Veolia Environnement SA (VIE) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to this Veolia's Deep Dive event, which titles Waste to Value, Focus on Innovation and Hazardous Waste. My name is Frederique Bedos. I'm a journalist, and I have the privilege to be a host for this live event. Thank you all for attending you in the room and you who are following us online. This event will be held entirely in English. So for the people here in the room, translation headsets are available. Channel 1 is for French. Channel 2 is for English. And Channel 3 for Spanish. And for you who are online, you can choose to follow this presentation in the language of your choice. As you can see, this event takes place in a very special facility. We are in the north of France at Courrières at the very heart of what Veolia does best in terms of technology, chemistry and innovation. Actually, this is one of Europe's largest hazardous waste treatment facilities. But of course, this type of infrastructure imposes very strict security measures. So ladies and gentlemen, for your safety, I invite you to locate the emergency exits situated at the back of the room on the right and on the left. In the event of an evacuation, follow the safety team's instructions. They will guide you to the assembly point located right behind this stand on the road you took this morning. Now that we are clear on the security, let me give you a few last details. From now on, you can download the slide deck, which is already available on the platform. At the end of the different presentations, we will dedicate 30 minutes to answer your questions. For the audience here, you will just have to raise your hand, and we will come to you with a microphone. And for those online, you will just have to type your question in the chat and send it to us. Once again, feel free to ask your questions in French, English or Spanish. We are together for roughly 1.5 hours, and here is the program. Estelle Brachlianoff, CEO of Veolia, will present a global overview about Veolia's waste and pollution treatment worldwide. Then Emmanuelle Menning, Deputy CEO of Finance and Purchasing of the group will share with us the business models related to this market and the key figures. And we will continue with the roundtable gathering for Veolia executives for a special focus on 4 different regions. And finally, Estelle Brachlianoff will give us a few words of conclusion. I think we are all eager to begin and in order for all of us to have the global context in mind, let's watch a video. [Presentation]

Time to dive deeply into the matter. Let's welcome on stage, the CEO of Veolia, Estelle Brachlianoff.

