Thank you, and good morning, everyone. Welcome to this presentation of Veolia 9 months 2019 results.

We are starting this call at 8:00 instead of 8:30 as ENGIE is also publishing its Q3 this morning. So we will end our call at 8:50 to allow you to listen to their call, if you wish.

I'm joined this morning by Estelle Brachlianoff, our COO; and by Claude Laruelle, our CFO. I will start with the key highlights of the 9 months, and then Claude will comment the detailed results.

And finally, with Estelle and Claude, we will answer all your questions. On Slide 4, you see the key figures of our 9-month results.

They are, again, very solid in Q3 as they have been in H1. These good results are fueled by the 2 pillars of our strategy, strong organic growth and cost savings, which are, at the end of September, led of our annual objectives.

Our revenue has thus increased by 5% in the 9 months. In Q3, it has benefited from good water volumes in France and in Central Europe, and again, by good waste volumes, which have grown at the same rate in Q3 as in H1.

By geography, France has increased by 2.7% in the 9 months. The Rest of Europe has progressed by 5.3%, of which, plus 6% in Central Europe and plus 4.5% in the U.K.

Finally, revenue has increased by 8.2% in the Rest of the World, of which, plus 12% in Asia and plus 21% in Latin America. Q3 is, therefore, fully confirming H1 performance.

EBITDA has increased by 5.1%, fueled by top line growth and by the high level of efficiency gain. EBIT has progressed by 5.5% over the 9 months, and current net income has grown by 7.5% to €486 million.

Please note that there were no overall Forex impact in our 9 months results except for the financial debt level. The first pillar of our strategy is revenue growth, mostly organic, as summarized in Slide 5.

This growth is connected in a very disciplined way regarding balance sheet and leverage and is, at the same time, very dynamic for our fast-growing activities. Among these fast-growing activities are the treatment and recycling of hazardous waste, the recycling and energy recovery of solid waste or the energy efficiency services, where we have run again new contracts and built new industrial facilities in many geographies.

Moreover, our traditional businesses, such as municipal water or district heating networks, can be further optimized and have recently enjoyed new and attractive development opportunities. Finally, in order to focus on high-potential and fast-growing activities, we are progressively downsizing very competitive or low-margin businesses, such as construction of solid waste municipal collection without associated treatment or recycling services.

So our growth strategy, clearly differentiated according to market segment growth potential, and Veolia's own distinctive advantages and skills is bearing fruit. The second pillar of our profitable growth strategy is cost efficiency.

Slide 6 provides you with our 9 months performance. With €185 million of cost savings over the 9 months, we are clearly ahead of our annual objective of more than €220 million.

Operational efficiency, with - in particular the enhanced performance of equipment and facilities, has been generating for several quarters now most of cost savings. This solid 9 months performance allows us to fully confirm our annual guidance, which is recalled here on Slide 7.

Of course, given the 9 months performance, we will be at the top of the range of this guidance. Moreover, as you know, 2019 is the last year of our 4 years 2016-2019 strategic plan.

We are now in the process of preparing a new strategic program for the group. This new 4-year plan, 2020-2023, will be presented to you next February 27 during the presentation of the full year 2019 results.

These were the main highlights of our third quarter. I now hand over to Claude Laruelle for more details.

Claude, the floor is yours.

Thank you, Antoine, and good morning, ladies and gentlemen. I'm on Slide 9.

First, after the solid Q3 that Antoine has just described, no major changes compared to H1 results. Revenue grew 5% at constant Forex, with almost no impact of Forex on 9 months, by 0.2%.

EBITDA after IFRS 16 grew 5.1% at constant Forex compared to last year, and current net income continued to grow close to 8% year-on-year at constant Forex. As you will see later in the presentation, the lower working capital requirement and the good management of CapEx helped our net debt to be stable compared to June 30 at €12.5 billion, despite €230 million of financial investment in Q3.

Moving to Slide 10. As we said, we had a solid Q3 with 3.8% revenue growth driven by the international segment.

Q3 was mixed in France, with Water France still at the same momentum on volumes, tariffs and commercial gains; and waste activities, slightly lower linked to contracted activity and low recycled paper prices. In Europe, as you know, Q3 is a smaller quarter, with no sales of heat.

