Jean-Pascal Rolandez of The L.T. Funds presented his thesis on Veolia (France: VIE) at European Investing Summit 2026.
Thesis summary:
Veolia is the world’s leading environmental services group and the only one with a substantial international footprint. Founded in 1853 under Napoleon III as Compagnie Générale des Eaux, it built its business on French water concessions, diversified into media and telecom, and was broken up after the 2000 bubble into Veolia, Vinci and Vivendi. Jean-Pascal, Paribas’ French equity strategist in the late 1990s, has followed the company for 35 years.
Veolia runs three balanced divisions, Water (41% of sales), Waste (32%) and Energy (27%), for local authorities (57%) and industrial clients (43%) in 56 countries, with France only 20% of operating profit. Jean-Pascal sees three barriers to entry: financial, with capital intensity at 8% of sales; technical, with more than 550 proprietary water treatment technologies; and contractual and reputational, since concessions of 7 to 40 years demand spotless execution. Its 2025 ROCE of 6.6% exceeds a 2.8% WACC.
Water markets should grow 7% a year through 2030 and waste 5%, on stricter regulation and water scarcity. Indexation clauses protect margins when energy prices fall, even as revenue dips, as in 2025. Jean-Pascal forecasts sales rising from €44.4bn in 2025 to €50.0bn in 2028e and EBITDA from €7.1bn to €8.3bn, with EBITA margin edging up from 15.9% to 16.6%. He sees 6% to 7% annual EBITDA growth through 2030: 5% from revenue, 1% from acquisitions and 1% from Suez synergies.
Former CEO Antoine Frérot sold public transport, cut the footprint from 100 countries to 56, reduced capital intensity and bought most of rival Suez’s assets in 2022 for €18.7bn. Jean-Pascal calls his successor, Estelle Brachlianoff, tough, disciplined and financially minded. After a €3bn US hazardous waste acquisition last year lifted net debt/EBITDA to 3.2x for 2026e, her priority is to reduce leverage below 3x, toward 2.5x. Jean-Pascal would also sell the water chemicals business inherited from Suez.
Near €31 a share, Veolia trades at 5.9x 2027e EBITDA and 1.1x revenue, with a 5.6% dividend yield; Jean-Pascal believes it deserves 10x EBITDA. He blames the discount on a lack of peers, complex concession accounting, few international holders and its French listing. Without any re-rating, he expects returns near 10% a year from 6% EBITDA growth plus the dividend. Risks include France’s bond turmoil, which hit the shares this summer, high gearing, FX, and large contract renewals.
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