Hello, everyone, and thank you for joining us today, whether you're with us here in Courrières or connecting via live stream from around the world. What you see around you here at the Courrières site tells a remarkable story of transformation because where years and decades ago stood around here, coal mines. Now you can see we are in an ecosystem and a real green technology hub, including these plots, which is treating the most difficult pollution and regenerating key resources as well. This is telling about the transformation the waste industry has come through. And after diving into energy and water, today, we are talking about waste, and how this will contribute to GreenUp and how we are confident it will deliver. And when I say waste, I'm guessing some of you might see trucks in the streets and bins. You will see after today, you will think about technology and innovation. Waste management, in fact, has come a long way. What started as a simple yet essential services, with collection and disposal, has become one of the industry's most pressing challenges, that of generating energy, recycling materials and treating pollution. And why is that so? Because megatrends are supporting this move and this transformation. Of course, I will start with legislation, which is key to boost recycling, which is saving CO2 or to protect, of course, ecosystems. But progressively, in addition, there are other trends which come to be as important, starting with health and pollutant removal to protect your health and that of your kids. The Lancet magazine estimates that 9 million people die each year from air, water and soil pollution in the world. That's absolutely gigantic as you can imagine and a big health problem throughout the planet. Another big trend will be the reshoring of strategic industries as microelectronic or pharma. And all of them, they are in high demand for our services. I won't forget security of the supply chains in today's quite uncertain times, securing their supply chain for industry is absolutely key. And when we produce local energy from waste or materials from waste from recycling it, that's exactly what we do to ensure and secure supply chain. In a way, waste isn't waste anymore. It's an untapped local mine. In this transformation landscape, Veolia stands apart. In size, of course, as you can see on this slide, since we are, for instance, #1 in the hazardous waste, which is a key booster as you know in our GreenUp program as well as in Europe for solid waste, just to mention a few figures. But our expertise run is much deeper. It's about mastering the most complex materials and leading the circular economy, thus paving the way for the future of the industry. Our leadership translates into powerful numbers with EUR 15.7 billion revenue from waste activities with solid margin and return. In terms of firing power, I could mention as well our 32 plastic recycling plants in the world or 40 high-temperature incinerators, such as the one we'll visit in a minute. Actually, years ago, we were used to talk about the tons or the number of tons we processed, the trucks or the number of trucks, the fleet size. And this would be, in that case, 55 million tons of municipal we process each year, which is for those who wonder, it sounds big, but if you want to visualize it, that's the equivalent of the annual waste of Greater London, Paris and New York combined. So that's big. But that only tells half of the story because now we speak more in terawatt hour of energy produced. We speak more of tons of material we recycle or pollutants we remove. So the shift in the indicators are very much telling the story of transformation. And again, for those who are hesitant to visualize what 9 million tons of pollutant represents that we remove every single year, that's 10x as much as a catastrophe, which happened 15 years ago in the Gulf of Mexico, the BP Deepwater Horizon spillage, if you remember it. That's what we treat, but every single year. And we won't stop here as we try to create more loops, more circular loops and innovate to do so such as the battery recycling facility we just opened. Innovation enables us to show the way of the future of this industry. And we hold high ambition in our waste activity as we are uniquely positioned in this transformation. By 2030, the global waste management market is set to grow by 3% per year and reach EUR 1,300 billion, but not all segments within this industry are equal. While our solid waste business continues its steady growth, hazardous waste is set on the swifter pace and we ambition to reach mid- to high single-digit growth, thus a booster in GreenUp. This means growing twice faster than the market. And of course, we're not only focusing on top line growth. EBITDA will grow faster, leading to margin increase and even higher ROCE growth of 50% by '27 to around 9% for hazardous waste. Solid waste, on the other side, although the 2 are combined, isn't just heritage for Veolia. It's our stronghold, delivering good results and really a foundation for us. And we keep this foundation strong, thanks to operational excellence, to new offers in recycling, to good consumer service and NPS as well or local energy production. And we constantly develop new technologies and expertise in this industry as well. And the combination of the stronghold and our booster is what enables us to deliver growth and resilience. So allow me now to explain why we are confident about our positioning and differentiation in the waste market and what sets us apart. Our winning formula combines me the best of both worlds, a global reach, together with deep local roots. We've built a global footprint, enabling us to deploy innovation and technologies at scale, but we are as well deeply rooted in local communities worldwide, ensuring our solutions are adapted to specific local demand. A combination of waste water and energy, which allows us as well to offer unique offers to our customers in combining those 3 as opposed to running them in silos. We have built and are still building a great irreplaceable network, an infrastructure, if you want, of waste treatment asset, which we fully own. And we are developing great technologies and expertise, patents and keep on innovating constantly. Let me give you now a little bit more color about some of the components I just highlighted and starting with a geographical footprint, which is very global in the waste management activity as the rest of the group with, in this case, 34% outside Europe. This worldwide footprint allows us to invest in innovation, to anticipate and to copy and adapt from one corner of the globe to another. As an example, we managed to recycle plastic up to the highest level of quality, which is called food grade in Europe. It took us a while to get there. And then we were ready to export this technology and know-how to Asia. Asia, on the opposite side, was leading the way in terms of industrial solutions. When America, for instance, has pioneered emerging pollutants. This footprint, of course, helps derisking our results from macro as we are not exposed to any specific market as well as we are able to seize opportunities when they arise. On the other hand, our top 3 position in each of the key local markets we operate gives us the ability to have pricing power as we've demonstrated in the last 3 years with great success as inflation came back. No other competitor can show you a map like that one. This power to combine expertise is what makes Veolia unique, combining our various expertise in wastewater and energy as well. And that's the second point I wanted to explore a bit further. This combination of activities corresponds to 25% of our global turnover in Veolia and growing. Let me show you examples with relation to waste, of course, because we have to talk about waste today. And each of the 2 examples I'm going to mention are counting in billions of revenue, so they are at scale. I will start with bioenergy. We produce 9 terawatt hour of energy from residual waste each year, corresponding to EUR 2.5 billion revenue. This is massive. This is enough to power 1.5 million European homes. And there is an untapped potential to do more with -- we estimate 150 gigawatt hour which is -- gigawatts, not hour, that we think we can generate in Europe or can be generated in Europe. I would like to mention as well our new offer to treat pollutants, what we call new pollutants, although they've been here for a while such as PFAS. In just 2 years, we've created a EUR 205 million treatment business from scratch. By 2030, this will hit EUR 1 billion. And why? Because we have demonstrated our ability not only to put them on the side, but to remove them, and I would call that destruction, for no better words. So it's 99.9999% efficiency that we have demonstrated. And this is thanks to our double expertise in water and hazardous waste, in particular, water tech. Again, none of our competitor has this. Last but not least, we can rely on a good track record of delivering consistent growth and resilience of our result in the waste management activity as demonstrated in the last 6 years on this slide. Waste management has contributed to our net results doubling in the period. And this is not by chance, but thanks to a few strategic choices. Our balanced portfolio of customers and regions, which makes us uniquely resilient. When one sector or region slows, another one drives growth. Our leadership as well in innovative offers and expertise and our ability to combine businesses, they are very key to ensure this performance, added to which agility and performance management. Delivery is and always be paramount for Veolia. And that was quite pushed to the test recently if I just pick 2 examples. One, when inflation came back in many countries, 3 years ago, roughly, we have launched a dedicated pricing strategy, which has worked. Another example is COVID, when we've developed specific extra efficiency measures, which have been allowing us to deliver the same level of result than pre-COVID in less than 6 months, although the revenue hadn't fully come back yet. So it's not just about managing risk, it's about capturing opportunities in all economical cycle. Altogether, the performance of our waste activities has been strong, including a 4.5% growth per year in the dry waste business or solid waste business in the last 6 years, a little bit above inflation, or 8% in the hazardous waste activity. And in both cases, associated with good, strong EBITDA increase. So allow me now to expand a little bit on the highly specialized hazardous waste, which is about technology and innovation and a few new announcements for this morning. So what are we talking about here? Sometimes it's even called toxic waste, which I think says it all. We are talking about arsenic, PCB, PFAS, nuclear wastes, mercury or even chemical weapons we destroyed from Syria 10 years ago. All types of materials you don't want in the air or in the river near where you live, a lot of what the industry is actually producing. And no industry can operate without guaranteeing hazardous waste management from semiconductor fabs to battery gigafactories from pharma to chemical plants, it's all the same. And an answer is to offer them peace of mind and security as well as compliance, enabling, therefore, to reconcile industrialization or reindustrialization, together with the health of local communities and ecosystems. And what makes that possible is the 300-plus network of treatment assets we have with Veolia of various types, which each type of treatment dedicated for each specific chemical family. Therefore, very unique and highly specialized. And CSC is where I would encourage you to remember your chemical classes from high school. When there is an atom of carbon, it may burn very high temperature. This is why we have a high temperature unit, like the one we see here. But when you don't have an atom of carbon, it won't burn whatever the temperature. And then you move to physical chemical treatment of some sort, for instance. This is to treat, for instance, fly ash. Fly ash, which is a concentrated pollutant removed from air pollution control at stacks. And at times, we even try to regenerate and to recycle as long as it's not harmful for health. This is what we do with solvents. And we turn, therefore, a problem into a resource each time we can. All this with precise protocol and sampling to ensure no mixing of 2 components, which wouldn't get well together. As ammonia and bleach, you don't want those 2 mixed together. Do you? So we have plenty of laboratories across the globe. They employ 15% of our workforce. We're talking here typically about chemical engineers, and they are key to ensure safety, security and compliance. And they are helped with AI with all the data we've collected all those years, helping them to get quicker to the best mix, the best recipe possible. We even call it internally the Master Chief -- Master Chef, more so than Master Chief. Isn't it, Bob? You correct me each time. And you're right. So all these -- all those assets are 100% fully owned, ensuring full value on the entire value chain and our ability to innovate quickly and test things and new ideas. Because it takes years in research to imagine and create sophisticated chemical compounds, but it takes the same type of expertise to design how safely to destroy them. And it's constantly evolving as science does, a new challenge emerge such as what we call new pollutants, for instance. And here again, Veolia is leading the way with patented technology, and we are already holding more patents than all our competitors combined and regularly depositing new ones. This is happening, thanks to our finest chemists in our 51 laboratories worldwide. And today, I'm really proud to announce our latest breakthrough, PFAS DropFast. This is quite technical. But in a nutshell, this is to treat one of the latest of those challenges, which is PFAS, which sometimes is called Forever Chemicals. A new technology, which enables chemical reaction during thermal treatment to ensure 99.9999% complete PFAS extraction in incineration unit, starting above 900 degrees. This is very, very unique and quite an important one. And just one example of our portfolio of patented technology. And I'm super proud to show you this slide because every single of those 5 offers is unique to Veolia. Dual-melt technology is not only treating contaminated soil, it's mastering vitrification at the highest level, a level that can handle radioactive waste, for instance. And I'm sure this is neutralized for EUR 10,000 at least. So you can imagine how mastering this technology means. And we've just opened a first unit in Texas. PFAS again with our activated carbon regeneration, which can be a game changer given the expanding demand for activated carbon altogether. Spent solvent regeneration, up to pharmaceutical grade purity across all our 73 specialized plants. And we target to recycle, we generate 300,000 tons per year, which is the equivalent of the entire consumption of the European pharma industry. Last but not least are strategic metro separation process via hydrometallurgy, which can produce technical grade hydroxide and carbonates, meeting the EU Critical Raw Materials Act requirements and starting basically from the black mass of used batteries. I'm talking here about cell phone batteries, electric car batteries, electric bicycle, if you want. So you take the black mass and then you extract nickel, cobalt, lithium or copper. And you know those are critical minerals for energy transition as well as strategic autonomy. You don't want to be dependent on another country allowing to import or export this type of material. Those are not just solutions, but proprietary technologies. And as ever, we keep on anticipating and finding the new one to break the new frontiers, which happen. Another look and another map. And when I look at this map, let me explain to you what I see. Every single of those points was built over the years. And this map is a product of years and years of effort. Every single dot on this slide, which are the treatment assets we own across the globe is custom built and represent at times years of permitting and planning, a few years of construction, a few of ramping up. We're talking about high temperature incineration unit. We have 48 as well as Class A landfill or physical chemical treatment. This map is like a unique infrastructure and a very, very difficult one to replicate. And we're not just waiting for future growth, we are building the future. As you can see from the 5 red dots on this map, which follow our customer demand, and we are constructing new facilities, which will start opening from '25. 100% Veolia owned. And again, nobody in the world can show you a map like this, neither in terms of breadth of technologies, size or geographical footprint. And our leadership in hazardous waste stems from decades of expertise and transforming difficulties and challenges our customers face into opportunities. In fact, we've gone from pioneering this industry to be now its undisputed world leader with high ambition for the future. And it all began in the '70s. And you might wonder how can this idea to treat hazardous waste in a specific set of units came from actually a spin-off of the French water business, with the critical observation that some rivers were becoming almost unpotable due to industrial pollution. And realizing that tackling waste at the source rather than at the door of drinking water plants was much more efficient. So it's kind of an internal spin-off, if you want. And it created and transformed the whole industry. And look at our journey. We've tripled our revenue in the past decade alone, a dynamic no other company has enjoyed. And today, I'm very proud to announce our next chapter. By 2027, for GreenUp, we will be treating 9 million tons of pollutant annually. And by '30, we will have grown our business by another plus 50%. This will come, of course, from organic growth following the sustained important demand we have from our customer as well as new offers such as PFAS removal, including the new technology I've just announced this morning. But it's also the result of our investments, which we have prioritized, as you know, in GreenUp. We are building 5 new plants, the 5 dots on the precedent map, which will add 285,000 tons of treatment capacity by '27 and 430,000 tons when they are fully ramped up. You remember, our existing plants are full in Europe and in the U.S.A. At the same time, we are acquiring 5 new complementary facilities, adding 100,000 tons to this number via tuck-in acquisition we just signed in, in particular, 3 in the U.S. alone. So in a nutshell, the world needs advanced hazardous waste management more than ever. And through GreenUp, we are ready to deliver, and we are starting to deliver. Why such confidence? The demand for our service is here, supported by legislation as well as other powerful trends such as protecting health or just simply allowing industries to grow. In fact, for many of our customers, we're not talking about nice to have or an ESG agenda, we're talking about a must-have license to operate. Our unique positioning and footprint has been built brick after brick, and now offers strength by design, not by chance. Our combination strategy sets us apart when we bring together waste, water and energy. And we are keeping innovating and building the bridge for our future growth by launching innovative breakthrough and adding treatment capacity as just announced today. This is why we are confident about our GreenUp targets. I'm confident in top line, of course, but accretion as well with plus 50% ROCE to 9% by '27, and extra value to come after this date when we fully ramp up all our facilities, and Emmanuelle will elaborate about this in a minute. But numbers tell only part of the story. This growth is much about how many pollutants we remove, how many ecosystems and communities we protect. Emmanuelle, the floor is yours.

