Earnings Call: Q4 2020

Feb 25, 2021

Thank you, and good morning, ladies and gentlemen, and welcome to this conference call on the Veolia 2020 Annual Results. So I am with Estelle Brackenof, our CEO Claude Larbelle, our CFO and Olivier Bruce, our Head of Strategy. During this conference, we will present the very strong 2020 results we have just published, which once again prove Veolia's resiliency and exceptional rebound capacity in confronting the sanitary crisis. You will see that we recovered our 2019 level of activity and profit as early as Q3 and that we even exceeded it in Q4 leading to 0.5 2020 well above 2019, making us ideally positioned for 2021. Since the first signs of the pandemic in China at the beginning of last year, I set the priorities for the year ahead in order to enable the group to tackle the challenges of the COVID outbreak. 1st and foremost, ensure maximum protection for all our employees throughout the world and provide all essential services for our clients. 2nd, enable the group to absorb the inevitable economic consequences in order to rebound as quickly as possible. 3rd, we remain focused on operational efficiency to limit the COVID impact on our results. And 4th, maintain the strategic priorities of our Impact 2023 program launched early 2020 in terms of new developments, innovation, ecological transformation projects and continue to invest for the future so as to increase our competitive edge. Thanks to the exceptional commitment of All our employees, whom I thank very warmly, we have successfully faced all the challenges of the COVID crisis and even surpassed the objectives we had assigned ourselves. Veolia will have thus wiped out all the consequences of the Sanitary crisis in less than 9 months. We are starting 2021 with level of activity higher than that of 2019, which makes meet very confident for the year ahead despite the ongoing COVID situation. Estelle will give you details on our 2020 operational achievements. Olivier will then update you on our multi faceted performance objectives as well as on several important and already successful innovation projects. I will then, of course, give you an update on our planned takeover of SUEZ, which is progressing quite well since the filing of our tender offer on February 8. I will also share with you our financial prospects for 2021. And finally, Claude will give you all the details of 2020 financial performance and results. I am now on Slide 6. 2020 results were clearly ahead of target taking into account the crisis. After Q3, where we managed to offset the first half shock more quickly than expected. Q4 was also above our objectives. This was achieved, thanks to the strategy put in place very early in the year to face the crisis. Keep up our prices. Launch the specific cost cutting plan of €250,000,000 complementing our efficiency program of €250,000,000 and maintain our growth CapEx in order to feed the group's Future Growth. Consequently, we managed to stabilize activity in Q3 minus 0.6 percent at constantforex and to resume top line growth in Q4 plus 0.9 percent at constant ForEx. And in terms of EBITDA to grow it by 1.7% in Q3 and by 4.2% in Q4, well above our initial objective of stability for Q4. All our teams have remained fully focused on operational performance. And once again, I want to thank them warmly. For the full year, revenue reached €26,000,000,000 EBITDA was €3,641,000,000 current EBIT EUR 1,275,000,000 and current net income EUR 415,000,000. These very encouraging results allow us to propose a dividend increase to $0.70 per share for 2020. And I now hand over to Estelle, who will detail the 2020 operational performance of the group. Thank you, Antoine. 2020 has certainly been an exceptional year in many aspects. Of course, the pandemic has had a direct impact, I believe, in the spring. The resilience of our essential services as well as our ability to react, adapt and recover very quickly have been very strong. Delivering economic performance was growing our business according to our strategic plan, but we've had constant focus throughout the year And it still is. Starting with our revenue, the rebound we have seen in Q3 has been reinforced in Q4, Back to a little growth compared to 2019. I must say, I'm particularly happy to see our growing by almost 4% in Q4. As for EBITDA, it shows an even better picture, growing by 4.2% in the last quarter and with margin levels back to 15.7%, slightly higher than last year. Altogether, cumulated EBITDA versus second half of the year was higher than in 2019, despite some percentage of activity still missing here and there. This is really the direct Here and there. This is really the direct result of our Recover and DAP plan launched in the spring, Which has led to more than doubling our cost cutting effort compared to our initial objectives, which have reached EUR 550,000,000 in 20 20. I'm now on Slide 8, which gives a little color of the activity level in the last quarter of 2020 by geography, which Claude will detail later on. Starting with Europe. The second wave of COVID in the autumn has not had a major impact. Municipal Water and District Heating has performed very well, whilst construction worked full speed with even some catching up effect. Waste volumes have stabilized above 95% in France, Germany and the UK until, of course, in the UK, the new lockdown in November. In Asia, Africa and Middle East as well as Australia, the level of activity was comparable to pre COVID levels. In North America, we are still missing some volumes in refined, revised production regeneration and Industrial Services and in South America, some dry waste volumes. Going to Slide 9, which shows our cost cutting plan performance and which is a key factor of our EBITDA performance in the 2nd part of the year, as you have seen. We have exceeded both our annual efficiency plan as well as our specific recoverable plans With a total cost cutting of EUR 550,000,000 reaching 2020, more than double Our original targets. As you know, our RecoverNet plan was launched in the Sprint Conference for COVID impact. I'm pleased to see that our digital road map launched 2 years ago and the Paris tools we have deployed accordingly has been Key enabler to deliver on this recover NAVA plan. We've been able to switch swiftly and seamlessly to remote working whenever that was suitable. Our offer, 66 upgrade live control center across the globe as well as our