Veolia Environnement S.A. (OTCPK:VEOEY) Q3 2022 Earnings Conference Call November 9, 2022 2:30 AM ET
Company Participants
Estelle Brachlianoff – Chief Executive Officer
Claude Laruelle – Chief Financial Officer
Conference Call Participants
Ajay Patel – Goldman Sachs
Arthur Sitbon – Morgan Stanley
Jenny Ping – Citi
Olly Jeffery – Deutsche Bank
Vincent Ayral – JPMorgan
Tancrede Fulop – Morningstar
Olly Jeffery – Deutsche Bank
Juan Rodriguez – Kepler
Philippe Ourpatian – ODDO BHF
Verity Mitchell – HSBC
Arnaud Palliez – CIC Market Solutions
Estelle Brachlianoff
Good morning ladies and gentlemen. Thank you for connecting to this conference call during which with Claude Laruelle, our CFO we are going to present Veolia’s Nine-Month Results. As you will see both our nine-month results and Q3 results are excellent and allow us to be very confident in our 2022 full year results.
These very strong results are new testaments to the resilience of our business model as well as our capacity to adapt to the new 2022 environment. The integration of SUEZ is going very well, both from a human resource point of view and in operational terms and we are even ahead of the planned synergies at the end of September.
The group’s 220,000 employees all work with the same ambition to make Veolia the anticipated global leader in ecological transformation and to develop solutions to address global resource scarcity and treat pollution.
On page five, you have the Q3 results which are excellent. We combined Veolia and SUEZ in both 2021 and 2022 so that you have a good picture of the financial performance of the combined group as we have of course benefited from a significant perimeter effect coming from the first consolidation of SUEZ activities.
Q3 revenue was close to €9.2 billion, up 13.7% at constant scope and perimeter after plus 12.9% in the first half. This very strong growth was driven by a continued high level of activity and volumes combined with significant price increases both in Waste and in Water. And in Water we have benefited from a dry summer as well as a full order book for our Water Technologies. I shall add that October is in line with Q3 trends.
EBITDA growth in Q3 was very satisfactory up 9.4% versus Q3 2021 excluding last year’s positive one-off of €83 million associated with the completion of the construction of an Energy from Waste unit in Troyes which had no impact at EBIT level and which we had released last year.
After 6.1% in the first half this excellent performance is due notably to the accelerated synergy delivery €46 million in Q3 alone almost as much as in the first semester. In nine months, we have already reached our annual synergy objective of €100 million.
Current EBIT grew very strongly and reached €644 million in Q3, a growth of 17.6% a comparable rhythm to H1. These very strong results enabled us to generate a net free cash flow of €337 million in Q3.
On page six, you can see the nine-month results and their progression at constant scope and perimeter. Our nine-month revenue grew by 13.2% and reached €30.7 billion. A great deal of this growth is attributed to energy prices, but restated for this effect organic growth was still 7%, which is remarkable especially as this growth covers all our business segments; Water, Waste, and Energy.
EBITDA reached €4.533 billion, an increase of plus 5.2% after 6.1% in the first half. Of course the difficult comparison basis with €83 million one-off in 2021 reduces the nine-month growth. But the underlying EBITDA progression is strong across all our businesses.
Current EBIT grew very strongly by 19.4% and reached €2.217 billion. Given the most recent activity trends, I can already confirm that we target the upper range of the EBITDA guidance objective of 4% to 6% progression for the year.
On top of these excellent operational performances, I’m also very happy about the remarkable execution of the integration of SUEZ, easier and quicker than expected and I’m on page seven. First of all, we have now secured all the divestiture processes required by the various antitrust authorities both in terms of price and schedule. And we expect total proceeds above €3 billion with strong value creation.
We’ve obtained the green light from the EU antitrust authorities on the divestment of the hazardous waste activities of SUEZ in France and are about to obtain the final authorization of the CMA on the divestment of the Solid Waste business in the U.K.
All antitrust divestitures will be closed by year-end at very high valuation multiples. If we take the example of the SUEZ Solid Waste business in the U.K., we signed the divestment based on multiple of 16.9 times 2021 EBITDA.
And we are keeping, I shall remind you, the same activities within Veolia the historical Veolia activities, but twice as big.
From an operational and human resource point of view, integration has been a reality in all geographies for several months now and it is a real success. Management teams are merged and work actively together.
The success of the operational integration can be seen in the delivery of the synergies. In only 8.5 months, €98 million of synergies were generated significantly ahead of schedule as €100 million was our annual target if you remember.
This enables us to be very confident in achieving the cumulative €500 million synergies target. And beyond synergies or cost synergies the pooling of assets know-how and technologies, strengthen our development prospects and give Veolia a new dimension.
We are now in the top three in virtually every geography where we are present including just to give you one example the United States in regulated water and hazardous waste.
Page 8, I would like to explain further our capacity to adapt to the new inflation environment which is visible in our nine-month performance of course. 70% of our revenue is indexed with escalation formulas reflecting our cost of factors and therefore protecting our margins.