Maybe before Emmanuelle, maybe we can watch a film. Yes, it's a film about history of waste. Let's watch this. [Presentation]

Thanks to Estelle Brachlianoff. We have just had a global picture and highly strategic messages on Veolia's unique positioning in waste and hazardous waste. And now for more details on figures and business models on these activities, let's welcome on stage the Deputy CEO of Finance and Purchasing of the group, Emmanuelle Menning.

Thank you, Estelle, and good morning, everyone. I will now enter into more detail on our business models. As Estelle had just recalled, waste revenue reached 35% of the groups in 2024 and this EUR 15.7 billion split for 72% in solid waste, key stronghold businesses and 27%, a large part in hazardous waste, our booster. Solid waste activities are local, systematically adapted to the reality of the geographies with 4 main countries representing 70% of the total. We are in the top 3. In each country, which meanwhile are France with EUR 3.3 billion of revenue; U.K. EUR 2.2 billion; Germany and Australia with EUR 1.7 billion. We have a well-balanced customer portfolio across countries with around 50% municipal with long-term contracts, including price indexation, 20% commercial and retail, 15% treasury, for instance, with hospitals and schools and around 15% industrial with all type of industries. In a nutshell, solid waste is a profitable business with a strong predictable free cash flow and high ROCE above group average and group WACC. Now let's dive in the main characteristics of our business model in solid waste. In solid waste, we are working across the whole value chain with 4 business models, which are closely interacting with each other and notably collection, fueling treatment assets from collection to sorting, recycling, incineration and landfills. Globally, our solid waste revenue is evenly split between collection and treatment. Starting with collection in the first box. Collection in services represent around 50% of our solid waste revenue. It includes 3 separate activities, municipal collection; commercial and industrial collection, C&I; and industrial services. Municipal collection for EUR 1.9 billion enable us to secure volumes for our incinerators. As margin and barriers to entry are low, we have become very selective. It is often an entry point in new market or emerging countries. C&I collection is larger with EUR 2.9 billion of revenue, 25% of solid waste and more profitable. It's secure feedstock for our treatment facilities. Coming to treatment. The 3 boxes on the right, treatment activities are the other half and are split between sorting and recycling incineration and landfilling, with relative waste depends on the maturity of the country. Sorting and recycling is the largest and fastest-growing segment due to the evolution of regulation. The EUR 2.5 billion revenue is coming from our service fees, from our sorting and recycling of materials and the actual sales of recycled products. Incineration amount for EUR 1.8 billion revenue, at landfill for EUR 1.3 billion; both generating mainly in France and in the U.K. are highly profitable. Now let me detail the 3 key picture of our business model, which characterize solid waste as a stronghold. First, our specific resilience; second, our proven agility; and third, the power of combination with water and energy. Starting with the first one, our resilience. Our solid waste activities, even including 50% of nonmunicipal clients, are much more resilient than in the past and probably more than the market thinks. Our solid waste benefit largely from a unique characteristic of the Veolia business model, which contributes to its resilience. We are in the top 3 in each of our geographies. We are well protected against inflation. We benefit from a diversified geographical footprint and a balanced portfolio of clients. We enjoy more than 90% of contract renewal. Our exposure to energy and commodity prices is well under control. Regarding energy, we have implemented a hedging policy by which we sell in advance over 3 years our electricity revenue in order to have visibility. And regarding recyclates, we have put in place back-to-back contracts. And we have long proven our agility with continuous efficiency gain and adaptation plan when needed locally. You can also see on the slide a chart showing to what extent solid waste has been a stronghold. Indeed, solid waste has delivered over the past 15 years continuous low- to mid-single-digit growth, plus 4%, excluding Suez. In the last 15 years, we launched a profound transformation of our operation in order to be more resilient. We put in place more efficient and locally adapted organization. We streamlined our structure, we derisked our recycled activities, and we are much more selective, proactively supporting the evolution of our main markets, for instance, in the U.K. and all these action bore fruits. Second characteristic of solid waste operation, our agility and strong track record in terms of efficiency. Efficiency gain at Veolia are largely recurring and not discretionary cost-cutting programs of which you could question the continuity. We have highlighted in the slide 3 key levels of continuous efficiency gain in solid waste. We continuously prune our portfolio. We are very selective in municipal collection. We decide on specific action plan when needed, such as in Germany, where we have extracted significant synergies after the acquisition of Hofmann. And in France, we have also rolled out a plan with 4 focus points: recovery of nonprofitable contracts, G&A optimization, HR agility with internal mobility and purchasing optimization. Finally, the third characteristic and strength of our solid waste come from combination which make us unique. Regarding solid waste, our most compelling value added come from the combination of waste and energy. We sell 9 terawatt hour of renewable energy from waste, of which 6 terawatt hour of electricity and 3 terawatt hour of heat, which fuel district heating networks. If we consider our waste-to-energy incinerator plus RDF production, so the alternative fuel coming from nonrecyclable waste and biogas from landfills, total bioenergy produced from waste amount to more than EUR 2 billion, EUR 2.5 billion in '24. Going forward, energy revenue from waste is bound to increase due to the large demand of municipalities for local and renewable energy. The potential for industrial clients, of which we typically replace gas and coal turbine with RDF. All in, the increasing energy revenue from waste, which is plug-in with no additional CapEx or limited, will contribute to enhance our margin. After solid-waste activity, stronghold which is resilient, agile and benefit from the combination, let's go now on our booster hazardous waste. As Estelle explained earlier, hazardous waste is a growing market, fueled by megatrends in which Veolia already enjoy leading position. As hazardous waste has long been a fast-growing activity for Veolia and deliver a revenue CAGR of 8% in the last 15 years. 2024 revenues amount to EUR 4.3 billion. In hazardous waste, we are operating by geographical platforms, 55% of revenue in Europe, 30% in the U.S., 10% in Asia Pacific, notably in Australia and China. And we are taking off the business in Middle East and Lat Am. Our customer base is very diversified by sector, as you can see, with health care and chemical representing 40% of our clients. It is also benefiting from a very large number of clients, for instance, more than 10,000 small and medium size in France. EBITDA amounts to EUR 666 million in 2024, implying a 14% EBITDA margin, which will expand by 2027, as I will explain in a few moments. Likewise, as several facilities are going to be commissioned and growth CapEx to be less significant, ROCE will significantly increase in 2027 from 6% to 9% after tax. Veolia was pioneer in hazardous waste in Europe in the '70s. It grew sharply in France and developed network of facilities and then expand in the U.S. and in Asia, taking advantage of the regulation forcing industries to address their pollution. We fully and highly anticipate the market trends and find solution -- found solutions for our industrial clients. In Europe, we are #1 with EUR 2.4 billion revenue in the market, still suffering from scarcity of facilities. We enjoy more than 20% market share with 20 incineration plants. The EBITDA margin is the highest of the segments at 17% and will continue to grow by 2027 as our new asset will be commissioned notably in Germany and in the U.K. In the U.S., we are #3, with EUR 1.3 billion of revenue in the market, also suffering from scarcity of facilities and which will continue to grow, fueled by the reshoring of industries, new volume coming from micropollutant treatments like PFAS. We enjoy a 10% market share, but an 18% market share in incineration, which will increase to 22% with the commissioning of Gum Springs. Like in Europe, we expect our EBITDA margin to grow, thanks to the ramp-up of new facility. In the rest of the world, new assets will be commissioned in Saudi Arabia and in Taiwan. In China, we are recovering with a restructuring plan to compensate for slower economic growth after COVID and change of regulation. Recovery is underway with significant operational cost decrease and concrete margin improvement. Hazardous waste is a winning business model, fueling the growth of GreenUp. More precisely, Veolia is a market leader in the market with high [Technical Difficulty] of hazardous, just to name a few of this barrier. Complex regulatory requirements, difficulty to replicate our know-how, which also includes unique assets and equipment, require high safety standards, deeply experienced people. This slide reminds you of our 3 pillars of value creation: top line growth, performance and capital allocation. Starting with growth. It is supporting by volume expansion, pricing strategy and mix optimization as well as new offer and innovations. Our objective is to continue to grow annually our top line mid- to high single digits in line with GreenUp booster trajectory. The second pillar of value creation is performance with cost efficiency. Continuous optimization of our asset utilization, which will lead to 10% average annual growth and margin expansion between '23 and '27. And the third pillar is capital allocation where we focus on new capacity build and selective tuck-ins, always in line with our strict investment criteria, IRR above WACC plus 4% and ROCE above WACC after year 3. Finally, this leads to strong value creation with ROCE expected to increase by 50% between '23% an '27 to 9% after tax. I will now detail specifically the first pillar, growth. So growth will come from 3 levels. First, volume expansion on top of high barrier to entry is fueled by complex regulatory requirements, health protection, natural protection and new pollutants, industrial reshoring and strategic material recovery. Second, pricing power and mix optimization. We continue to increase our price in '24, for instance, in the U.S. by 8% and in Europe by 4%. Above all, our value added come from our unique capacity to optimize our mix and select the highest value added waste to be treated. And third, a new offer, a new pollutant to treat such as PFAS. I would also like to highlight that the growth we have enjoyed in hazardous waste has always been disconnected from macro and has been razor fueled by environmental regulation, health protection, reshoring and strategic independence. Moving to performance, #4. Expansion of our margins will come from the combination of optimization of asset availability and improvement of utilization rates. The sharing of best practices in our different operations, for instance, we are using our deeply experienced personnel, what we call our flying team from France to commission smoothly, Tahwil in Middle East and Gum Springs in the U.S. Volume internalization and the improvement of the utilization rate of our treatment facilities with our collection contracts. For instance, in the U.S. in Gum Springs, we have been able to secure around 50% of our facility capacity with guaranteed take-or-pay agreements. Finally, capital allocation, which is key for hazardous waste. You can see on this slide the upcoming commissioning of new assets as well as the recent tuck-in acquisition, which will fuel our growth by '27. Regarding new assets, we will add 285,000 tons by '27 and 430,000 tons once full ramp-up is achieved, contributing to the enhancement of our margin. Regarding M&A, I am very pleased, as announced by Estelle that we have signed 3 deals in the U.S. and we have bought a Class 1 landfill in Japan and in Brazil. Overall, 5 deals representing EUR 300 million enterprise value with multiple around 10 before synergies. This transaction will participate in the margin expansion fully aligned with our strategy and well executed. So in a nutshell, we have strong ambition for our hazardous waste business, thanks to growth, efficiency and new assets. We expect top line to grow mid- to high single digits, EBITDA to grow by 10% per year on average, resulting in margin expansion at least 200 bp, while ROCE should increase by plus 50% by '27 to 9% after tax. So hazardous waste is a winning business model, fueling the growth of GreenUp, and we have full visibility on its path to contribute to our 2027 target. Thank you very much.