customer health As helped enormously to optimize our services and keep live communication with our customers. While those efforts were delivered, I'm pleased we have been able to sign new contract and projects as well, which will help sustain our growth. Just to mention a few examples listed on Slide 10, I would like to highlight a nice series in Eastern Europe with the right bank heating network of drugs and cogeneration in Budapest, Both anchored with local partners and able to deliver synergies with our existing business in those In France, the acquisition of ODDIS from SUEZ will perfectly complement And Gas at Face with our existing SARP business, which is a very successful business in environmental maintenance. Now on Slide 11. Reflecting back on 2020, the crisis Strongly confirm the soundness of our strategic choices, organization and positioning. Starting with our team, Their engagement and professionalism during the crisis has been exceptional. At the time of borders reappearing pretty much everywhere, Our decentralized organization at the country level for daily operations together with local partnerships around the key infrastructures has been key to our resilience and responsiveness. Our digital transformation has certainly be accelerated as well from strong foundation. Continuing with our business model, it has proven very resilient, Thanks to a balanced portfolio in various geographies as well as between municipal and industrial customers. When it comes to industrial customers, We are very pleased we've decided a few years ago to ensure we were not too exposed to a specific sector such as oil and gas or automotive for instance. This was certainly a smart move. 2020 performance of our hazardous waste activities, though serving exclusively industrial customers, is a testimony to our excellence and differentiation in this space. I'm now on Slide 12. You would see that marginally, the development priorities which underlie our strategic plan impact 2023 remain fully valid, and We are delivering on this plan. Despite the COVID crisis and our global effort to reduce costs, We made sure to maintain a reasonable envelope for discretionary investments in order to deliver on our strategic plan and ensure future growth. You will recognize on this slide the priorities underlying the strategic plan as they were presented to you last February in 3 categories, as you know, accelerate, optimize and reduce. This plan is well underway in each of those As you can see by examples mentioned in the gray boxes on the slide, which I would be happy to detail if you wish. On Slide 13 now, I would like to focus in particular on three examples, which illustrate how our strategic plan is moving forward. Starting with plastic recycling. In 2020, we opened a new capacity for PET recycling in Spain, signed the JV as well with Mitsui and 711 for a new PET plant in And developed 4 other projects, which should materialize in 2021. Our Indonesian sand should be commissioned Another key commitment we took in our strategic plan was to eliminate coal from our European energy activity by 2,030, which represents a total investment of €1,200,000,000 We started to invest in this position in Braunschweig, Germany And plan to do so in the Czech Republic very soon. Holland will be next in 2022. Last but not least, hazardous waste. The economic performance maintained during the crisis With revenue growth and double digit EBITDA margin even in 2020 confirm our ambition in this We are building new treatment facilities as we speak in China, Singapore, India as well as Saudi Arabia, South Africa, Germany and the U. S. A. And we are developing a few other projects as well. Slide 14 I'm now on Slide 15. Those strategic thoughts were translated as well into an asset rotation program In order to free capital to invest in the most promising activities such as the one I just mentioned. This too is well underway with EUR 2,000,000,000 already closed or signed, the largest being our municipal ownership business in the U. S, Veolia has once again proven in 2020 its resilience in an and presented the crisis and its capacity to rebound very swiftly and very strongly. Veolia is a strong company, And we are focused on continuing to deliver good results. I now hand over to Olivier, who will present our non financial results for the year. Thank you, Rachel. Good morning, everybody. I'm on Slide 16. As we've said in the past, we believe that the Clarity of our company is ensured by the fact that it's useful to all its stakeholders, our shareholders, of course, It's also our employees, our clients, the planet and the society we operate in. And you know, this is why last year in February, we launched what we call our multifaceted performance made of 14 indicators on top of the 4 Financial ones. And this is what you can see on this wheel with the stakeholders and the indicators. These indicators, they come with targets that we've made public, that we've assigned to our management teams and inserted in our internal management processes. And as we said, they're also externally audited every year. They are designed to address Each of our 5 stakeholders need, and we strongly believe that by meeting these targets, we will get closer to our stakeholders, And we will make Veolia stronger and more competitive. And also, we will stay true to our purpose. On Slide 17, you can see a selection of these some of these indicators for each of our stakeholders aside from the financial ones. On the left hand side for clients, one objective, of course, is to ensure that They are satisfied with our services, and the indicator we chose is the Net Promoter Score. And you can see here not only the target for 2022, but also what we achieved in 2020. And we're pretty happy with the results. As you can We're on track once we say we're even above the target. But of course, the pandemic and the crisis has brought us very close to the needs of our clients, If anything, by ensuring the continuity of the services we deliver to them. 2nd, for the planet. Of course, one of our objectives is to phase out coal from our operations in Europe by 2,030, not walking away from it, but converting it to cleaner energy. And as you can see, we've started investments, and we're on track to meeting our targets. For our employees, one of the indicators we showed here is to assess the level of engagement. And of course, this level of engagement is paramount as we've