Veolia Cuts Loss, Ups Sales in 1H12 - Analyst Blog

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Veolia Environnement ( VE ) announced its financial results for the first half of 2012. The company's operating loss per share in the first half of 2012 was €0.18 (23 cents), narrower than a loss of €1.11 ($1.40) incurred in the first half of 2011.

Total Revenue

In the first half of 2012, the total revenue of the company was €14.78 billion ($18.59 billion) versus €14.30 billion ($17.98 billion) in the first half of 2011, reflecting growth of 3.4%.

The top-line growth was aided by positive contributions from its Water and Energy Services segments, while lower contribution from Environmental Services marginally dragged down results.

Segment Results

Water : Total revenue from this segment in the first half of 2012 was €6.09 billion ($7.65 billion) versus €5.92 billion ($7.44 billion) in the first half of 2011, up 2.9%. The growth was attributable to healthy performance in Europe and Asia.

Enviornmental Services: Total revenue from this segment in the first half of 2012 was €4.48 billion ($5.63 billion) versus €4.6 billion ($5.78 billion) in first half of 2011, down 1.6%.  The marginal dip in the revenue was due to the challenging macroeconomic environment.

Energy Services: The segment generated total revenue in the first half of 2012 of €3.9 billion ($4.9 billion) versus €3.6 billion ($4.52 billion) in the first half of 2011, up by 9.0%. The growth in this segment was attributable to higher energy prices.

Operational Update

Selling, general and administrative expenses (SG&A) decreased 0.6% to €1.79 billion ($2.25 billion). The marginal decline is an effect of the cost reduction initiatives undertaken by the company.

Adjusted operating income in the first half of 2012 was €523.1 million ($657.9 million) versus €179.9 million ($226 million) in the first half of in 2011.

Finance cost during the first half of 2012 decreased to €397.2 million ($499.5 million) from €405.3 million ($509.7 million) in the first half of in 2011

Financial Update

Cash and cash equivalents of the company as of June 30, 2012 were € 4.5 billion ($5.5 billion) versus € 5.7 billion ($7.4 billion) as of December 31, 2011.

Net cash from operating activities in the first half of 2012 was € 820 million ($1.03 billion) versus € 864 million ($1.09 billion) in the first half of 2011.

Net financial debt of the company as of June 30, 2012 was €14.73 billion, unchanged from the 2011 year-end level.

Guidance

Veolia Environnement provided a combined outlook for 2012 and 2013. The company has decided to sell assets worth €5 billion and bring the net financial debt level to €12 billion within the next two financial years.

The company also provided a business outlook beyond 2013. The company forecasts organic revenue growth of 3% per year from 2013, while adjusted operating cash flow is expected to be over 5% per annum. The company has also taken the initiative to reduce costs and aims for a gross reduction of €500 million in 2015.

Zacks Rank

Veolia Environnement retains a Zacks #4 Rank, which translates into a short-term Sell rating. Veolia's peers Connecticut Water Service Inc. ( CTWS ) and Aqua America, Inc. ( WTR ) currently retain a Zacks #2 Rank, which translates into a short-term Buy rating.

Based in France, Veolia Environnement is a provider of environmental management services to its worldwide consumers. It operates through three segments, which are Water, Environmental Services, and Energy Services.


 
CONN WATER SVC (CTWS): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CTWS , VE , WTR

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