Let's move on to the round table. For a special focus on 4 different regions of the world, let's welcome on stage 4 Veolia executives. She is the CEO of the hazardous waste, Europe, Catherine Ricou. He's President and CEO of Veolia Environmental Solutions and Services in North America, Bob Cappadona. He works for Veolia EMEA and Middle East as General Manager of MAGMA, Helder Daravano. And last but not least, he works for Veolia in Australia and New Zealand as National Remediation Services Manager, Matt Ead. Welcome on stage. Thank you all. So Catherine Ricou, let's begin with you. Obviously, Catherine, you are going to tell us about the European market. And quite logically, it all began here in France. We are talking about a long history of several decades, aren't we?

Yes. No, exactly. It is really about several decades, 5 exactly. So Veolia decided to build in 1975 in France, the first hazardous waste facility to accept this type of waste. And the goal at that time was really to protect the environment and to make sure we could protect the water resource to produce drinking water. So at that time, the French subsidiary, the Compagnie Générale des Eaux really started to launch a very strong collaboration with industrial customers making sure we could find together waste and solution for them to treat their very specific waste in order to protect the water resource and reduce the impact on the environment. So that's exactly when we started the activity for Veolia in hazardous waste. So now 50 years later, we are in 10, even 12 countries in Europe, and we are treating 5 million -- 5,000 million tons of waste in our facilities in Europe. And it's very interesting to see that the growth of Veolia hazardous waste in Europe has been really structured through organic growth, but also through very strategic acquisition because the model is really, as it was said just before, to own assets, merchant plant. So we had to decide which were the very strategic countries where we needed to invest to make sure we can support growth. And each country had a very strategic strong growth opportunity. So you can see on the slide, Poland, you can see Spain, and these territories were really flagged in terms of growth opportunity. So now, again, 50 years later, 12 countries. And all this growth has been really structured, also thanks to the very strong European regulatory framework. And it's not only about protecting the environment, it's also about this framework in Europe, it's also about protecting the health, and we've talked a lot about PFAS and a lot about new, again, emerging pollutants. So this framework has been very strong. And now we see in Europe that we've got countries really mature in terms of regulatory development, and we still have some countries on the way to implement this regulatory framework. So we still have growth in Europe, thanks to regulation, and we see today that it's moving very fast on regulation. Another lever for growth in Europe, of course, is the growth and the evolution of the industry. So the economical health of the industry is important. But what I think make us really special in Europe is that we have and we're providing solution to a very granular portfolio of customers. As you can see, only 15% of our portfolio is about large -- very large customers. The rest of it is very granular. It could be, again, in the market for the microelectronic, pharmaceutical, but any kind really of industry. It can also be household not that they are bringing waste to our own facility, but to collection point. When you paint and you maintain your house, these type of wastes are brought then to collection points. So you can see that the range of waste that we are treating, the market segment and the granularity of the customer is really very broad. So now, not only we've got a granular portfolio of customers, but the resilience of the model is really based on the fact that we've got a very large network in Europe of more than 100 facility again, merchant plant owned where we can invest, where we can develop. And when you can see this map, I think this map is very explicit on how the flows are traveling and how we do assess with the expertise that we have, the type of flows and the needed treatment that we need to apply to make sure we can treat the pollution in the right assets. So part of the asset and the portfolio that we have, we've got 4 main portfolio. One is the high temperature incineration. We've talked quite a lot about that. In Europe, we do have 20 sites. It's a lot. It's helping us to really map in some strategic countries and to capture the growth. And we've been developing, it has been just announced, a patent called DropFast, to make sure we can create the condition in incineration, the condition to destruct the PFAS. And I just would like to take the opportunity to thank the French team that have been really behind the development of this patent because it's a lot of work. It's very innovative. And I think it's really amazing to see that today, this type of patent can be spread across the full territory of Veolia to make sure we can address this challenge of PFAS in incineration. So incineration is one. Liquid and material recovery. It's not really well known, but 60% of the waste that we treat are liquid. We usually think about solid. But hazardous waste is a mix of a lot of material, a lot of typology of waste and 60% is about liquid. So in this facility, we can take the waste -- the liquid waste of the industrial customers and make sure we can treat them. Another category of assets is the recycling. We talked already about the Critical Raw Materials Act for strategic metals. So that's one recycling opportunity. We talked already about solvent. So in recycling, we've got specific flows. And each time a waste is identified, we try to assess really if that waste can be treated in one of these facilities. And the last one is the mineral treatment, some waste of mineral, it was presented. The mineral treatment, the landfill, the soil remediation. We have a lot of projects with contaminated soil with PFAS and also groundwater -- underground water contaminated water with pollution. So these 4 category of assets are really equally spread in Europe. And in terms of expertise, what's very specific to hazardous waste is to treat this waste in these assets. We need to have very skill-set people to sample, qualify, understand the waste. And we've got more than 20% of the employees that are chemists. A lot of them are in the labs to make sure we can assess these waste and then to define where to treat them, the best way, creating the most value and how to combine the waste to make sure we can treat them very safely in our facilities. So as you can see, the resilience of the model, the strength of the model in Europe to continue to support growth is really about expertise for sure an innovation, about a network really equally spread, about diversity of assets and about a very granular portfolio of customers.