seen during the pandemic, for instance, with our frontline workers who made wonders to ensure essential services are delivered come what's made. And as Antoine said, we're very grateful to them very proud of their high level of engagement that you can see on these results with 87% engagement Finally, for society. We can't ignore the fact that there are people who are yet not connected to essential services around the world. And one of our commitments is to increase the number of people benefiting from health to access water and sanitation. We've assigned ourselves the target for 2023, 12% increase Number of benefiting from this essential services, and you can see that we're off to a good start in 2020. I'm on Slide 18 now. Talking about innovation. In terms of innovation, despite everything that's been going on in 2020, We've managed to focus and accelerate on some very promising projects. These projects not only address major challenges of the green transformation of society and our economy, but also potentially, they can open new significant markets for Veolia in One of them is the recycling of electric car batteries. You could be aware that 2020 has Significant increase in the sale of electric vehicles throughout the world. In Europe, only more than 1,000,000 vehicles sold, which is for the first time more and the number of vehicles sold in Asia. Of course, these batteries in a couple of years will have to be recycled. One reason is that they are part of hazardous waste. That really are dangerous. They are less doing And if we manage to extract these metals, of course, they will be recycled in production of new batteries. By 2,030, We forecast that there will be more than 1,000,000 of batteries to up to available to be recycled in Europe only. We started a joint venture with Solvay. We've got the 1st glance In France, we've got another one in Asia. We will be ready to be one of the major players of the recycling of this wave of batteries that is coming to us. The second one is carbon capture. Everybody's hope these days is talking rightly about achieving net 0 targets Aligned with the Paris Agreement. And net zero targets will come with carbon Capture, there is no doubt about that. This is what Veolia is working on. Because of our competencies, because of our Partnerships with industrials because of our knowledge of handling, capturing and transporting hazardous waste, which is what carbon dioxide is we feel we are well positioned to address this future market of carbon capture. And in fact, in partnership with British company called Carbon Clean, we've started a number of developments, 1 in India. In fact, there are 2 in India, the other one in the UK. And we hope that by 2023, we will be able to show and demonstrate our industrial ability to capture the carbon. The third one is the bio conversion of organic As you probably know, by converting organic waste, we can now produce we can grow insects that will become and produce oil, proteins to feed animals and organic fertilizers. We got the first plant already operating in Malaysia. We've got another one being under construction in South of France. This is a multibillion dollars market internationally, and we believe that because of our knowledge Of the feedstock, of the bio, of the organic waste, we can again take contribute to this market and take a Significant stake a bit. And finally, water on 2 grounds. 1st, wastewater reuse And desalination, you can see on the slide an example of one product we launched, which is called the barrel, which is a very compact, safe, cost effective and digitally connected Small plants with membranes that will be able to provide desalination water, fresh water in remote areas. The 1st industrial full scale plant will be operated in France by 2021. This will address not only the need for fresh water, but for instance, the needs of agriculture as we've seen last summer, where water It's no longer available at the right time or the right location. Again, we believe we can provide solutions. So as you can see, we've got very promising Innovation under development in Veolia and we hope that we can bring them to the market in the coming months years. Now all these efforts in terms of ESG, I'm on Slide 19 now, It's hard to be acknowledged by the international rating agencies and we're very pleased with that because we're working hard on it. As you can see on the Slide, we've made progress in 2020 among some of the major agencies. CDP Climate Ranking increased our ranking from B plus to A-. The FUTI For Good Index again acknowledge Our position ranking us number 1 in water utilities and entering Veolia as part of the Top 5% best performers in Global Utilities Sector. And finally, ISS ESG ranking As ranked us now number 1 in the utilities and multi utility sector. So at the end of the day, the hard work we put in ESG matters starts to appear in the rankings and put Veolia on top of these rankings. We're very pleased with that. Thank you, Olivier. And now let me give you an update on our planned takeover of SUEZ, and I am on Slide 20. The projects we launched at the end of August 2020 to create the world champion of ecological transformation is a major opportunity at the time when climate change is the defining issue. The Veolia SUEZ combination is an answer to this emergency. As I have already had the opportunity to tell you, the very strong complementarity between SUEZ and Veolia In terms of assets, geographies, know hows, technologies, human resources and clients is very obvious and guarantees the successful integration of the 2 groups. Our respective strategic plans share the same objectives. And combining our forces will therefore accelerate the execution of our ambition and enable us to reach our objectives even faster. All of this makes the combination of Veolia and SUEZ strongly value creating transaction for all stakeholders. Our clients will benefit from a larger and more innovative service offering. The employees of both groups will benefit from new and expanding opportunities. And finally, the value creation coming from the merger will be strongly accretive to Veolia's EPS and for all our shareholders. So Where are we in the transaction? And I am on Slide 21. We are progressing perfectly in line with our plan. After the acquisition from ENGIE of a 29.9% stake in Suez Capital on October 6, The legal hurdles we have faced and which have prevented us from signing a formal