To understand where Veolia Environmental (OTC:VEOEY) is going, you have to understand where it's been. Just before -- and during -- the Great Recession, former CEO Henri Proglio went on a massive spending spree. He essentially turned the company into a water-waste-energy-transportation conglomerate.

Unsurprisingly, the company took on a huge debt load to do this. And with the onset of difficult times coming just after this expansion, the timing couldn't have been worse. Though things got off to a tough start, current CEO Antoine Frerot has done a great job at trimming the company down, focusing on a few key areas, and unloading its debt.

Just the numbers, please
Veolia only presents its figures on a half-year basis, so the figures included are for a six-months. 

On a pro forma basis (not including changes to the company's interests in Dalkia), revenue actually decreased 1.3%. Veolia's three demographic regions had the following results.



Europe ex-France

Rest of World

Revenue Growth




Source: Veolia Investor Relations, presented on a constant currency basis

One might think that with revenues dipping on a constant basis, investors would have been discouraged. But with the stock up about 6% from pre-release levels, that's not the case.

There are three big reasons why.

Positive foreign exchange
Veolia is actually benefiting from global currency fluctuations right now. If we allow those fluctuations to filter down into the revenue results, they would actually look like this.



Europe ex-France

Rest of World

Revenue Growth




Source: Veolia Investor Relations

While no company -- or its investors -- should ever rely on such fluctuations to benefit results into perpetuity, it doesn't hurt when the winds are blowing in your favor.

Conditions improved throughout the year
Because the company only reports once during the first half of the year, management took time to point out that its business improved in virtually all areas as the months passed.

In France, for instance, revenues were down 3.6% in the first quarter, but only 1.6% in the second. The same could be said for the "Rest of World" division, where 2.4% growth in the first quarter was followed by more-robust 4.5% growth in the second quarter.

In addition, the company signed a number of new contracts during the first half of the year. Here were some of the largest.




Total Value

Hampshire County, UK


5 years

€ 743M

Lille, France


8 years

€ 456M

Mayo Energy, Ireland

Biomass Energy

15 years

€ 450M

Monteria, Colombia


10 years

€ 226M

Southend-on-Sea, UK

Waste & Water

15.5 years

€ 211M

Source: Veolia Investor Relations

All of these developments caused Frerot to be very upbeat when describing the company's progress toward its long-term goals.

Becoming much more efficient
But nothing was better for investors to hear than the fact that the company is become much leaner. Even though revenues were relatively flat (depending on how you look at currency exchange rates), net income was up a whopping 110%.

That's largely due to the fact that Veolia has been selling off its non-core assets and paying down debt as fast as it reasonably can. During the first half of the year, over $488 million was paid down in long-term debt. Back in 2011, Veolia had roughly $17 billion in debt. Today, that number sits over 40% lower, at just over $10 billion.

The company confirmed that it will be able to pay its two dividends for the year out of free cash flow, which should be music to investor's earns. At today's prices, that equates to about a 3.5% yield. Even if revenue remains relatively flat, cost cutting could allow Veolia to offer an even bigger dividend in the years to come.

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