Research Update: French Utility Veolia Environnement S.A. Affirmed At 'BBB' Despite COVID-19 Operating Uncertainty; Outlook Stable

We consider Veolia Environnement S.A.'s business mix more agile than before the group transformation launched in 2012, with a substantial contribution from the water concession business (44% of group EBITDA). That said, the company is exposed to the COVID-19 pandemic and associated economic downturn, which could lead to operating underperformance, notably in its waste (36% of 2019 EBITDA) division, and to a lesser extent its energy (20%) business. Veolia currently has some rating headroom and we believe remedy measures, such as a capital expenditure (capex) reduction, could mitigate the negative effects, and we note its new 2020-2023 strategic plan with a focus on continuous organic growth, primarily in hazardous waste where it is a global leader. We are affirming our

...- We consider Veolia Environnement S.A.'s business mix more agile than before the group transformation launched in 2012, with a substantial contribution from the water concession business (44% of group EBITDA). - That said, the company is exposed to the COVID-19 pandemic and associated economic downturn, which could lead to operating underperformance, notably in its waste (36% of 2019 EBITDA) division, and to a lesser extent its energy (20%) business. - Veolia currently has some rating headroom and we believe remedy measures, such as a capital expenditure (capex) reduction, could mitigate the negative effects, and we note its new 2020-2023 strategic plan with a focus on continuous organic growth, primarily in hazardous waste where it is a global leader. - We are affirming our '###' long-term issuer credit rating on Veolia. - The stable outlook reflects our expectation that Veolia will be able to counter operational challenges following the COVID-19 pandemic and expected consequent recession...

Research Update