Veolia Environnement: Q1 2013 results – In-line EBIT & 2015 cost-cutting targets up by 60% offset weak EBITDA
BUY, Fair Value EUR13 (+25%)
Veolia released Q1 2013 results which were slightly weaker than expected at the EBITDA level. However, the satisfying contribution of JVs and lower D&A led recurrent EBIT in-line with consensus. The 2015 cost-cutting target was increased to EUR750m from EUR470m (+60%). All else equal, if achieved, this would drive 2015 EPS 35%+ higher than the current level. Assuming 12x 2015 EV/EBIT, EUR280m extra-savings should translate in a ~EUR6/sh gain in valuation.
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