5 billion expected on the years 2008 and 2009

After a warning on its results Sunday evening, the Veolia Environnement group collapsed in the stock market Monday. Its Chairman Henri Proglio, brings together investors today for their detail its strategy and try to convince them of the strength of the economic model.

After the warning Sunday evening, the Veolia action lost 21 Monday. How do you explain this diving

It should be straight. We have not announced losses. We have not lost big contracts. We simply stated that, in view of the exceptional turbulence economy and unpredictable weather, our self-financing capacity will not grow not 6, but will be equivalent to that of 2007, which was a year of record results! And the year 2009 should be better. I have difficulty to see this speech as a disaster for the massacre of the value of our group.

What judgment do you wear on your course of scholarship

It is clear that we have lost our status as a safe haven and performance value. Should now work for explanation. We're not 18 euros! In any rationality, even in the current economic situation, trades of concessions such as ours are valued on average 15 to 20 times their free cash. Only based on the value of our existing assets, Veolia should between 40 and 55 euros. This complements our growth potential. Except to suggest that we have a potential for growth, what I decline.

But why have a second warning on your accounts

Veolia Environnement was faced with unforeseen events. The decline of the dollar and the pound sterling in the first half, then the Australian dollar. Even if our investments are in local currency, the decline of the pound sterling, in view of the conversion, could erase the excellent performance of the United Kingdom activities in our accounts in euros. Similarly, no one could predict that the price of oil lost half of its value year, or the climatic conditions of the summer. In the United States, cyclones caused a power cut that was disrupted during a month our plant in Texas. In Europe, rotten summer resulted in Romania and Czech Republic of the setbacks of the volumes of water use by 19 in one case, and 5 in the other. In China, finally, major cities having been called to finance reconstruction after the earthquake have asked delay for months the planned tariff increases.

Your competitors have not revised their forecast downward. How much do you evaluate the consequences of the economic crisis

We assessed the impact of the economic crisis between 25 and 30 million euros on this end of the year, mainly due to the decrease in the quantities of industrial waste. I find it hard to believe that the vagaries of the weather, the decline of the dollar or the tariff reports in China and the Morocco are that Veolia Environnement.

At any time you have considered to question the strategic model of the company

In thirty years, I've never seen such accumulation of adverse external events. But we are absolutely not in a position of having to sacrifice our strategic choices. The vessel is secure, debt is totally restructured on the short and long term, we are facing a huge development potential in a context of global awareness of environmental issues. Europe discussed the fight against CO2 emissions climate package, California after the Australia faces a problem of management of the water, the need to recycle waste to save the raw became a global issue.

Then what set you this stock market crash

We passed this year 65 to 18 euros, it is clear that we had a communication problem that caused disappointment in the market. But it seems equally clear that the brutality of the stock market fall was due to speculation. Because none of our major shareholders sold its titles. On the contrary: the Dassault family chose to enter the capital of Veolia, considering that the company was undervalued! But, at the same time, a significant flow of sales was caused, at the beginning of year, by catches of profits, and the search for liquidity of hedge funds forced by the financial crisis later. In General, the Veolia Environment action has undergone important short selling that pushed the course down.

How to counter these short sales

We must stop the speculation. I totally agree with banks support plan decided by the Government, but this plan should, in my view, have for consideration the implementation of provisions to regulate speculative activities.

Given the current crisis, it is your debt of 16 billion euros, or 150 of your own funds, not too high

Measure our debt as a percentage of our own funds is not relevant. The Group was born in debt. 8 Years ago, we have inherited the debt of Vivendi. In two years, we have restructured debt and few groups today as solid financial situation! We have essentially as bond financing. Two thirds of our debt is at fixed rates with a maturity of almost 10 years. We have no significant reimbursement deadline before 2012. And I say this clearly: there is no increase in debt or capital increase.

And in the short term, what your cash

Veolia has no liquidity problem. We have confirmed almost $ 5 billion EUR, bank credit lines on which we have drawn 1 billion as a precaution last week. This is in addition a positive cash flow of over $ 2 billion. Therefore, we are not the commercial paper market. Furthermore, the cash flow depends on our net investment, capacity of operational cash flow on the other hand. This last Ebitda will reach this year between 4.1 and 4.2 billion euros, the same level as in 2007, and we are going to make 1 billion from disposals in 2008, 900 million are already secured. Shall be the total we moved probably a little more than the 1.5 billion expected on the years 2008 and 2009. The investment will be limited to 3 billion next year and we will be free positive net cash flow.

The savings plan announced involves t - it layoffs

We announced a plan of savings of 400 million euros by end 2010. But there is no reason to make a plan of dismissal in a company whose turnover will increase by more than 12! On the day investors today, I announce that more than 180 million of savings will be carried out in late 2009 as part of the plan and that the operational results will be improved.

Can degradation of the health of local communities impact your group, particularly if they decide to postpone investments

As I know, customers will continue to pay their water bills, and local communities will continue to impose the tax on the removal of household waste. If they want to save, the cities will rather defer their highways or real estate investments, or entrust the management of their environmental services to operators.