Thank you, Catherine, for this first very interesting elements. What's particularly interesting about Veolia's activity on European soil is that despite this longevity, the market remains very dynamic and full of new opportunities. So what do you have in mind for the next chapters ahead?

The next chapter is about growth, of course. And you've seen that the growth of the activity has been really faster than the GDP. And to sustain this growth, I think I would want to come back on the levers for the value creation model that was presented just before. I think the first one is really to leverage even more the resilience of our market footprint in Europe by acceleration of the combination. If you look at it, and I think that's really also what's fascinating in that market is the hazardous waste activity is really at the crossroad of the 3 stronghold of the group. Of course, we treat waste pollution and pollutants in our facilities, but we also treat liquid, so we depollute liquid. We recycle water. We reuse water for our own needs, but also for customer needs that are requiring reuse water. So this is a combination and we do have enough facilities, a lot of technology from the group, membranes, for example, with reverse osmosis. So this is a very strong element of combination. Another element of combination is energy. We do produce a lot of energy. We transform energy and we do our best to reduce the energy consumption that we are using in a facility. So this is another key element for combination. So hazardous waste is really at the cost hood of all this acceleration. So that's one lever. Another lever is what I would call the continuous improvement of the operational efficiency. Improving performance on these assets that we own is always something that we're looking at. It's about, again, risk management. It's about safety. It's about asset management and maintenance because we need to invest the right way at the right moment on this asset. And every percent that we can gain on the availability on an asset is also contributing to a sustainable growth. So this is very important for us. It's a key lever in Europe. And coming back on expertise, expertise is key in the hazardous waste. It is a key barrier, but it's also a key asset for growth because our customers really identified the value of this expertise. So now not only to grow, we're really managing this asset, but they are asking us to come into the fence of their own sites to help them to qualify, to reduce even, but also to prepare the waste to be treated the right way and the proper way. And we have a lot of discussion on what type of category of assets we need to assess for you in terms of waste treatment. So this is key for growth. We already talked about new capacity in Germany. So we are working on that project. It will contribute in '27 to our growth. So this is, again, a key element to enhance, increase this network in Europe and, of course, the organic growth. We have a lot of offers through innovation, through also new customer needs, emerging waste, I mean, new waste, the gigafactory industry that we can talk about that later, but it's really adding new waste that we need to qualify and identify the best way to treat them. So all these elements are key for us to sustain the growth. And maybe the last element, not the least is innovation. Innovation has been over the 5 decades, really a key element for the Veolia hazardous waste in Europe to grow. Again, we've got 75 patents that are really used in all the segments that I've been talking about. So the next chapter will still embrace innovation. And the key element will be the combination. The next stage for us is to continue what we're doing in the hazardous waste, decarbonizing the hazardous waste market. So that will sustain the growth for us.

Thank you. Thank you very much, Catherine Ricou. From Europe, let's go to the U.S.A. with you, Bob Cappadona. First thing first, Bob, can you tell us how the group is positioned in this part of the world?

Thank you very much. It's nice to see that the hazardous waste business has so many friends. I can feel a warmth of your friendship right now. So appreciate everybody being here. The business here in the U.S., it is a perfect example, maybe our first example of copy and adapt where the business started in the '70s and '80s, very much is a service-based business. There's a lot of the front-end work on managing material ultimately to hazardous waste treatment facilities, but 80% of the material that we owned or that we managed did not go to the Veolia-owned or managed facilities, so went to third-party facilities. So -- but the focus was on customer service, the best NPS score and really managing that customer relationship resulted in excellent growth. We've seen -- as you can see in the chart where we've gone from 0.5 billion to 1 billion and manage 1 million tons of waste. Our ultimate goal, 2 million tons of waste, $2 billion in revenue across the group. We've done that through organic growth. We've also done that through some tuck-in acquisitions, which have been mentioned today, one of which closed yesterday, so we're very, very happy to see those tuck-in acquisitions along with the group. Go to the next slide. This is similar to Catherine, that the footprint of our assets across the country. We service every state in the country. One of the challenges certainly is, in some cases, it takes 2.5 days to get across the country. So transportation becomes an integral part of our business, and managing the most efficient way of getting material across the country is very important to us. In terms of incinerators, we have 3 incineration sites, 6 hazardous waste incinerators, and in 1 more example of that global sharing similar to DropFast, we've been working on PFAS testing at our facility in Port Arthur, Texas. And we've been able to achieve 99.9999 treatment destruction levels of PFAS through the facility, ultimately creating the solution from a liability perspective for our customers now and into the future. As I mentioned earlier, the transport platforms, that's where we're taking materials in from smaller service vehicles, transferring them onto larger vehicles where this way, every vehicle that we send across the country, nose to tail, floor to ceiling, ultimate goal is for it to be fully utilized and to be the most efficient possible. Again, critically important in terms of being competitive with our local customer. Liquid hazardous waste recovery, a big part of that business is solvent reclamation, but also fuel blending, where we are taking in waste solvents and preparing them so that we can manufacture essentially a fuel that can then be used in other kilns around the country. Oftentimes, these are very clean materials that are coming from the high-tech industry or the pharmaceutical industry just can't be reused again in that industry. So we prepare them for alternative use. In some cases, we will recycle them, sell them into another industry. In some cases, we'll identify industries where we can sell right back into the same industry. In our electronics recycling business, this is traditional electronics recycling, everything from your cell phone to your PC and most recently, to batteries and the management of lithium batteries. And in the case in the U.S., this is our white-glove logistics program. White glove and batteries probably don't necessarily align perfectly to you, maybe fine restaurant white glove, but white glove here is focused on safety. The #1 issue with the lithium batteries, of course, is the potential for reactivity, catch fire and then the inability to control the fire. Our white glove logistics ensures that we're managing batteries from the point of generation to the ultimate treatment asset, which right now agnostic to the technology that we utilize so that depending upon the chemistry, we can go to different chemistries depending on the batteries that we manage. The group in the U.S. is currently, I think, with some pride and some not so pride managing 2 of the largest battery fires in the United States, 1 which is over a year old, but it reignited multiple times. We're managing the battery from that very safely and managing those either to recycling or an on-site treatment activity.

Well, Bob, what you described is a great dynamic for the group in the U.S. And guess what? I've got a perfect example to illustrate this dynamic. A few days ago, Veolia has opened a new site in Delaware. We are talking about the inauguration of a brand new PFAS treatment plant, the largest of this kind for the group and definitely one of the largest in North America. Let's see how it looks like. [Presentation]

So -- yes, you want to say something?

I know for the technical people, the facility is the most amazing part of that. To me, the piece is trust, trust, trust. The client 100% trusting in the technology of Veolia to solve a problem.

Yes. Magic word. So Bob, what's next for Veolia in North America in the waste sector?

