of or pickup in demand that you're seeing for water and waste and energy services, Could you please just give us an indication of any particular sectors where you're seeing real strength? Trying to get an idea about whether there's a sort of sustained acceleration in terms of sanitation demand from any particular Industrial Groups, please. Yes. Thank you. So around the cost cutting, you're right, we are very pleased to see that we are basically going on with sustained Cost cutting plan around EUR 250,000,000 a year plus the top up of the recovery of that plan, which was made on purpose for the COVID on top. And there is no reason why we couldn't keep that pace of EUR 250,000,000 a year going forward. And of course, we'll have on The synergies with the merger together with sales. How do we do that? Various initiatives, I guess, bottom up and top down. We are finding every single piece of saving and cost cutting we can on every single operation and plant in Veolia. And as you know, We have many. So we have around 2,500 main plants, be they wastewater treatment plants or energy Waste of cogeneration units, big large cogeneration units and in each and single of them, we have specific Cost cutting or efficiency plan be there to reduce the consumption of reactive, We'll be there to reduce the consumption of energy, for instance, in a wastewater treatment plant, which you know is consuming a lot of power. But with good initiatives such as putting anaerobic digestion on top, we can manage, that's an example, to have them to be energy self sufficient to produce as much energy as they consume, that's a big saving and of course, a big improvement for CO2 footprint. So many initiatives from the bottom up of the organization and of course, the top down ones such as digital, which are traversal throughout the organization or management and management optimization. So it's really a bottom up and top down approach, which makes us so strong and so confident we will be able to derive those type of figures going forward. In terms of your second question, do we think this growth and the appetite for our services is going further? Yes, Very much so. And I would say in some sectors, it's even increasing. Let me mention 2 type of services where we see even An increased appetite for them. One is everything to do with specific exceptional weather events. You've seen we've seen in this year incredible like winter event in Texas. We've seen incredible fires and floodings. And of course, we have some services to be able to For specific, I would say protection, but amendment to this mediation to this Weather events consequent for our customers. I've mentioned the water scarcity and the reuse of water as one solution, And we can see a lot more appetites than even a few years ago for this type of service. Another of those will be energy efficiency Because Energy is in chief of building, which you know is quite an important business in Europe, in the U. S. For us. Each time we help our customer reduce their energy consumption, it's of course saving for them, but it's CO2 And with the world as it goes and global warming being more and more a concern for our customers, I guess this type of solution is even more asked By our customers than a few years ago. I guess on this type of activity, a typical business unit will be on a 10% year on year organic growth, something like that. And I don't see any reason why it couldn't even increase in the next few years. Great. Thank you very much. Are there other questions? We have no more questions for the moment. So if there is no more question, I just want to thank you for Attending this conference call, I wish you a very good day and perhaps Thank you very much. Bye bye. Thank you. Ladies and gentlemen, this