Veolia Environnement (VIE) investor relations material

Strategic transformation and decarbonization of urban heating

• Urban heating represents 25% of revenues, with a focus on Central and Eastern Europe, especially Poland, Germany, and the Czech Republic, and accounts for 50% of energy consumed in Europe.

• The business model is asset-based, regulated, and benefits from long-term contracts, with high EBITDA margins and resilience to price volatility due to regulated prices and hedging.

• Decarbonization is a core pillar, with a EUR 1.6 billion CapEx plan to fully exit coal by 2030, leveraging a multi-fuel approach including biomass, waste heat, geothermal, and mixed-fuel cogeneration.

• Efficiency gains, digitalization, and AI-driven optimization are key levers, raising network efficiency rates to 88% group average in 2024.

• The Ecothermal Grid offer targets both existing and new networks, aiming for EUR 350 million additional turnover by 2030 and supporting carbon-neutral heating.

Financial performance and growth drivers

• Urban heating generated €7.7bn in 2024 revenue, with EBITDA of €1.1bn, a 14% margin, and ROCE around 9%, delivering high, predictable free cash flow.

• EBITDA growth to 2030 is driven by new connections, efficiency gains, and the coal exit, with the latter contributing about 50% of the uplift and over 10% IRR.

• CapEx for coal exit is evenly distributed to 2030, with peaks in 2027 and 2028; EUR 250 million additional EBITDA is expected, with most realized after 2027.

• Expansion is focused on CapEx-light models for new geographies and services, while maintaining strong asset ownership in core markets.

• Regulatory incentives, green premiums, and long-term contracts provide stable, predictable revenue streams.

Operational excellence and partnership model

• Local partnerships with municipalities are central, enabling smooth permitting, community engagement, and tariff management.

• Integration of water, waste, and energy businesses creates unique synergies, such as waste-to-energy and heat recovery from industrial and water processes.

• Innovation, including AI, digitalization, and thermal storage, enhances efficiency and flexibility across networks.

• The Poznań project exemplifies a successful coal-to-renewables transition, with 13 innovative solutions implemented and a 17-year capacity market contract.

• Growth is organic, with network expansion, new connections, and replication of successful models in new regions, including Central Asia.