Veolia Environnement S.A.

Veolia's waste solutions activities (36% of 2017 revenues) tend to be more cyclical and generally based on shorter-term contracts. That said, Veolia has a global presence and is increasing its focus on higher-value-added services, which benefit from higher growth and profitability, notably hazardous waste management for industrial customers. S&P Global Ratings' stable outlook on France-based Veolia Environnement S.A. reflects its anticipation that the group will continue improving credit metrics in the coming years, while self-financing its capital expenditures (capex) and dividends. It incorporates our projection that Veolia will post credit metrics commensurate with a 'BBB' rating on a sustainable basis, including an adjusted funds from operations (FFO)-to-debt ratio at or above 20% on average over 2018-2020 (20.4% at year-end 2017).

...Veolia's Strong diversification in waste and water businesses provide it with cash flow resilience. Veolia's water business (44% of 2017 revenues) benefits from monopolistic positions from the long-term concessions, broadly stable water volumes distributed, and modest but sustainable earnings growth from indexation. The group notably has a leading position in France and strong footprint in China. Although the group faces pressure on remuneration at the time of concession renewal, Veolia already renegotiated most of its large contracts, limiting further material downside risk in the coming years. Veolia's waste solutions activities (36% of 2017 revenues) tend to be more cyclical and generally based on shorter-term contracts. That said, Veolia has a global presence and is increasing its focus on higher-value-added services, which benefit from higher growth and profitability, notably hazardous waste management for industrial customers. Although Veolia has a balanced global presence, it has...

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