We experienced a continuous momentum in our waste activity in the U.K. and still double-digit growth in Southern Europe.

The Rest of the World continues to be led by a strong Asia and Latin America, with a growth of 9% during Q3. Global Businesses, like the beginning of the year, have strong hazardous waste activities and lower VWT revenue due to the decision to reduce construction activity.

EBITDA for the quarter was up 4.3%, thanks to the solid dynamics of our growth platforms. On Slide 11, you have the same figures for the 9 months consolidated.

And moving to Slide 12. The revenue bridge is showing the same trends as H1, with revenue growing 5%, 3/4 organic and 1/4 from the scope effect, including tuck-ins such as cogeneration in Slovakia, waste in Portugal or plastic in China.

We continue to have a strong volume and commercial momentum, representing 2/3 of the organic growth, thanks to continued good waste volume, plus 1.9% year-to-date, and new contract wins in many geographies. Price effect continued as well to be dynamic, much more than last year.

We experienced a drop in paper prices in Q3, leading to a lower contribution of recyclate minus €28 million for the 9 months compared to last year. Moving to Slide 13.

Our waste activities continued to be solid, 7.1% growth driven by 3 main effects. First, the volume effect.

Despite a high comparison basis and the selectivity of new contracts in France, we had 2% volume increase in Q3, thanks to U.K., Germany, Australia and hazardous waste. The price effect, which is, to us, priority #1, with good indexation and tariff increases in all geographies.

And third, the scope effect with, for example, the integration of a newly acquired activity in Portugal, which is delivering above plan already. I'm moving to Slide 14.

We - you have the usual EBITDA bridge where you can see the continuous improvement in operational performance, with cost-cutting at €180 million ahead of our annual target. It is linked with the implementation of our operator priority plan in more than 2,000 facilities, leading to stronger operational savings.

The second contributor to the EBITDA growth is the commercial and volume effect at plus €73 million or 2.7% in line with the revenue growth. The lower price cost squeeze this year, minus €77 million compared to minus €93 million in the 9 months last year, is due to better tariffs and price increases in all businesses.

Moving to Slide 15. Now we will review our activities by geography.

First, we start by France; as I said, is mixed. Water, on one side with a very solid delivery of its over 2020 plan, helped by better volume and tariff indexation and the restart of the Valenton wastewater contract in the suburbs of Paris, the largest outsourced wastewater treatment plant in Europe.

Waste, with more selectivity on contract renewal and focusing more on pricing than volumes. The EBITDA for French activities is slightly up, thanks to the water dynamism.

On Slide 16, all geographies continue to be dynamic in line with our H1 numbers. No major change in Central Europe after good tariff increases and a hot summer, leading to higher water volumes at plus 3%.

U.K. continues to deliver very strong revenue growth at plus 4.5%, with all waste activities well oriented.

And Southern Europe, up double-digit, with very good contract renewal and new commercial gains. At EBITDA level, the growth is mostly driven by the U.K.

and Southern Europe. On Slide 17, we experienced solid growth in all international geographies, especially in Asia, where China continues to deliver plus 20% growth, and specifically, in 3 main activities, the preheating in Northern China, hazardous waste across the country and plastic recycling in the province south of Shanghai.

Looking ahead for a second, we are expecting the growth to continue in Asia next year, with 6 facilities under construction for hazardous waste plants in China in 4 different provinces, 1 hazardous waste treatment center in Singapore and 1 plastic recycling facility in Indonesia. Coming back to Q3 figures, Latin America continues to grow at double digit for the 9 months, and EBITDA growth for the Rest of the World remained very solid in line with the revenue growth.

Moving to Slide 18. Global Businesses, same trends as H1.

VWT is downsizing its construction business, but it's showing good desalination wins. We have just signed a new contract in the Emirates, Um Al Quwain, where our role is limited to design, equipment supply and commissioning, thus avoiding the construction risk fully transferred to our EPC partner.

Hazardous waste in Europe continues to be very dynamic, helped by recover pricing power in incineration treatment. EBITDA is up, thanks to hazardous waste performance and restructuring effects.

On Slide 19, you have the detailed conversion of EBITDA into EBIT, EBIT growing at 5.5% at constant FX. You can note the low level of provision and fair value adjustment at plus €5 million and the strong performance of our China JVs, up 7%.