What's next is, as we mentioned earlier, focus on continual growth, both organic and through some acquisitions, focus on our local service model. We put our people embedded locally with our customers and in some cases embedded in our customer locations. So at over 250 different locations across the United States, our people are reporting full time to a customer location. Typically, the line I say with that is we focus on what we do best, so you can focus on what you do best. And we see more and more in growth and technology innovation type companies where that's the trust that they have in Veolia is to build that infrastructure to support what they would like to do best. We're managing our portfolio of business and I'm looking at everybody's faces, I say this, a bit of a volatile time, and there's always an interesting story in the news, manage our business accordingly to make sure that the opportunities that we view in the market or where we put our resources, where we put our assets align with the industry sectors that align well with Veolia. Key things, semiconductors, life sciences have been very good markets for us in terms of, as I mentioned, being local and being embedded in customer facilities. PFAS being ready for what we see today and what we will see into the future and exploring emerging markets on the train right here, I looked out the window and I saw windmill blades. Windmill blades in our market is a business opportunity. We've got a windmill blade recycling business embedded in the ESS business. Who even thought that was a problem? But that's an opportunity for us where we now recycle those windmill blades, take the materials from those windmill blades, put them right back into the cement industry. It's an opportunity, as Emmanuelle described earlier, of us for additional volume in through the Veolia network, pricing to appropriately to environmental solutions and utilizing the assets that we have across our network. Last thing, as we mentioned, the opening of the Gum Springs incinerator in Gum Springs, Arkansas. One of the neatest things about that within the last week, we won an award for being the best corporate citizen voted by the public. So my comment about having friends of the hazardous waste business and it making me warm, that's a little bit making me warm here, but it also makes me warm at home to know that our business is valued that highly by the local community and that we're a good citizen in the community that we operate.

It's really impressive, Bob. Thank you very much. While Europe and North America are already major markets for Veolia, it's a whole different story for the Middle East and Australia. Let's start with you, Helder Daravano. Can you describe to us the specificities of the Middle Eastern market and how different it is from those in Europe and the U.S.?

Yes. Thank you. Indeed, from 0 to a major player in the hazardous waste market in less than a decade is quite remarkable. And put Veolia in the hazardous waste joining 2 already strong activities, the water and the energy sector. From a market perspective, the Middle East is a fast-growing and very dynamic market, approximately 25% of the size of Europe, but growing as twice as faster. I would say that it is also a mature market in terms of oil and gas and big industries, but young and still developing in terms of hazardous waste. So altogether, this makes it very challenging for us, but also very attractive. And I think it puts Veolia in the unique position and the only company able to keep up with this fast pace and this market transformation. From a regulatory point of view, is well supported by robust and long-term government plans, with very well-defined road maps and green agendas when we're talking about environmental aspects. So these things together allow us to replicate models and strategies from our wide portfolio in Veolia and provide tailor-made solutions to the market, while supporting our customers in this ecological and energetic transformation. So to materialize these concepts, these strategies, 2 key facilities recently started. So MAGMA has a brownfield in the UAE and Tahwil has a green field in Saudi Arabia, reinforcing Veolia's geographical network in the hazardous waste. So with a little bit more focus in MAGMA is a project that started 7 years ago, initially conceived as an O&M that then became an acquisition in 2023. After 5 years of detailed business model, design through innovative partnership, leading to a merchant plant that nowadays is open to the entire UAE. So in 2 years since we took over, several circularity aspects have been implemented on site, right, like water reuse, alternative fuel as a source of energy, even substitution of some raw materials by some other waste streams in certain processes because they are all interlinked in this specific facility. So this is thanks to probably our third generation of copy and paste. Bob mentioned the second -- probably the third, coping and adapting from our brothers and sisters in Europe and the U.S. So while we're growing faster and the market is demanding that level, we are also investing already. We have several projects where by innovating, adapting to the customer needs with several improvements, we're aiming to multiply by 2.5 approximately our capacity over the next 2 years in the MAGMA side. So this is strategically leading us to an environmental partner -- to become an environmental partner to our customers and is making MAGMA, in this particular case, the one-stop shop facility in the Middle East. So I would say that as a key message from my point of view, this journey has been possible over the last years, mainly through one fundamental instrument, which is the Veolia network, benefiting from the Veolia network, as mentioned by Catherine, by both for us is key, on this copy and adapt strategy. And is, I would say, the key of the success so far in the Middle East. So moving to Tahwil. Tahwil, we call it MAGMA's younger but bigger brother that has been permitting over the last -- during 2 years, construction in approximately 4 years and is now ramping up quickly, leading to 120,000 tons of hazardous waste on a waste-to-energy incineration plant. It's a state-of-art facility built by Veolia and currently ramping up quickly. And soon, we'll be providing steam in the form of energy to the industrial park where it's based. And looking ahead a little bit further, we'll capture 25% of the hazardous waste market in Saudi Arabia. So in a nutshell, if I have to summarize the ingredients of our hazardous waste expansion strategy in the Middle East, I would say that when you combine the global network and local network from Veolia, adding this know-how, expertise, maturity with the fact that we own the assets that allow us to invest and adapt our facilities to the market with business partnership with strong clients, big clients on the long term and with those green agendas well defined, which is another key pillar in this process, that gives us a great recipe in sustainable and long-term growth, consolidating firmly and strongly our position in the region.

Another Master Chef recipe. Thank you very much, Helder. So now let's fly over the Pacific and go to Australia, Matt Ead, your turn. We have just heard about this new market in the Middle East. What can you tell us about Australia?

So Australia is actually a well-established market. We've been operating in Australia for over 30 years in hazardous waste, longer in solid waste. And it's all been about adapting to the local market needs. So initially, our hazardous waste facilities located in the traditional manufacturing areas, so along the East Coast. But in recent years, as the resources and mining industry has developed, opening new facilities in Northern Territory and along the West Coast. And the good news is that the hazardous waste market in Australia continues to grow. So the latest federal government report show that it's still a growing industry, and we are seeing that reflected in our financial results. We've had 7.5% growth since the merger in 2021, 7.5% year-on-year growth. So what are the key drivers for the hazardous waste market in Australia? So it's increased regulation and it's increased community awareness. So companies are wanting a social license to operate now. So there's been a move away from landfilling and moving towards treatment of hazardous waste. The example I'd like to give here is our Taylors Road facility in Melbourne, which is a hazardous waste landfill. And now on top of that landfill, we actually have a thermal treatment facility. So the contaminated soil and hazardous waste that was previously going into the landfill is now treated and turned into a beneficial product. So how has Veolia adopted the business over time? So it's all about geographical spread. So a bit like the U.S., we're a large country. So it's having treatment assets, near where the waste is generated or it's about having collection facilities or transfer stations as we call them. Everywhere else that can then take the waste to those treatment assets. It's about targeted M&A. So looking at facilities where we currently don't have treatment. So an example of this was the Brandster's acquisition in Sydney in late 2024. So we believe we're actually #1 for collection of hazardous waste in Australia and #2 for treatment. So by taking it to our own facilities, then we're able to internalize that margin and increase profitability. It's also about expanding services on our own sites, so doing more on our own sites. So installing PFAS water treatment at our hazardous waste treatment facilities. It's about doing medical waste on our treatment facilities as we recently have installed in Darwin. So we're now collecting medical waste at the Darwin treatment facility. The third growth lever, how we're adopting the business in Australia is about doing more for our customers. So this is the combination that Estelle talked about before. So adding new services, doing more things for our existing customers. So the example that I'd like to give here is in the Pilbara region in Western Australia. So this is the biggest iron ore producing region in the world. And Veolia has had an industrial services contract there for many years. So in 2012, we started doing solid waste collection services with a single truck. We formed a joint venture with a local indigenous corporation to give them more opportunities. We then won a solid waste contract with our existing industrial services customer. And over time, we've now grown that service to now we do hazardous waste treatment for that customer. We've won other contracts in the area for Woodside, among other people in Rio Tinto. And we now believe that we have 70% market share in that region. So the key to Veolia in Australia is adapting to the local market conditions, doing more things on our existing Veolia sites and then doing more things for our existing customers.

Thank you. Thank you very much, Matt. Thanks to all of you for your crystal clear explanations. Yes, you're right. They deserve it. So it's time to conclude. And of course, the conclusion belongs to Estelle Brachlianoff, the floor is yours.

