Veolia Environmental Services (UK) Plc1, a unit of
), has signed a 25-year Private Finance Initiative ("PFI")
contract worth approximately £460 million ($731.1 million) for
residual municipal waste treatment and energy recovery with Leeds
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Per the contract, Veolia will install a high-tech recycling and
energy recovery facility subject to receiving necessary planning
consents. The facility will be built in the East Leeds Cross
Green Industrial Area. The unit is also planning to develop a
cogeneration plant that will supply heat to local users.
The construction work is expected to begin in mid 2013 with the
recruitment of 300 people and creation of 45 permanent positions.
The recycling and energy recovery plant is expected to come on
line in spring 2016.
To meet the European Landfill Directive targets, it is important
to focus on converting waste into a resource. The British
government believes that it needs to invest £10 billion in waste
management infrastructure by 2020 to achieve the target. This
facility will allow the Leeds city authorities to save £200
million ($317.9 million) over the term of the contract in
comparison to the cost of filling land with residual municipal
Veolia Environmental Services (UK) Plc1 is a subsidiary of Veolia
Environmental Services. Veolia Environmental Services is the
global benchmark for waste management and resource recovery, and
the only operator across all segments of the waste management
business (solid, liquid, non-hazardous and hazardous
waste). Veolia Environnement provides tailored solutions to
meet the needs of municipal and industrial customers in four
complementary segments: water management, waste management,
energy management and passenger transportation.
Recently, Veolia Environnement registered 3.3% growth in its top
line in the first nine months of 2012, stemming from higher
contribution from its Water, Energy Services and Other segments.
However, its Enviornmental Services segment was a marginal
Total revenue in the first nine months of 2012 was €21.59 billion
($27.67 billion), up from €20.91 billion ($29.43 billion)
reported in the comparable period last year. The year-over-year
growth was attributable to favorable summer weather, leading to
an increase in the demand for water.
Net financial debt of the company as of September 30, 2012 was
€15.2 billion ($19.54 billion) increasing by €0.3 billion from
€14.73 billion ($19.07 billion) at year-end 2011.
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 while aiming for a gross reduction of €500 million ($640.3
million) in 2015.
The company presently retains a short-term Zacks #3 Rank (Hold)
that corresponds with our long-term Neutral recommendation on the
The company mainly competes with
Connecticut Water Service Inc.
American States Water Company