Estelle Brachlianoff (Veolia) : "Nous manquons déjà d'eau en France"

As a leader, I'll start with that: it requires agility on the company. I spend a lot of time thinking, well, we need to readjust what we had planned, not the direction, not where we are going, but how we will get there. But we must be agile on our foundations, that's for sure. And since Friday evening, have you reviewed your foundations? Did you tell your team this morning, wait, we are in an unprecedented period since 1945, as Yaël Braun-Pivet said at the National Assembly. So we have already had many, many precursors in 2024 and before, and each time we have been able to adapt quickly and well at Veolia, so we will do it again. In any case, for the company I run, and you mentioned our historical results for 2024. They were achieved despite a number of headwinds, and ultimately we did many things in 2024 that we hadn't planned at the beginning of the year, but we adapted, we put specific action plans when the results were not exactly where we wanted them, and that allowed us to nevertheless come out on top, and even better than that. Yes, because I also talk for example about tariffs, we'll come back to that, you are not very exposed. Finally, the Veolia group, as much on political instability, it can have a direct impact because political instability means change of government, change of minister, change of mayor, change of deputies, and so you, that goes down very well because very low, because you also have an activity that is very local. So you...

You are right. So when we look at what already happened in 2024, political instability had half of the world's population going to the polls last year, and I remind you that 80% of the company is outside France today at Veolia. So elections in many countries mattered to us. The macroeconomy was not exactly brilliant or at least not at the level we hoped for, especially in Europe, especially the macroeconomy of industries, commodity prices, energy, raw materials were not at their highest. And despite all these headwinds, we produced historical results with a +15% for example in net profit. So geopolitics is also part of the strategic options we have taken in the plan I launched last year, to say we have diversified our risk at Veolia with a presence in a number of countries and not just in one or a group of countries.

So the ecological transformation is both decarbonisation but also removing pollutants that can have an impact on health, it's also addressing the issue of scarcity of water resources or scarcity of raw materials that are absolutely essential for industries, agriculture, or our daily lives. Why do I start by saying that? Because ultimately, yes, the political discourse in France, Europe, or even the United States is not very supportive for all that is the Paris Agreement and decarbonisation. All that is subsidies on the subject has indeed had difficulties being continued. But at Veolia we do not depend on subsidies, and we work well beyond the sole issue of CO2, which is an important issue. But when I talk to you about health or when I talk to you about scarcity of water resources, well, in the United States, whether they voted for Harris or they voted for Trump last November, we measure it: Americans, roughly two-thirds of them, what matters to them is that when they turn on their tap, there is no pollutant that could have an impact on their health and their children's health. So ultimately, the demand for our services at Veolia does not come from politicians, especially at the national level, it comes from the populations.

So it's very true what we feel is that there is no miracle recipe. So an economy that would have everything right, for example the American economy, and the European or French economy that would have failed everything, quite the opposite. We see that there is a need for all of these economies, and ultimately the players, including the financial world, realize it perhaps more than a few months ago. And even in the United States, we see a very different atmosphere among our clients because I remind you that Veolia has half municipal clients and half industrial clients. So in fact we have real-time indicators of what is happening in the economies. We are very present in the United States, we do 5 billion in turnover, and you want to double your presence there. So I have the ambition to double this presence by the end of the decade, and we are well on the way to doing so. And so in the United States, to talk about this business climate, we really have, I think, a two-speed economy: the economy of tech, data centers, pharmaceuticals, microelectronics, is very, very flourishing with double-digit growth, but the more traditional economy or the one linked to consumption is not in much better shape than a number of European countries. Yes, that's an important point.

So yes, the results are historical, meaning we have never done as much in the history of Veolia, whether in terms of turnover and we can go down to EBITDA, and therefore net profit, so on all components, all components are historical, and even the return on capital employed if you want me to detail all the financial indicators. So yes, despite a number of headwinds in 2024. So I am often asked how you manage to do that and navigate in these troubled times and produce these historical results. For me, it's the winning formula of Veolia with four elements. The first, I already mentioned, is that we are very international, 80% outside France, 40% outside Europe, so in fact we have the ability to play on a number of different places in the world. The second is that in fact we are not a specialist in water or a specialist in waste or a specialist in energy, we are, but in addition we have the ability to combine these different businesses to offer totally unique offers for our clients of decarbonisation or depollution. So for example, removing pollutants like PFAS, there is only Veolia that knows how to offer a complete solution.