offer earlier have all been resolved 1 by 1. We have therefore filed our tender offer before the IMS, the French Stock Market Regulator on the 8th February for the 70% remaining shares of SUEZ at €18 per share dividend attached. The antitrust process is also progressing as planned with regular and constructive exchanges with the European authorities. We expect to obtain a green light within now 7 to 13 months from now. Finally, the financing of the transaction is, of course, fully secured. And our cash projections for 2021 bring down the net financial debt to below €12,000,000,000 the leverage ratio will thus decrease to below 3 times as early as 2021 and from 2023 onwards. On Page 23 now, you see our financial prospects for 2021. In 2021, we will more than offset 2020, and we expect to deliver strong results growth. In terms of revenue, we plan to recover our 2019 level of activity. The activity loss due to COVID will be fully recovered and complemented by new growth. In terms of EBITDA, we target growth of more than 10% with an EBITDA above for Bilibili, thanks to revenue increase and to a test cutting plan of €350,000,000 including €250,000,000 from our recurring multiyear efficiency program and €100,000,000 of additional savings coming from our recover and adapt plan. Net financial debt will decrease to below €12,000,000,000 hence a leverage ratio below 3 times at the end of 2021. In terms of dividends And in view of the very good 2020 performance, the €0.70 dividend will be proposed to the AGM. And our objective here is to recover our pre crisis dividend policy in 2021. On Page 24, you can see the breakdown of the 2020 revenue and EBITDA decline and the rebound targeted in 2021 leading to an increase of revenue of more than 3% and of more than 10% under the EBITDA level. You see clearly that in 2021, Veolia is targeting financial performance at least equivalent to or above 2019 levels, meaning that our objective is also to come back to the same level of dividends we had proposed at the beginning of 2020 for the results of 2019. On Page 25, We confirm that the strategic choices included in our impact on the Tunis flip plan remain fully relevant. These choices enable us to face the crisis and we will continue their implementation in 2021. Our long term fragment fuel objectives have only been delayed by roughly 1 year. It is clear that the finalization of the takeover of SUEZ will reinforce and accelerate the execution of this plan. I now hand over to Claude, who will give you the details on our 2020 financial performance. Claude, the floor is yours. Thank you, Antoine, and good morning, ladies and gentlemen. I'm on Slide 27. I'm sure you remember the very good Q3 number that we presented in November and reminded by Antoine and Estelle. For Q4, we have exceeded our guidance on all financial indicators and accelerated our performance after the Q3 rebound. In this presentation, we will focus on understanding the Q4 numbers in our Spireos businesses, Keeping in mind that Q4 is remarkable on 3 main items: pricing discipline, cost cutting and cash collection. Regarding ForEx, you can see it has impacted all the P and L indicators with a negative minus 1.5%. And thanks to the strong performance of Q4, all the variation that you see on the slide for the full year are improving compared to Q3. Let's move to Slide 28 with a detail of 2020 by quarter and by geography. You can see the strong rebound of Q3 with the revenue back to historical level and EBITDA up 1.7%. Q4 shows an acceleration and is a remarkable quarter in 2 ways. 1st, Revenue increase of 0.9% at constant price for the whole group. And second, Thanks to a good operating leverage, an EBITDA increase of 4.2% with the effect of both pricing discipline and cost cutting that strongly delivered. France has more than confirmed its rebound of Q3 with plus 2.5% growth in Q4, Thanks to good water and waste volumes and also favorable pricing in both activities. The rest of Europe had a very strong Q4 with a boost of the energy business in Central Europe and the continuous effect of the tariff increases in the water and heat businesses. The rest of the world is more contrasted with China back to growth at plus 4.1% at constant price in Q4 and North America not fully backed yet to its nominal level of activity with lower refinery activity. Global business continued to perform well, plus 2% at constant scope and ForEx, With recovery of work and good momentum in hazardous waste, as Estelle told you. On Page 29, you have the Q4 revenue bridge. The favorable pricing is more than offsetting the like of West Williams. You can see on the bridge That the like for like growth is very well oriented at plus 0.9% in the context of COVID Wave 2. What is remarkable is the price effect of €80,000,000 contributing for 1.1% of the revenue increase. As I said, we continue to have a slight negative effect on volume at group level minus 0.7%, linked to less commercial waste volumes in a few geographies. One last thing to mention, energy and recycled prices are well oriented, Plus €48,000,000 or plus 0.6 percent, which is promising for 2021. Moving to Slide 13. It shows the revenue bridge for the full year with a limited 2.9 percent decrease compared to 2019 and the sharp rebound in H2 after the COVID outbreak. What is again remarkable for this year is a green box on the chart of price effects, €286,000,000 for the full year. As we told you, we have learned from the freight boost crisis, and we have kept Our pricing discipline all along the year despite the temporary drop of volumes that will clearly help of 2021 performance. We can move to Slide 31, detailing our waste activity. Waste revenue is back to growth in Q4, driven by waste prices. You can see the yearly revenue sequence With a sharp drop in Q2, the rebound in Q3, but not yet at 100% and a very good Q4 performance, Plus 1.6 percent at constant scope and ForEx. Let's focus on the Q4 column. Q4 revenue growth is, as you can see, strongly driven by price increases, plus 2.3%, more than compensating the negative volume effect of minus 1.8% linked to commercial and industrial way in the few geographies. France did very well in Q4, plus 2.5% revenue growth with plus 3% price increase, driven by our treatment facilities and higher recycled material prices. In the UK, You are now familiar with the situation. Our PFI has continued to run at full capacity, producing a large Torsion of the revenue and results of the company, while the decline in C and I collection volumes linked to the November lockdown I've impacted the landfill volumes with lower margin. This is overall a very resilient business model. Germany was Flat in Q4 and the rest of the world was sharp here. In Asia, for example, we have the effect of the start up of new hazardous waste facilities combined with commercial development. Pacific is back to growth, plus 3.4 percent, And the U. S. Has recovered quite well with a flat Q4. As our new choice in Europe has almost fully recovered, and here again, The business model is very resilient with the treatment units producing most of the results and running at full capacity. On Slide 32, you have the EBITDA bridge for Q4 only with a strong plus 4.2% increase. Let's focus on the three main points. 