The challenges ahead are immense. Industries, they face tightening regulation and release increasing complex pollutants. Communities, they demand protection for their health and the environment. Regions, they need to maintain their attractiveness, while supporting industrial development and secure the supply of critical minerals. While scarce natural resources are even more needed to support our wealth, every single of ours, and reaching planet boundaries at the same time. So how do we combine those 2? This is where Veolia through GreenUp takes center stage as architects of environmental security. Every solution we develop, every facility we operate, everything we do in a way serves just one purpose, protect, protecting population, protecting industrial operations, protecting strategic autonomy of each of the countries we live in. So from developing a circular economy to removing pollutants, that's exactly what we do in our waste activity. And our hazardous waste activity in particular, perfectly exemplifies this mission. And as we've seen, no one matches our capability from our cutting-edge technology through to our unrivaled portfolio of customers or assets. So together with our '24 results and our more recent ones, today's announcements prove that we are on the right path to deliver GreenUp. So let me remind you those announcements. So first, our target of 50% growth of hazardous waste revenue by 2030, including EUR 1 billion combined revenue in PFAS. Second, our 5 strategic tuck-ins as well as 285,000 tons of capacity by 2027, reaching even 430,000 tons at full ramp-up. Third, the launch of our breakthrough DropFast technology, once again pushing the boundaries of what's possible in pollution treatments. Our strategy and priorities are clear. Our capabilities are proven. Our path is set. And we are starting and delivering. This is exactly GreenUp in action. Thank you very much.

Thank you. And we're ready for the questions, I guess. I think it's time to open the Q&A session. Thank you so much.

Many hands already lift up. So okay. Can you -- yes, you get the mic. Your turn.

I'm [ Josette ] from El País newspaper in Spain. I wanted to ask what are the plans for Spain in the growth on the hazardous waste projects? There are investments in plan now that you have this key investor criteria that may accompany you.

So I may take this one, but maybe you will want to complement, Catherine, on that one because Catherine is in charge of the hazardous waste in Europe. So of course, we're in France today, but she runs as well our facilities in Spain. I'm trying to find back the page of the map where you see an important dot on the map on Page 37, which is in Spain, basically near Barcelona, although it's not exactly in Barcelona, a bit nearby, where the industrial park is located. We have a very nice high temperature incineration unit, which we've developed over the last few years. I think we have the date somewhere else. And we go on investing in this activity in Spain, like in the rest of Europe. But it's fair to say that Catherine manages it as a network, as we've seen hazardous waste travels. So when you have sufficient needs in a specific country, you invest in specific assets through the specific waste flow. And when it's too small a market, you tend to ship it to a neighboring country. So in a way, the more the industry in Spain will grow, the more you will have dots on this map, and we're very happy that our investors, including Caixa support this growth because it's good returns as well as good for your health and that on the environment. It's good return.

Okay. Next question. Who has the mic?

Wanda Serwinowska, UBS. Two questions from me. The first one is on the CapEx plan because I haven't seen how much Veolia is going to invest by 2027, 2028. I think it's like EUR 200 million was last year. But when -- after the presentation, it seems it's a super growing market. So what keeps you preventing from investing more, given your balance sheet headroom? I would ask. And the second question is to Emmanuelle on the EBITDA margin. If I'm not mistaken, you mentioned a target to expand EBITDA margin by more than 200 bps. If you could give us the building blocks more or less, that will be appreciated.

I'm not surprised, but you've listened carefully to what Emmanuelle said. So in terms of the first part, and you will take the second part, Emmanuelle. In terms of the first part, in a way, if I de-zoom a little bit, what are our priority of investment in the GreenUp plan. We've made it very clear. Priorities is to the boosters, which doesn't mean that we don't invest in the other activities, but we prioritize them. So there is a queue in investment. Of course, the first thing is you have to be at the bar. WACC plus 4% are our minimal and good ROCE and so on and so forth, but we have still too many projects which would be at that bar. So we prioritize the booster. That's super clear. So you have here lucky guys and ladies because they skip the queue compared to the colleagues basically in terms of investment, both in M&A and in CapEx. So far, we think what we've put on this plan is enough to support the 5% to 10% growth, and we don't need to invest in other new red dots on the map apart from the 5 we've just discussed. So the intention is progressively last year was EUR 200 million investment. And progressively, it will go down because we'll open this plant, and we don't have many other dots on the map so far. Hence, the ROCE in a way mechanically increases, today, in a way, we have them in our funds employed, and we have no revenue or margin associated with those 5 dots on the map. So in '25, '26, '27, you will see a ramp-up of the performance associated with this reducing investment. If there was a change in the market and we think in a way may have a 6 in the map, we'll see. But so far, we're good with that. And honestly, it is enough to support the growth, which is embedded in GreenUp under '27 targets. Maybe on the second part, Emmanuelle.

On EBITDA margin, thank you for the question, Wanda. So you are absolutely right. We have strong ambition in terms of margin expansion for our hazardous waste business. Our target is to expand it by 200 bp to 300 bp. It will come from 40% from new capacity, so the tuck-ins and the opening of new facilities, 30% performance and efficiency and 30% volume growth. So a large part of it is fully secured. The capacity will -- they will start. The tuck-ins have been closed with very attractive multiples, and we will also benefit from the volume expansion, our pricing strategy, which has been very successful in the last 3 years as well as new offer and new volumes as PFAS. What you have to have in mind is that also, it will have a strong push also, as you were mentioning, CapEx on our ROCE because we'll benefit from the EBITDA for our new facilities, having done the investment, finalizing that, but the larger part is in the past.

And just want to elaborate because we say margin expansion. We gave you figures and Bob and Catherine are too shy to have mentioned them, but it's a good track record. On Page 38, you have just 10% CAGR of EBITDA in the last 5 years in Catherine's business. And on -- so 10% per year. So we've done a plus 60% basically from 2018 up to now. And in Page 42, Bob, you have a plus 12% CAGR. So times 6, it's 80% or something EBITDA, which this gentleman has been able to deliver, those 2 without having opened new capacities yet. So only using the 1 up to 4 levers, which Emmanuelle shown and not yet the 5 and 6, if you want to, in a nutshell. That's why we are confident about delivering GreenUp.

Well, actually, let's continue a little moment with Bob because there is a question for Bob coming from the chat. Can you talk about the pricing outlook in the U.S. market? Do you expect pricing to continue at high single digits? Was 8% in 2024. Any concerns about the commercial incineration capacity coming online? That is a question.

Good question. Certainly, the dynamics of our market in the last 5 years, you had full utilization of the capacity across the network. And then about '22, you started really seeing the impact of onshoring of manufacturing, light manufacturing, tremendous growth in containerized waste. So not necessarily bulk waste, but containerized waste. And there wasn't significant capacity in -- or available capacity in the industry to support the containerized waste. That containerized waste comes at a higher price per unit. Because of the managing and handling of the containerized waste, that has played up part in our ability to manage pricing to our benefit in support of margin growth within the business. Our network is set up to handle that based on investments that we've made in the infrastructure of the business. I mentioned the platforms. There's also an IT infrastructure that supports that as well. That enables us to manage containers into our network very, very efficiently, and that's given us good margin opportunity.

So no worries on the price going down when competitors open new capacity, Bob, is what I understand.

One of the things I did not mention when I spoke of Gum Springs, the Gum Springs incinerator has been identified by the United States EPA as a recycling facility. It is the only hazardous waste incinerator in the country that is identified as a recycling facility. So we started by preselling part of the capacity to the unit. And that's a significant competitive advantage is having that H050 code, which is an EPA designation, unique to the facility, which will enable us to secure the volumes and provide the value to our clients that I think supports the pricing that we have within the market, and we've demonstrated that in the 5 years.

And the beginning of the year was very promising with what, 8.5% of revenue growth in the first quarter. We're always disappointed because we have a challenge this gentlemen and myself have said, "When are you going to hit the $1 billion mark in dollars?" We negotiated if it was in dollars or in euros for a while. Now you've announced today that it's going to be a $2 billion and you're on the way, Bob. I'm very confident on that one as well as good margin, as I said earlier on.

