Research Update: Veolia Affirmed At 'BBB/A-2' With Stronger Business Position; Outlook Stable

French water, waste, and energy group Veolia's successful merger with Suez has enhanced its market positioning since the group now benefits from a larger scale (revenue of €42.9 billion in 2022), enhanced geographic diversification, and a higher contribution from stable regulated water operations. The group delivered strong operating and financial performance in 2022 and maintained adjusted funds from operations (FFO) to net debt close to 20%, which was above S&P Global Ratings' expectations, thanks to strong organic EBITDA growth and a cost efficiency program. In light of Veolia's stronger business position and better stability of cash flows we have lowered our financial ratio requirement for its 'BBB' rating to adjusted FFO to net debt between 18% and 23% (from 20%-25%).

...- French water, waste, and energy group Veolia's successful merger with Suez has enhanced its market positioning since the group now benefits from a larger scale (revenue of 42.9 billion in 2022), enhanced geographic diversification, and a higher contribution from stable regulated water operations. - The group delivered strong operating and financial performance in 2022 and maintained adjusted funds from operations (FFO) to net debt close to 20%, which was above S&P Global Ratings' expectations, thanks to strong organic EBITDA growth and a cost efficiency program. - In light of Veolia's stronger business position and better stability of cash flows we have lowered our financial ratio requirement for its '###' rating to adjusted FFO to net debt between 18% and 23% (from 20%-25%). - We also revised our management and governance score to satisfactory from fair to reflect strong execution of the integration of Suez staff and activities. - We therefore affirmed our '###/A-2' issuer credit ratings...

Research Update