Water treatment plant: Veolia relies on innovative technologies for a sustainable future. (Photo: Freepik, Nastiklis1992)
The past few weeks have shown many investors the importance of regional diversification. For example, Waste Management Inc. is the leading company in North America and is estimated by investors due to its defensive orientation as well as the stable sales and earnings. But there are also listed companies in Europe that not only Waste management compete, but can even surpass the US company in its business model.
From the small provider to international number 1
Veolia was founded in France (Lyon) in 1853 under the name Compagnie Générale des Eaux as a water supply company. Over the decades, Veolia has developed into a multinational company for the areas of water, waste and energy services.
2022 could Veolia Sa further expand its market position by taking over 86 percent of the water and waste management specialist Suez. As a result, Veolia finally positioned itself as a leading company in the field of environmental management.
Leader in water services and waste management worldwide
Water services: In this area, Veolia is the world market leader with a market share of 40 percent. This includes the management of the water supplies, the collection and preparation of water as well as the distribution and transport of drinking water.
Waste management: Veolia is also leading worldwide in the collection of waste as well as their treatment and exploitation. With a market share of 35 percent, the European environmental generalist lies in front of its American competitor Waste Management.
Energy services: Energy services have also been part of the range of offers since 1990. This includes the operation of district heating networks, the support of decarbonization with energy -efficient solutions and also the use of renewable energies in your own services. More than 700 district heating networks in Europe make Veolia a central partner in decarbonization.
Special competence: desalination of water
Despite the expansion of business areas over the past few decades, Veolia’s core business remains water treatment. The company takes a key role in the desalination of water. Many regions of the world only have limited access to fresh water.
The desalination company “Ashkelon” in Israel, implemented by Veolia, is one of the largest desalination plants worldwide. 100 million cubic meters of fresh drinking water are prepared annually. Further facilities are operated in the Middle East, North Africa and also India. The worldwide market for water recalculation is expected to grow with an annual rate of over 10 percent by 2030.
Long -term contracts and 4,000 patents
Veolia’s business model is based on recurring infrastructure contracts with terms of 8 to 20 years. These contracts are inflation -protected and often secured by the public sector. Around 80 percent of sales are long -term and recurring. The rest of the sales result from consulting services and the sale of used materials.
In 2024 sales were able to increase organically by 5 percent, while profit could be increased by 12.3 percent. 3- to 5 percent growth can be expected in the long term. The 4,000 patents also offer protection against possible competitors.
Investment in technology
Veolia has recently invested in technology. With a AI tool, forward-looking maintenance, energy optimization and also waste collection are supported.
“Lifting Grade” is the digital platform of the company that is used worldwide, which helps cities and industries accelerate the ecological transformation process through the use of data analysis and artificial intelligence. The goal is to use the combination of human expertise and technology to develop tailor -made solutions for customers.
By integrating lifting degrees into the operating processes of customers, inefficient processes are minimized, environmental performance improves, costs reduced and resources saved. The next steps are the cloud migration of the core systems, an ESG dashboard and carbon scoring planned for customers.
Future catalysts that the market is still ignored
At first glance, Veolia looks like a classic supplier from the last century – solid but boring. But this impression is deceptive. The company is strategically repositioning itself in the background. Goal: play a leading role in climate change.
The change has long been in progress. Veolia invests in modern systems, optimizes processes and digitizes its infrastructure. It is not about trends, but about real operational efficiency.
- Water is becoming scarcer worldwide. The rec preparation is no longer an option – it is mandatory. The EU already prescribes it for agriculture. Veolia is well positioned in this area and also operates desalination systems in particularly affected regions.
- Industrial waste must be disposed of strictly. Veolia has the necessary permits and systems to deal with dangerous fabrics. At the same time, the company is driving recycling of rare metals. Waste becomes valuable raw materials – with attractive margins.
- Veolia already operates hundreds of district heating networks in Europe. Many of them are already running with waste heat, biomass or low-CO₂ fuels. Cities are increasingly relying on these networks to reach their climate goals. Veolia already has the infrastructure, contracts and the partners.
Veolia indicator: The financial situation is stable
The strategic takeover of Suez in the amount of 13 billion euros was a burden on the balance sheet. According to the acquisition, the goodwill reached almost 100 percent of the equity amount. 23 percent of new shares were spent on the takeover. The degree of debt is 2.6 of the EBITDA. With a Course-profit ratio (KGV) From currently 14, the world market leader is significantly below the long-term average of 18 and the free cash flow return already reaches 6.7 percent. Analysts assume an average price target of 36 euros. This currently corresponds to an undervaluation of 20 percent. There are also 5.1 percent dividend.
Conclusion Veolia share
The stock does not seem too expensive for a stable, predictable business that is very well positioned for the future. The stock also offers diversification from the USA and the technology sector as well as little volatility in turbulent stock market phases.
Disclaimer:
No investment advice. No call to buy or sell securities.