On Slide 20, the 5.5% EBIT increase is leading to a 7.5% current net income increased at constant Forex. The cost of the net financial debt went up in Q3, including the refinancing cost of the convertible bond that we issued in September with a negative yield of minus 0.6%.

The cost of the refinancing was €2 million. We expect a decrease of the cost of the net financial debt in Q4 in line with the €440 million target for the year.

Our tax, the rate remains low at 23.5%. Moving to Slide 21.

No major changes on CapEx, with plus 30% on discretionary CapEx, as I mentioned a lot in Asia to fuel the growth of the group. We had a significant improvement of our free cash flow in Q3, €300 million better than Q2 and €100 million better than Q3 last year, due to higher EBITDA and better working capital management.

The net debt is slightly up compared to September last year, with a negative Forex impact of minus €160 million and the effect of tuck-ins in Q3 of €230 million. On Slide 22, you can see the evolution of the net debt.

As we told you, we expect the net debt at around €11 billion at year-end, including the proceeds of the district heating disposal in the U.S., few acquisitions we're expecting to close in Q4 and the reversal of the working capital. On Slide 23, as Antoine told you, after the solid Q3 and the NPAT growth we have booked, we can fully confirm our guidance for 2019.

Thank you very much.

Thank you, Claude. We are now ready with Estelle and Claude to answer your questions, ladies and gentlemen.

Very quick as we got another call. Just to verify one thing.

We see lower works from the Global Businesses, and then on the waste volume, we see - you talked about selective policy. Is the evolution we saw in Q3 was basically your expectations or your plan regarding both activities?

I guess with regards - thank you for your question. With regards construction activity as much as waste, the key word here is really selectivity.

As Claude mentioned, we really are downsizing our construction activity. That's what you see on the number.

In benefiting on the reverse to the month selling technology and commissioning, and it's exactly the example Claude highlighted with the Um Al Quwain recent win and signing. In terms of waste volume, they are still really good and satisfactory.

When you have a look at the figures just published, with 2% in Q3. And I guess we've worked a lot on the mix.

So we have basically more plastic, more hazardous waste, but a little bit less volume in municipal collection, which is very intentional. So it's, again, a selectivity of our activities here.

Yes. Just one simple question regarding the trend, mainly in France, as you mentioned, there is a quite sharp downward trend on the 2 quarterly basis revenue strength because you're leaving from plus 5% in Q2 versus plus 0.5% in Q3.

Could you just elaborate about your view, because it seems that it's, first, mainly driven by the basis of comparison? But are you still confident about the fourth quarter, looking all these businesses in France?

And then how are you seeing, let's say, the beginning of next year? Are you expecting still to have a continuation of the 2019 trend or maybe some positive news coming from the - your businesses and your repositioning?

Claude?

So for the trend in terms of revenue growth, so for the French Water, we will have the same trend as we have seen. So no major change on the French Water, which is more than half of the revenue in France.

For the waste activities, as just Estelle said, we won't see major changes, so we won't see a rebound in Q4. So as well, we should be in the same trend as what we have experienced recently.

Philippe, you have to take in mind that what is increasing us are profits more than turnover. And especially in France, now the profit level of the Water business is increasing rather quickly more than we expected through our plan, 2020.

And for the Waste business, we are interested by activities with margins, meaning that for the waste collection, for example, if they are fueling our treatment on recycling facilities that have good waste volumes. If the collection, the municipal collection, for example, is just collection without value, be it on treatment or recycling, we are less interested.

So what we want to do is to increase the profitability and also to derisk our activity, meaning to decorrelate it a bit between the industrial production. We want to have good volumes on potential activities that is hazardous waste, recycling plastics or valorization of waste and energy activities.

So we don't just want to collect, we don't want to just invest in trucks. We want to make value on the treatment and the recycling.

We will come back to the question.

I'm going back to the point of waste in France. I get your point.

But can you explain why then the EBITDA is down in - following your indication? It's just due because of the change in the quality of the benefit or is there anything else?

And what should we expect going forward, are you going to - is there any discussion [indiscernible]?

