The ratings on Veolia Environnement S.A. (Veolia) reflect Standard&Poor's Ratings Services' assessment of the group's strong business risk profile and significant financial profile. The ratings are supported by Veolia's leading positions worldwide in water distribution and waste water treatment, which represented 46% of operating income in 2010. In addition, the ratings reflect Veolia's significant share of stable and recurrent revenues under long-term municipal contracts; and its wide diversity by business, contract, and geography. We also consider the more conservative strategy that the new management team adopted in response to the economic downturn and competitive pressures as supportive of the ratings. These strengths are, however, offset by challenging market conditions and increasing competitive pressures; volatility of earnings stemming from