1st, cost cutting is strongly dealing with €83,000,000 Despite all the difficulties linked to the various lockdowns and the travel restrictions, we were able to over deliver our Cost cutting plans in all our business units. It is more than the double of the usual price cost split of minus €39,000,000 2nd, now with our adaptation of the COVID situation, our volume impact is very limited, minus €11,000,000 3rd, The energy and recyclers prices are well oriented, especially for paper and cardboard, which is up compared to Q4 last year, plus €8,000,000 again promising for 2021. Moving to Slide 33. You can see the annual EBITDA bridge compared to 2019. The main effect are, of course, The COVID impact, which has led to an overall volume and commercial effect of minus €443,000,000 Constant registered in Q2 and the cost cutting plan for €278,000,000 fully implemented, as I said, despite The various lockdowns, which have occurred during the year, it is twice the usual price for squeeze of minus €142,000,000 Moreover, this year, the overall impact of energy and recycled prices has benefited EBITDA by €28,000,000 due to the energy prices with a favorable combination of increases and electricity prices in our Energy business and lower fuel costs in waste activities. Let's review now our activities by geography, Starting by France on Page 34 with 1,000,000 water and waste activities in H2. Focusing on Q4. French Water business continues to perform very well with revenue up 2.5 percent, thanks to volume and tariffs and also work associated with our contracts, which are back to normal. Waste activities were also very well oriented despite the second lockdown that was much less impacting That's the first one. We took advantage of the volume resilience to continue to increase our treatment prices, which has more than compensated our volume decrease. Recyclates were also well oriented in France in Q4, helping To boost the results, the EBITDA of the segment was sharply up in Q4, helped by these good business trends and cost cutting measures. Regarding Rest of Europe on Page 35. Revenue growth in Central Europe was very strong, Revenue up 14.9% in Q4 and 6.3% for the full year, with the mainstream businesses Performing very well in Energy and Water and additional revenue and EBITDA coming from the recent acquisition of the Pride of the Frac right bank district heating network and cogeneration assets in good assets. We also enjoyed a good start to the year 2021, which is all very promising. UK has also a solid Q4 With a resilient business model, as I said, combined with strong adaptation measures, even though revenue was impacted by the November lockdown, UK delivered a strong EBITDA growth in Q4, plus 13.7 percent at constant for it, thanks to the great performance of our PSI and efficiency measures. Germany revenue was flat with Q4 waste volume back to normal level. Southern Europe, which is mostly concentrated on Energy business, has recovered normal activity and margin in Q4. Let's review now the rest of the world on Page 36, where we experienced recovery in all regions With a few highlights, starting with Asia. China is back to growth with plus 4% revenue increase at constant ForEx in Q4 with good weight and energy activities. Latin America is doing better in a context of lower currency And COVID now under much better control. For example, Brazil is up 10% at constant price in Q4 With the new acquisition in the Southwest region, complementing our waste activities very well. North America is still impacted Like the lack of gas and jet fuel consumption with lower volume in our recycling business for refineries, the rest of the business is performing as Australia is back to normal and our Morocco activities are recovering well after a very long lockdown. EBITDA of the segment is well oriented plus 5.4%. Of course, it has to be compared At constant scope and forex as Q4 2019 included the contribution of the district heating business in the U. S. I'm moving to Page 37. Global Business had a strong recovery in both Construction and hazardous waste in Q4. As you know, our BWT transformation is ongoing to focus this activity on value added technology and reduce the level of risk. VWT activity in Q4 is well oriented, plus 6.2% at constant for it, Like SAD, plus 8.1 percent with a strong catch up after the long lockdown of Q2. Hazardous rates in Europe has recovered well and today is only impacted by lower oil prices than last year. EBITDA for the segment is almost stable in Q4 compared to last year, minus 1.5%, due to the fact that Industrial and Energy Services were impacted by lower activity levels, which was almost Fully compensated by the very good performance of our technology and construction activity. On Slide 38, you can see the EBITDA translation into current EBIT. Two main variations compared to last year. A significant change in provision reversal and fair value adjustment, minus €12,000,000 this year compared to plus €52,000,000 last year and also less contribution from our Chinese JVs, leading to a total net income of JV and Associates of €111,000,000 compared to 100 and €30,000,000 in 2019. As a result, the level of current EBIT for the full year 2020 is €1,275,000,000 Moving to Slide 39, you have the detailed translation of current EBIT into current net income. What do we see? 1st, A significant decrease of the cost of net financial debt at €414,000,000 compared to €441,000,000 in 2019, with a significant decrease of our cost of borrowing down by 62 basis points, thanks to the refinancing of for euro debt and the interest rate decrease in almost all countries. 