8.5% top line growth, 15% bottom line growth year-to-date.

Thank you. Let's go back to the audience. You've got the mic.

Philippe Ourpatian, ODDO. I have 3 questions. One in -- regarding competition. The second one, the question of detail. And the last one is also a question of business, I would say. Concerning competition, your position in the U.S. is clearly hazardous waste, not really a solid waste, shown on your maps. And some competitors in the U.S., big one like Waste Management are increasing their market share in the hazardous waste. They have just bought recently Stericycle, which is a U.S. company dedicated to hospital hazardous waste. In this specific segment or more broadly, are you seeing some threat in terms of competition? And what is exactly your market share in this specific segment of the medical waste, hazardous waste? Do you have this ranking? The second question is concerning just the detail. In the solid waste business, you mentioned 1% of the revenue, which are efficiencies. Is this figure is a growth of net concerning the famous EUR 350 million gross figure is linked to the -- just to be sure. And last, concerning the flows of cross-border waste. I'm a little bit surprised about the volumes you were underlying in your comments. Could you just have an idea about what is the percentage of waste, which is traveling, means imports plus cross-border in Europe, for example, because U.S. is a one country versus the one you are managing on the, let's say, national or local basis, many things.

So I will start on the first one, you will go for the second, and we'll go on the third as well. So are we fearing the competition? Altogether, and you have a specific question on the U.S., the answer is no. We are really leading not only in size, but in patents and everything we just explained, and footprint and portfolio of assets on every single step of the way. Can we keep resting on our laurels? You never can be when you run the business. So it's not the style of the Haz really. So we're always trying to innovate and to find new things. But are we specifically worried by the competition? Not really. Not specifically in the U.S., neither in Europe. Really, the gap is quite wide and is more widening than going the opposite around. But we're always very careful to keep it that way, really. In terms of the U.S. market, you're right, you have a very different subsegment. The medical waste is an industry we're not that present in the U.S. compared to, say, the type of -- in a way the highly technical one, we'd rather. So Bob hasn't mentioned the type of customer we're talking about, but we're talking about large macroeconomic companies. We are talking about the whole biotech industry behind the MIT in Boston, these type of guys. And we, on purpose, are very like high end, if I may. So we could do a bit of medical waste. I have no idea what size, but it's not significant. And so other competitors -- we have competitors in the U.S. But on these high-end things, so we are picking value versus volume, if you want. We are, I think, very good at it. I have tested with customers myself. They are sticking. The Net Promoter Score is great and really going on with the journey, but specifically medical waste, Bob how big is it, I have no idea in our business in the U.S. because it's not significant enough, so I know the answer to that one.

Yes, we do have -- and in fact, one of the recent acquisitions is a medical waste facility, but it's part of our Veolia Resource Solutions group, which has been one of the fastest-growing components of our environmental business in the U.S. That is a total waste management offering primarily to pharmaceutical, biotech, high-tech industry where we can manage radioactive waste, we can manage hazardous waste, we can manage medical waste, we can also manage solid waste, but these are primarily from generators that are looking for us to handle their hazardous waste. And a small component of it is medical waste. We do not look to compete with Stericycle, now waste management in terms of medical waste. I believe we have a technical and customer service lead relative to Republican Waste Management in the customer segments that are beneficial to our business. So yes, we watch what they do and look to continuously improve every single day to make sure that we maintain that technical and customer service lead, but I certainly don't fear our competitor.

The second question, solid waste, 1% efficiency growth or net, Emmanuelle?

It's growth. So Philippe, the answer is growth. You know that efficiency is part of our DNA. We have an amazing track record in terms of efficiency extraction. It's the same on synergy. And what is important for us to make you understand is that a large part of it is fully recurring, as you have seen in the past years. And maybe one last sentence about it, we had very good retention rate last year and in Q1. And also our track record in terms of synergy extraction as efficiency is quite strong, which is important for the tuck-in that we are doing in the U.S.

And as far as the flows is concerned, so the third part of your question, you have a U.S. and EU different views on that one because the size is not exactly the same geographically wise. The map shows that basically hazardous waste travel 100,000 miles, 2,000 miles with that big difficulty. There is a big thing, which prevents that from ended up in -- sorry, developing countries where it wouldn't be treated the same way, which is called the basal convention, which is preventing from exporting your hazardous waste and your nasty stuff to other places where they could cope with it, but not in the appropriate way, so which is protecting. But you have to have dedicated facilities and I'll explain with the Spanish example. You don't have necessarily the need on a specific location. So 1,000, 2,000 is quite classical. As we see in the U.S., we travel from the West Coast down to Texas very frequently, which is quite a long way away. In terms of markets as well, in a way, the best answer in Europe will be that when we had a discussion with the EU antitrust, they define it as the European market as opposed to country-by-country, which is not for every single component of it, but for the vast majority of it, which is a way to testify that it's not only on the borders, it actually does cross-borders.

So let's take another question from the chat. It comes from Alexis Heim de Balsac, Thematics Asset Management. Hello to the whole Veolia team, and thank you for this great presentation. In hazardous waste, you mentioned using several technologies to treat waste. Is there a difference in margin across the different technologies?

So different technology from physical to incineration to whatever, no, it's more that you cannot deal with one because it's depending on the type of components you deal with. Different from collection to treatment? Yes, of course, like any of this business, you have less margin in collection and more margin in the treatment. Whatever the type of treatment is, but the collection, as Emmanuelle explained, feeds the tons into the treatment system. So in a way, internalization is key not to be dependent on others. But when you're the Master Chef, you can sign a take-or-pay or actually put-or-pay, in a way, agreement with people who have the collection network, but don't have the treatment, and they need our capacity, which is always a good view. So in a way, you can see on the door here, some trucks, which are a lot of Veolia trucks, but some of them are not Veolia trucks because those guys, they don't have anything which looks like that, and they just need to go and be here, which is an interesting, of course, situation to be in.

So in my earpiece, I just have the information that we are running out of time. So I'm taking only one last question here in the room. So who has the mic already? You got it. You're the lucky one.

So my question was on your target on the return on capital employed, wanting to improve it on hazardous waste from 6% -- well, plus 50% basically. I think you suggested earlier that part of that improvement comes from the fact that at the moment, you have nonperforming CapEx as you are building new facilities. I was wondering if you could quantify that nonperforming CapEx and what type of return you're expecting on this specific CapEx that has already been spent?

So Emmanuelle will answer, but I wouldn't call them nonperforming CapEx. We are running and improving the EBITDA with existing and building the future growth and the results of '27. That's more the way I would put it. But to your question, Emmanuelle.

Yes, with pleasure. So from the EUR 500 million CapEx we have in hazardous waste, we have around EUR 200 million, slightly more, which are dedicated to these new facilities that we are opening. So you're absolutely right. In the years to come, we'll have automatically an increase of our ROCE coming from almost stable capital employed. We expect it to grow around 3% to 3.5% when the EBIT will increase by 15%, fueled by our revenue, mid- to high single-digit growth and the additional efficiencies, which is allowing our EBITDA to increase, plus 10% per year and our EBIT to increase.

So your figures are per year.

Yes, figures are per year.

So a few percent in funds employed, not much per year, more 10% at EBITDA, 15% at EBIT. And when you barely grow the funds employed in a way, that's why we said mechanically, it's not mechanic. It's by design, but grow the ROCE by 50% to 9%.

Absolutely.

So it was our last question. I know that many of you must feel frustrated, but you are here for the whole day. And during lunch, it can be the ideal moment to ask your question to the Veolia's team. And for those online, on the slide deck, you've got different contacts and you can feel free to send your questions to them. So this event is already coming to an end. Thank you very much, Estelle Brachlianoff. Thanks to all our speakers. Thanks to all of you for your participation and to all of you online. The replay will be available shortly. And let's hand this event on a powerful image with an inspiring film that brings to life Veolia's vision an ecology that protects.