Escalations are generally computed on the anniversary date of the contract sometimes generating a little bit of lag effect. Typically we are talking here about our municipal activities in water in waste or urban heating as well as a proportion of our tertiary and industrial contract with hospitals for instance.
Be it in municipal water in France with plus 4.6% in the U.S. with plus 6.6% or in Chile with double-digit increases the indexations already obtained in 2022 cover our cost inflations. For the remaining 30% of our revenue, we have a consistent and disciplined pricing policy to pass on to our clients our cost of factors inflation.
We are talking here typically about some of our commercial and industrial activities in Waste or Water Technologies. Our pricing discipline put in place a few years ago has enabled us to pass significant price increases again, in 2022 which covered our cost inflation as well.
You can see many examples on page 8, on the recent price increase and so I won’t mention them all. But in hazardous waste double-digit price increases were passed in Europe and in the U.S. And in C&I waste price increase went from 3% to plus 14% depending on geographies and I would say without loss of customers.
A few detailed comments on our Energy business now and I’m on Page 9. In the current context in Europe of high energy price and supply difficulties, Veolia is not only protected, but also ideally positioned to develop our energy efficiency businesses and increase our local and renewable energy production from waste water or waste.
I remind you that 60% of our revenue in Energy lies in district heating and we have a 40% in energy efficiency services. Urban heating is much more efficient than individual heating from an energy point of view which means the higher the price the more new customers are encouraged to connect to the network as we’ve seen actually in Central and Eastern Europe.
Moreover, tariff increases are adjusted with the cost of fuel. And last but not least, we have secured 100% of our fuel procurement for the upcoming winter and 75% for the winter season 2023, 2024. The current energy crisis is also an opportunity for Veolia, to further develop its energy efficiency business.
I remind you that our business in this sector is to allow our customers to save typically 15% of energy without major construction work on the building, thanks to the optimization of remotely controlled installation via digital and specific know-how.
Finally, we will look for all the local renewable energy sources that are still insufficiently tapped into, such as non-recyclable waste or wastewater and have a very, very interesting example with France, where we aim at being fully energy self-sufficient in France in all our activities within five years. This will be done by optimizing our biogas production from landfill waste by digesting the sludge from wastewater treatment plants to produce methane and by installing photovoltaic panels on all closed landfills.
And what we do for Veolia, of course we can do for our customers. And this is an illustration of the ReSource Plan, which have launched as early as March 2022 and which is already a great success.
Let’s now move to our Q3 commercial wins and I’m on Page 10. A few days ago, I was pleased to sign a landmark agreement on pollution treatment, which shows our leadership in hazardous waste, with two new hazardous waste treatment facilities for the refinery of ADNOC in Abu Dhabi, the fourth largest in the world. Size and location are very significant and we plan to increase significantly as well the initial capacity of 70,000 tonnes by expanding the customer base throughout the Ruwais industrial complex and beyond.
Given the accessible market and the life of the assets, we are talking about more than $1 billion in activity for Veolia. This contract is further evidence of our strong differentiation in the hazardous waste market, where we are the world leader with continued and very strong revenue growth in line with our Impact 2023 strategic plan, which I remind you targets €4 billion revenue by the end of next year.
It is also a great business development in the Middle East, which is a fast-growing geography for Veolia. So hazardous waste treatment as well as for desalination and energy efficiency and we should reach €1 billion of revenue very quickly in this part of the world.
On Page 11, you can see several other examples of new contracts which were won in Water Technologies, which is another strong development axis in the group. The merger between Veolia and SUEZ enabled the creation of the world leader in water technologies with a combined revenue of €4 billion. We signed remarkable contract with pharmaceutical manufacturers like GSK or semiconductors like STM or Micron, new giga factories for electrical vehicles like Li-Cycle and Redwood in United States. These are industrial sectors, which are very promising today and as you know independent of the economic cycle and for which our patented technologies of process water treatment of production of ultrapure water but also of recovery of lithium and treatment of hazardous waste are absolutely key.
The merger with SUEZ through the addition of our know-how offerings and technologies has created a world leader of ecological transformation and positioned the group as a key player of sustainable developments. I shall say I’m doing this presentation in the middle of COP27 so it’s quite an interesting date.
I’m on Page 12. And our company stands for solutions to reduce pollution and preserve resources. For existing solutions and there are many of them our goal is to develop them wildly across all large geographies. And as far as the solution which don’t exist yet innovation and the sharing of our know-how will enable us to invent them.
Moreover we measure our performance, in terms of our impact on our various stakeholders. And this multifaceted performance is deployed largely throughout the group up to the compensation system and operational management. This unique positioning is already recognized by most organizations that rate companies in terms of, sustainable development and ESG.
On Page 13, you have the detail of the €264 million efficiency gains, we have generated over the first nine months of the year. As you can see, we’ve maintained a sustained pace in the efficiency plan and we are perfectly in line with our ambitious 2022 annual target of €350 million. These efficiency gains come on top of the cost synergies, for which we have much — we are much ahead of schedule, as I’ve already mentioned with €98 million already achieved in nine months compared to an annual target of €100 million.