Yes. So on the waste activities in France, I guess what you see here is a mixture of the selectivity in terms of revenue that Antoine just highlighted for the - I guess in the favor of the waste collection, municipal waste collection activities.

And we've had a negative effect this quarter on the recyclate price, which Antoine and Claude have highlighted further on. So I guess the main point here is with the recyclate price, which has gone on decreasing compared to the previous quarters.

I can add, although it's of less intensity, that we had a few shutdowns, which is the normal course of business as well. So it's really mainly the recyclate price here.

And I will add, madame, that we are really confident to see the EBITDA of the waste volume in France, including next year, clearly.

I would only have one actually remaining at this stage. On Slide 14, you indicated that you still have around €77 million of net pricing pressure after cost inflation on your EBITDA at the 9 months.

I wonder if you could give us a bit of a feel of where exactly those pricing pressure sit because we've seen that indexations in French Water, and I guess also maybe Central/Eastern European Water have been good. We're also seeing good pricing momentum in the Waste business.

So I just wonder where, under the current conditions, you are still feeling some pricing pressure in your business?

So to answer most - Olivier, to answer your question, what we see, we continue to see in our business is the level of cost increase. You know we are operating in many countries when there are still pressure on labor cost increase.

And to keep the best talent, to hire also good talent, we continue to face this type of pressure, which means that we have to compensate the labor cost increase by a lot of efficiency gains. And what I like to compare is the price/cost squeeze with the efficient cost-cutting.

So we see that even if we have some inflation, inflation at 1% to 1.5%, it's still not fully enough to compensate for the pressure on labor cost.

And Olivier, you should have in mind that the pressure on our EBITDA is coming in one hand from the inflation of our costs, but also the pressure of competition. So we are giving back to our clients the part of the value we created in the past, and we have to compensate that by part of our cost savings.

It isn't the rules of our business. So in this €77 million, you - even if we got better prices this year compared to last year, there was also the pressure of competition when we renew a contract.

Always as a rule, we are decreasing our prices to get - to keep the contract. So this figure is more than inflation.

It is pressure, strong competition.

It's Fraser here. Apologies, my line dropped just as I was about to ask the questions previously.

Two quick questions from me. One on plastics.

Just wondering if the improvement is only about volumes, or if you could also comment on prices and in particular, the difference in plastic recyclate prices relative to your remarks on paper. And would you consider additional investment to expand plastic treatment capacity?

And my second question is just about maintenance CapEx. I know that maintenance CapEx has increased for the 9 months, just wondering what's driving that, please.

Okay. Estelle will answer the first question and Claude, the second one.

So with regards to plastics, to your second question which is, are we going on investing, the answer is yes. We set a very clear target of - with a lot of ambition, and we are really full on the way.

We've already done a lot, but there is still a lot of opportunities here. And we're very optimistic and confident about this market.

In terms of your question, the first one on the difference in a way as I understand it with the paper market, I guess the similarity is the difference between volume and quality. What's interesting and what we invest in is really high quality of recycling activity in plastics in particular.

So we're not talking a full mixed plastic type of activities but really the high-end relatively pure, which has a lot of value for the end customer, which means that we are, therefore, less impacted by, say, the Chinese ban drop in prices or the poor quality material here.

On maintenance CapEx, so the increase was in Q1, and it was due to the phasing of the maintenance equipment. As you know, the more we go, the more we are pushing equipment further, and we had much more additional maintenance just in Q1.

So no big deal about increasing maintenance CapEx overall.

Just a follow up [indiscernible]

Excuse us, Anna Maria, we are hearing you badly. Could you move?

Hello?

Perfect. Thank you.

Is that better? Yes, sorry.

Now I was wondering as you mentioned competition before. If you can just tell us a little bit about what you see in terms of competition, in terms of utilization of plants.

What are the trends? Of course, so far, you always indicated you haven't seen any slowdown sign.

But as well, if you can just give a flavor more in terms of how the competitive environment is shaping, if anything has changed versus first half.

Okay. So the competition intensity is really different between our different segments.

We have segments, with the competition is increasing every year and where it is more difficult for us to protect good margin. Two examples of that is Construction business, for example, where we have more and more additive competition products; or the municipal waste collection without treatment services behind it, where we are facing the competition of smaller companies but with smaller pricing.

