Veolia Environnement reports slowdown in waste business

Veolia Environnement put out a statement yesterday (October 19) which revealed that its waste division – which includes Veolia ES – had been affected by the global financial crisis since the beginning of the summer.

It said: “In the waste management business, Veolia Environnement has experienced a clear slowdown in business activity since the beginning of the summer.

“The effects of the economic slowdown (decline in tonnages both collected and treated) and the decrease in raw material pricing (paper, metals) have been particularly felt in the French and German business activities.

“In addition, certain elements have also weighed upon this year's profitability: Temporary shutdown and delay of certain incineration installations in Italy, and the implementation costs for the restructuring plan and the closure of a waste disposal facility in Germany,” it added.

Overall, Veolia Environnement – which also provides water, energy and transport services – said that it expected 2008 operating cash flow to be between EUR 4,100 million (£316 million) and EUR 4,200 million – roughly the same as that generated in 2007.

As a result of the situation, Veolia Environnement is to hold its “investor day” on Wednesday to provide an overview of its outlook for the full year of 2008 “within the context of the financial crisis and global economic slowdown”.

The company is also planning to control investments and dispose of assets, as outlined earlier this summer. This is expected to result in total investments in 2008 reaching EUR 4 billion (£3 billion) as opposed to EUR 6.1 billion (£4.7 billion) in 2007. From 2009, the company expects to save EUR 400 million (£308 million) over two years.

It said: “Taking into account these actions, the company expects to generate positive free cash flow in 2009 [net of all investments and disposals].”

Veolia Environnement is the latest company to suffer from the economic slowdown, which in the past days has also seen metal and paper prices fall.

For the full Veolia Environnement statement, please visit the Veolia Environnement website.