The ratings on France-based Veolia Environnement S.A. (VE) are underpinned by the group's top-tier global position in water-utility and waste-management activities, as well as its strong European presence in energy services. VE's above-average business profile is supported by diversified and recurring revenues under long-term municipal concessions and medium-term industrial outsourcing contracts. These strengths are offset primarily by a still moderate--albeit improved--financial profile, including expected gradually strengthening free operating cash flow. VE ranks among Europe's 10 largest utilities, with 2004 core EBITDA of €2.94 billion ($3.8 billion) after €0.32 billion in renewal expenses and €0.05 billion in restructuring charges, (€3.31 billion reported by the company). The group's core divisions include Veolia Water, with Compagnie Générale des Eaux in France (water, 44%