2nd, income tax expense decreased in line with earnings before tax. But thanks to the Q3 and Q4 strong performance, The tax rate is well below 30% at 26.1%. Current net income group share as which consequently €415,000,000 showing a remarkable H2 performance after €6,000,000 in H1. Net income group share on Page 40 is at €85,000,000 with many noncurrent impairments taken in H1. The main variation in noncurrent items versus last year is a non current capital gain of €170,000,000 linked with the disposal of our distillating business in the U. S. In 2019. We can move to Slide 41 with a better Then expected free cash flow of €507,000,000 Thanks to a very focused management of our In all our countries, we are able to improve our working capital position at year end by €233,000,000 compared to year end 2019. All the geographies where we had some issues in Q2, Morocco and LatAm, for example, have improved significantly. We took advantage of the Strong cash collection to increase our discretionary CapEx at €435,000,000 plus 20% compared to last year In order to achieve the crisis, we win for Enbar growth. For example, as Estelle mentioned, we are building The new biomass boiler in Braunschweig, Germany, which is our 1st energy conversion project, and we have also invested Significantly in our RWA project, 5 in Asia under construction or commissioning And also one in Germany and one in Saudi Arabia, for example. Regarding the debt level, net debt is decreasing at constant scope by €400,000,000 The debt increase is coming from 2 main effects in 2020. First, the purchase of straight shares for a net €1,450,000,000 second, the asset protection effect with many projects acquired in 2020 for €1,470,000,000 This is a temporary The situation and linked to the phasing of our asset rotation. Our commitment for 2021 is very clear. Our net debt at year end below €12,000,000,000 and a leverage below €3,000,000 On Page 42, You can see all the variation of the net debt between end of 2019 and end of 2020. You can see the main increase that are coming from the level of CapEx to increase the credit with embargo, the net financial investment and the acquisition of Fetched Shares. Moving to Page 43. Veolia continues to have a robust balance sheet and a very strong cash position, €6,700,000 at the end of 2020. We have also the full confidence of investors with the latest midterm note issuance done at the negative eight minus 2 basis points for a 6 year maturity that will help further reduce our cost of borrowing in 2021. After this very strong Q3 and Q4 performance, which has shown a remarkable rebound of our activity and our financial performance. I can Fully confirm our 2021 guidance described by Antoine and the medium term outlook on Page 44 And for the final, thank you for your attention. Thank you, Claude. And ladies and gentlemen, The floor is now yours for your questions. Thank you. The first question comes from Emmanuel Turpin from Societe Generale. Sir, please go ahead. Good morning. I will limit myself to 2 questions. First of all, would you mind updating us on the latest Trends that you've seen since the start of the year from a business perspective, particularly interested in waste volumes. We had a quarter on year on year sorry, a quarter on quarter improvement in 2H last year, but it was Nevertheless, printing a negative year on year growth in Q4. What are you seeing at the start of this year? Is the good waste Pricing environment still holding? And maybe also a comment on bookings in construction. You were saying they were soft at the end of last year. What are you seeing most recently? And my second question is related to the outlook for 2021. Bloomberg is saying that you're expecting a DPS Of around €1, which if we apply it to your historical payout policy would imply An ordinary EPS of at least €1.3 per share. And therefore, if my math is correct, are the new net earnings at or above EUR 7,000,000 or EUR 150,000,000 Is this the right way to look at it? Thank you very much. Thank you, Emmanuel. Estelle, we answer your first question, and I will take the second one. Hello, Emmanuel. On your first question about what is the trend at the beginning of the year like specifically in the way the volume and pricing, The answer is basically exactly similar to what we've seen in Q4. So we don't see any specific difference so far, Which means, if I go more into details, in terms of volumes, yes, you're right. We're still missing 1% or 2% here and there. And depending on the geographies, which is exactly what is detailed on Page 31 for Q4, but It's more than compensated for the price increases. And therefore, altogether, revenue is slightly up compared to the years before. So it's exactly what we see now. So to answer your questions, although we still have a little bit of volume missing, We continue with our price increase as well as cost cutting. So in the end, EBITDA related to the waste activities It's not only holding, but actually progressing compared to 2019 exactly in a similar way as what the rest of the group is Okay. And about the outlook of 2021, you understand well, Emmanuel, our objective is to have better or at least 0.25 percent of 2019 in terms of revenue and profit, meaning that if we reach this objective, we will come back to a dividend policy pre crisis. And this dividend policy pre crisis was for the results of 2019, with €1 per share in terms of dividends. So of course, coming back on this policy means that if we reach our objective for 2021, we will come back at that level. And you understood also that our impact 2023 Program is fully valid. We will continue to force out it. The crisis just make losing for us roughly 1 year. So the objective we have in terms of results for this plan could be just postponed from 1 year, but we're still on the set objectives for this strategic plan. The next question comes from Lionel Rodriguez, Sir, please go ahead. Thank you, everyone, and congratulations from the strong performance on Q4 results. I'll limit myself to 2 questions, if I may, to move the floor to everyone. First is on the upcoming negotiations with Suez. What are the points at which Veolia is willing to negotiate or would be more open and what can be considered a red line In this sense, so this is the first question. And the second one is more on the operational side. Can you tell us what is your current exposure To CO2 prices and your hedging