PFAS are perfluorinated, they are what are often called forever pollutants that are found potentially in water but also in soils that have been polluted historically around industrial sites or behind airports. The good news is that we have learned to treat them thanks to innovation, thanks to the group's technologies, and thanks to our international presence because in fact the first time we heard about PFAS and we asked ourselves if we were going to be able to treat them was in Australia and the United States. And we have few in France in my water? That's a very good question. So we did not wait for the legislation to impose it, we anticipated, and so from the end of 2023 we carried out a measurement campaign on all the water contracts that Veolia manages in France, and for 99% of them we did not find traces of PFAS according to the future standard which is not yet fully in force.

So I'm not going to tell you that there is a new El Dorado, because in 6 months or in a year with geopolitics, we just talked about it, we have to be agile, so let's know how to play in different places to grow our activity. But it's true that today the three places in the group that are growing the fastest are the United States, Australia, and the Middle East in all its components. These are places where we have organic growth of 5 to 10% per year for several years, even beyond.

So Veolia is a combination of historical core activities and activities that have very strong growth but are based on the first ones. Moreover, we could not do this growth on our historical activities. What pushed the most in 2024 is really the water technology businesses, whether it's desalination or ultra-pure water for microelectronics, or industrial water, and even the reuse of wastewater. So under all these components, it's true, water, and especially our water technology activities, we are world leader on the subject.

So we are behind because simply for years we thought we would never run out of water in France, so we had no need to develop these solutions. When you go to the other side of the Pyrenees in Spain, we are also number one, where they had more heat, more thirst earlier, it was a solution that was developed before. The good news is that since we are present on both sides of the Pyrenees, we are now taking these solutions that we developed, all this know-how, because we know it works, and we are in the process of importing them, for example in the Pyrénées-Orientales, just on the other side of the Pyrenees, which lack water. And in your contract with Île-de-France, you just resigned a contract, I think it just entered into force at the beginning of January. Is that part of your specifications to reuse these wastewater? So our contract, our new contract on water in Île-de-France, concerns drinking water, not wastewater. We would be capable of doing it for Île-de-France as well. But on this contract, what is very innovative is that we will treat all pollutants in the water, PFAS that I mentioned a moment ago, but also endocrine disruptors, pesticide residues. In 5 years when the new plants are put into service, all of this will be removed from tap water. So when you open your tap, you will finally have spring water from the tap for 100 times cheaper. Yes, 100 times cheaper. I don't believe you. Estelle Brachlianoff, I think many listeners and viewers say no, that's water, you can't say it's 100 times cheaper. 100 times cheaper than bottled water. 100 times cheaper than bottled water, that's accurate. You can go to your supermarket to check. Since we are in the midst of talking about inflation, in 2024, how much did water cost in France? So water prices in France are set by local authorities, it's not Veolia or its competitors who set the price of water. Based on a number of indicators, so I can't give you a global average, but it evolves roughly like inflation. The average of water prices in France, once again it depends on the cities one by one, which can decide to do social pricing or things like that. What I can tell you is that the water tariffs today, tap water, at home, the water bill is less than 1% of household budgets. So if we combine all the solutions that Veolia has developed to reuse wastewater or to avoid leaks in networks, we can manage to keep it under 1% of the budget. Will we run out of water one day in France? I can tell you that if you go to the Pyrénées-Orientales that I mentioned earlier, we already lack water. You just need to go see the flow of the Garonne or in the Pyrénées-Orientales, we are already forced to be very careful, and so we are putting forward solutions for that. What type of solution? First, start avoiding waste in water use, whether at home, with industries, with agriculture. Then in infrastructure, in distribution, to avoid leaks in distribution networks. There is 20% leakage in France, on average, but it can be much more or much less depending on the location. And then we move on to the reuse of wastewater, i.e., recycling water after treatment. And then when you are in the Middle East, when you have done everything I just told you, well, it's desalination, the last solution. Are we really the bad students in France or not? We are not the bad students, we are in a very good European average. And then I think it depends on the places: if you lack water or not, you have more or less interest in working on this leak rate. But I was talking about the United States earlier, we are talking about 50% leakage on average in the networks in the United States, so we have nothing to be ashamed of, even with this average in France.