So this is the reason why we want to progressively, in a good order, downsize these activities. At the contrary, we have activities, which are less exposed to the competition because the technicity or the know-how needing to provide these services are much higher, as Waste is a very good example.

And also plastic recycling, meaning really recycling, not sorting, but really recycling by proposing new raw material directly used by the users, we have also less competition because there's much less players. It is also the case for efficiency, therefore energy efficiency.

On these activities, we have much less competition, and we could propose the higher prices regularly. And on the middle, we have our, what we call, contractually regulated activities for the water services, where we have the increasing of prices during - with the inflation.

And at the end of the contract, we have to renew it. And in that case, we have our traditional competition.

We have not new, really new, big, new players, but our regular competitors, and it is also why we are focusing more on big impact, more complex one, which had been such ups in our countries to absorb our fixed cost. And for that, we have big players, classical competitors for the renewal of the contracts.

So we have clearly three different figures. And for the first one, we want to downsize.

And for the second one, we want to accelerate, and we will continue to optimize.

Two questions for me. Firstly, I saw that you've set the date for your full year results annual 2020 kind of strategy plan update today.

I was wondering whether there's anything you could, say, give us a flavor of maybe the issues that you'd be kind of looking at focusing on the strategy plan. And then further to that, when we're thinking about cost cutting, it's obviously been a very important driver of your kind of earnings growth over the last few years, and you're targeting more than €220 million of cost-cutting this year.

Is that kind of - you've said in the past that cost-cutting is not part of your DNA, and we should expect some ongoing cost cutting. Is that kind of - without asking you to just kind of give us all the details for your plan, is that kind of level of cost-cutting of around €200 million or slightly more sustainable in the medium term in your view?

And then secondly, obviously, we had kind of - Suez announced their new strategy plan fairly recently with - obviously, with them being in a very different position or quite a different position from you on the balance sheet, but announcing some asset rotations. And you'd early in end of Q3 and late summer announced the sale of your U.S.

district heating business. And you said in the past that if assets are mature and there aren't many growth opportunities that you could be interested in asset rotations.

I was just wondering how we should think about asset rotations, whether you saw many of your businesses being - fitting that criteria. You obviously don't really need to do asset rotations for the - just for deleveraging sake.

But should we expect more asset rotations from you?

Okay. We are in November, not still in February.

So you could understand that I cannot detail what we will say for the next strategic program. How do we build it?

Of course, we are using what we learn from the previous months and previous years. So the trends we see in terms of potential of - about risk on our activities will, of course, fuel the ideas of the next plans.

And we will add on that, what we feel about the future of our markets, opportunities and weaknesses. With what I summarized some minutes ago about our 9 months results in term of potential activities, growing activities, downsizing activities, you have a first flavor of what we could accelerate during the next program.

About the cost-cutting, you see, and we commenced the Page 14, Slide 14. Yes, 14, where we saw that.

Of course, cost savings is a key element of our economic model because through the competition process, we need to give back to the clients’ part of the value we created before. If we want to have more value for us, meaning more profit, increasing of our profit, yes, of course, cost-cutting will be a permanent and key element of our business model and our strategy.

And I can say that it is now part of the DNA of the group. You see that for this year, we have in advance - we're ahead of our program.

You know that during the 4 last year - say, during the 8 last years, we performed more than €200 million or €250 million with every year of cost-cutting. That is now clearly part of the DNA of Veolia Group, and we need them.

So it will continue. We will decide on February at which level.

But you see that we have room for that, especially on the industrial efficiency of our equipment and plants, which is now fueling the most part of our savings, meaning that there, we have a large room to continue. Would not be the case for SG&A.

But for industrial efficiency, in a group where we are managing more than 10,000 plants or equipment, we will continue to progress in the efficiency of all of them. About trade, I will not comment.

About the proposed but - and about our choices, if we want to accelerate on the most potential businesses, if we want to take advantage of the new opportunities for our traditional activities and if we want to stay very disciplined about the balance sheet, we will have to downsize or divest some businesses to be able to reinvest on the most profitable businesses. So yes, we will have a certain level of asset position during the plan.

So it is almost 8:45, a bit near 8:50, as I promised. Thank you very much for your presence on that call.

Have a good day. Goodbye.