strategy on that front? Thank you. So Claude will answer the second question. After that, I will come back on the first one. So in terms of hedging strategy for CO2, you know the way it's working. So We for 2021, we have aged most of our CO2, so at €22 per ton, So which is much lower than the current market. So we are very well covered for 2021 on the CO2 side. And we are starting also to cover 2022. You know the hedging policy that we have. We are starting to sell For 2020 with the higher price because the midterm outlook for electricity is higher than And in the meantime, we are hedging CO2 with start, but we are only at 30% as we speak. About our project with SUEZ, as you know, we filed our offer officially some weeks ago now. There is no Discussion is today, but I told it again through a press release 2 days ago. I am still willing to present personally this project to all the Board members of SUEZ. And as it is also what we have to do, what to do when we find an offer or when we are receiving an offer. So I remind you what is this project. It is to build one worth champion of ecological transformation, but we have also to ensure that the competition on our different markets, especially the French Quarter market should be strong. It is why I'm still ready to propose a solid, good quality and long term operator of Water in front of Veolia. And I am ready to negotiate that and to negotiate also with The Suez Board members, the element to put in place this project, but we are ready to discuss about our project, not another one. Perfect. Thank you. The next question comes from Andrew Fisher From Behrendberg. Sir, please go ahead. Okay. Thank you. Good morning, everyone. Thanks for taking my questions. Just on cost cutting, I was wondering if you could please give us a little bit more color on things that you've learned from the recovery and adapt plan Obviously, you can then carry through into future efficiencies, not just with obviously the Veolia business, but also maybe that Will relate to your ability to cut costs when integrating SUEZ. And then just also on pricing, obviously, you've highlighted the success on Price increases. Just wondering if you could maybe give us a little bit more color on how that sort of works with the negotiations that you're having With key customers, sort of if there's any sort of examples that you can give us on how you're successfully passing Higher prices through when obviously some customers might be still struggling with their own volumes and revenue lines, please. Thanks. Okay. Good. So I'm going to answer those 2. On the your first question, which is about the Recovenant Act Plan and the efficiency plan, so To give you a little bit of color on that, I guess, we have a few usual stuff and a few stuff which have It has been speeded up by surprises. So the on the usual one, we've done a lot of effort on SG and A, as you can guess, and actually G and A more so than SG and A. As in, for instance, rethinking all our locations in terms of headquarters in the various countries And administrative, like teams. So we've closed a few steps to a group of people in the same location and stuff like that Reduced real estate costs, just to give an example of what I call the usual ones. On the I guess, the things we speeded up, I would emphasis on digital, which is the key one. Digital operations It will be something which we've launched something like 18 months to 2 years ago, which led to from 5 upgrades Now 66 upgrades, upgrades being the live control center where we have all our big assets basically being monitored live. So you have a lot of IoTs everywhere to measure a few data slides and all those data are gathered into a control center, Which you may have 1 or 2 per country or 3, depending if you know the countries are big, it could be per region typically. And why is it so important? Because you can optimize life of performance such as reducing the energy consumption of the wastewater treatment Plant because you can see on the screen that something is happening, which can allow you to reduce a bit the consumption. You can monitor, for instance, how network of water distribution is behaving. And at times, I feel that there may be a leak somewhere, which you can anticipate as opposed to just prepare when it's fasting. So reducing that for the maintenance cost altogether. So those are real time examples of how digital helps improving the performance. And the performance has been basically sweating the assets and improving the yields of our value streams. That we can apply to in a strong way to the much more assets we put into those upgrades and the more we will deliver Such savings. So it's really sustainable and I would say quite deep in the organization. In terms of your second question on price increase, and I'd like to give a little bit of Color on that, I will take the example of C and I, so commercial and neutral waste, where the contracts are, I guess, relatively simple. As in, price increase are usually yearly. We've been really using everything we've Put into the CRM to be able to analyze customer by customer and type of customer by type of customer. The price they have That's the pricing strategy we may have. Just to give you an example, we may launch a price increase, which is Super high for, say, big retail at one point because they're less than they should compare to our metrics, if you want, But stay stable in the prices of the small shops as we speak in the crisis are not necessarily in the best shape possible. So we can Target some specific type of customer depending on our metrics and depending as well on the type of waste they produce because if they produce something you just And the burning opportunity launching, which has less value that this will produce some cardboard or some plastics. So you can target the price increase very differently one to the other. So when you do something like I just described on C and I in France, in some regions, You can have 10% or 15% increase at times in onethree of customers typically, and it could be 0 on another part Of customer. But that's that has been proven super successful. Great. Thanks very much. The next question comes from Olivier Van Dossler from Anne BNP Paribas. Sir, please go ahead. Thank you very much and good morning everyone. Yes, just a few questions on my side, please. So first, Two questions on SUEZ. The first one is, I was wondering how you think about some