Leading position worldwide in water. Significant share of stable and recurrent revenues under long-term municipal contracts. Recent credit-supportive strategic shift. High business and geographic diversification. Pressures on profitability given dip in waste earnings. Financial profile at the low end of our expectations for the ratings. Limited ability to generate free cash flow. The ratings on Veolia Environnement S.A. (VE) reflect its leading positions worldwide in water, which represented 45% of consolidated first-half 2009 EBITDA; focus, except in waste, on public sector clients with whom VE derives about 70% of its consolidated sales, generally under long-term contracts providing stable and recurring earnings; and wide-ranging diversity by business, contract, and geography. Also supportive of the ratings is VE's recent shift toward a