of the French Parliamentaries have been proposed a mediator to actually come and play a role in potential Discussion with SUEZ, maybe more broadly, how you see the government's role in the debate? And secondly, still on SUEZ, Could you please let us know how exactly you will account in your P and L for the state that you have in Suez? And when you say that you expect your certain income To recover the 2019 results, would I be right to assume that this is not including the contribution from Cielas there? Then if I may, just on the dividend, you said that you would recover dividend policy pre COVID from 2021. I think you had actually mentioned A year ago that the dividend for 2023 was going to be €1.3 per share. So I wonder if that is actually still valid. And finally, if I may, on the guidance, I wonder to what extent the €4,000,000,000 EBITDA guidance for 2021 We reflect dilution from disposal or should we think that the disposal that you will do in 2021 or more minority stakes And as you said, Central and Eastern European assets, which therefore shouldn't really affect EBITDA, but could increase minorities. Thank you. Okay. I will take a question on the image and I will ask Claude perhaps to the other one. So about the discussion on SUEZ, I think I already answered your question, but I will finish Olivier. We filed our officially. I want to present this project and this proposal to the Board members straight. And I think it is normal when no issue offer is on the table. So for that, I will be the best mediator for that. And they will also be, because we have to discuss together and it is normal. So if Anybody could convince the Board members of SUEZ to receive me for this presentation, it will be perfect. But I think we could do that directly as it is normal to do. About The accounting in the P and L, so as you know, the shares of U. S. Are non consolidated because We don't have the control of the competitors. So it's really non consolidated share. So there is nothing from SUEZ or anything In our accounts today, in our P and L. And we will take the dividend that we will receive from It will be accounted in other revenue and expenses other financial revenue and expenses in our P and L in 2021. In terms of you were talking about the dividend, so We already talked about the dividend, and you know that we are saying that we will be back to the previous dividend policy. So regarding the situation of 2021, if we deliver the 2021, all the numbers you're talking about, yes, In the order of magnitude you are talking about is right Olivier, so we should be in the magnitude of €1,000,000 of dividend per share. Exactly what we answered to Emmanuel some minutes ago. Yes. And in terms of guidance, the €4,000,000,000 is including also Some disposals. So it's fully included. So what we are talking about is really our commitment to deliver about €4,000,000,000 of EBITDA in 2021, including the asset disposal that we have in our land. Thank you very much. Ladies and gentlemen, I would like to So ladies and gentlemen, that's it. Yes. We have a question from Emmanuel Turpin from Societe Generale. Sir, please go ahead. Thank you. Just a follow-up question on Slide 13, which is very interesting about some of your growth pillars. Starting with hazardous waste, very resilient performance in 2020 with revenues Slightly up. So we have now EUR 2,500,000,000 of revenues from hazardous waste. Would you mind quantify the EBITDA from hazardous waste In 2020, you mentioned a high double digit EBITDA margin. And Maybe are you able to draw a line maybe 2, 3 years forward as you have many growth projects? Where could this division land looking at Veolia standalone? And I guess same questions for plastic recycling, which was one of your big areas of growth on steelies, I guess, considering the development plans. You had mentioned some Financial ambitions or budgets for plastic recycling quite ambitious. That was pre COVID crisis. On the COVID crisis has, of course, had some impact on the world. Now is this is your business development plan for plastic recycling still holding? Should we still assume the targets we're mentioning pre crisis? Or do you believe there could be delays? If you could just remind us of the metric, would be very helpful. Thank you very much. Yes, Emmanuel. It is the sales slide, so tell me answer. Okay. Fair enough. I'm super happy to answer to those because the answers are quite positive in my opinion and confirming that we've made the right choices in terms Strategy. In hazardous waste, the margin we've been able to achieve altogether in 2020 is around 17% EBITDA, Which is super good when you consider the overall situation, including the spring one where there's a lot of industries closing and so on and so forth. So of course, It's an aggregated one throughout the year. So that's the high double digit EBITDA margin we mentioned on this slide. And we intend to have an Try €1,000,000,000 or something like that of turnover by the end of the plan in hazardous waste with all the development we just mentioned. That's the order of magnitude and the ballpark number of our strategy in this spectrum. Again, the crisis have confirmed that it was a good choice. Why is that so? Because we are very differentiating here. Our customers need us. We have a social service even in has It's way towards industrial customer, and that has been proven throughout the year 2020. In terms of plastic recycling, The answer is yes. We won't change our plan because it's confirmed. Basically, low quality of plastic has Not a real future, but high quality of plastic recycling has proven very resilient. So typically, when I mentioned food grade Key recycling, so which is typically what we do with the non plant in Indonesia, for instance. We managed to sign contracts which are differentiated to virgin oil price, and that has been like a resistance throughout the year 2020 By the oil price crashing. So basically, in the vast majority of 2020, we sold Recycled plastic at a higher price that it would have been if it had been Virgin. And everybody has compliant with that contract. So that's more proof of Brazilian there than anything else. If you're talking about low quality of plastic, that's another story, but that's not the segment we are in. Thank you. So ladies and gentlemen, we have any questions? No more questions. So thank you very much for being on call. Have a good day and see me next time. Bye bye.