To summarize, and I’m now on Page 14, you can see that Veolia is a very solid group, able to face an economic slowdown with confidence. 85% of our revenue is not exposed to the economic cycle, which gives us a lot of visibility. The indexation of 70% of our revenue as well as our policy of putting pricing and value creation before volume, allow us to face inflation and protect our margin.
We continue to generate a great deal of efficiency gains of, which we retain between one-third and half depending on the years, and that fuels our earnings growth. They will be complemented by €500 million of cumulated merger synergies, which we are ensuring further earnings growth for the years to come, regardless of the macroeconomic environment. Our balance sheet is strong, with a leverage ratio below 3 times after the closing of the divestitures.
And the combined Veolia and SUEZ, has enhanced growth potential thanks to our range of unique offers available. All of this leads us to forecast a solid growth of our results over the next few years. Following our very strong nine-month performance and I’m on Page 15, we of course fully confirm all our targets for 2022, and target to be at the upper end of the guidance range of 4% to 6% increase of EBITDA.
I now hand over to Claude Laruelle, who will detail our nine-month results. Then, we will answer your questions. Claude, the floor is yours.
Claude Laruelle
Thank you, Estelle and good morning, ladies and gentlemen. I’m on Slide 17, showing very strong results of the combined Veolia-SUEZ Group, for the first nine months of 2022. We experienced very strong revenue growth in Q3, even better than in H1 leading to plus 13.2% for the nine months at constant scope and ForEx with two main items: first, continued solid volumes in all our activities; and second, a strong pricing discipline on non-indexed businesses and good indexation on our long-term contracts.
EBITDA is up 5.2% in the upper end of our guidance. As Estelle explained, that figure takes into account the negative impact of €83 million EBITDA one-off in 2021, with no EBIT impact leading to an operating financial asset disposal for Waste-to-Energy plant in France. If you exclude, this one-off, EBITDA is growing by 7.2% for nine months, which is remarkable. Current EBIT is growing very strongly, plus 19.4% and is perfectly in line with our objective to generate €1.1 billion of current net income at year-end.
On the right-hand side of the slide, you can see the ForEx impact on our different main financial KPIs. With euro-dollar exchange rate changing very rapidly, it has a much bigger effect on the debt €616 million as that is booked at closing ForEx rates. Then on the EBITDA, plus €91 million for which it is more progressive, as it’s booked with average ForEx rates over nine months and not yet on a full year basis of course.
The ratio between €616 million for the debt and €91 million for EBITDA is almost seven and it should be close to three when ForEx has stabilized.
Our net debt has slightly decreased compared to H1, and we will be below three times at year-end after all disposals, the working capital reversal and the free cash flow generation of Q4. We will see more details at the end of the presentation.
Moving to slide 18. You can notice, the acceleration of our revenue growth in Q3, with strong Water and Energy and resilient Waste. If you exclude the energy price impact revenue is growing by 7.7% in Q3 that reflects strong price increases and good volumes. France is up 1.8%, with good summer volumes in Water plus 2%; and contract selectivity in our Solid Waste business, especially in our municipal activity.
Rest of Europe continues to grow above 20% with strong performance of Central and Eastern Europe on the Energy segment and again a strong UK Waste business. Rest of the World plus 9.8% is really driven by the US plus 17.9%, with strong tariff increase good Water and Waste volumes on our regulated activities and a very strong hazardous waste business.
Water Technology had a very strong quarter with significant tariff increase in a chemical business for Water Technology and Services WTS that we inherited from SUEZ and strong technology sales in both Veolia Water Technology, VWT and WTS.
On slide 19, you can see the strong increase of all our business in all geographies. It demonstrates that inflation of cost is really passed to our clients in all geographies either by indexation or by voluntary price increase.
Moving to slide 20, and we review our activity by the usual segmentation of our seven business lines. First, Municipal Water. Growth is 6.7% is driven by price indexation and better volumes in Europe and US Water Technology and Works plus 8.9%, with very solid businesses growing fast in both VWT and WTS, as a world leader in many water technology fields.
Bookings are well oriented, and we have a strong pipeline of projects, especially in the Middle East. Solid waste plus 6.2% is driven by price increases and solid volumes. We’ll have more details later in the slide show. Hazardous waste continued to grow at double digit plus 13%, which is remarkable with a very strong performance in the US, Asia and Europe and continuous price increase in H2.
After a very solid Q3, October shows the same trend. Local loops of Energy and Energy Services growth is driven by energy prices and a remarkable performance of the new assets we bought in 2020 in Prague and Budapest. And our industrial services are driven by good commercial activities and energy price increases.
On the next three slides, we have put a new presentation of our business by activity: Water Waste and Energy. And we start by Water on page 21. Our Water revenues significantly increased with the SUEZ acquisition in the US in Chile and in Spain, reinforcing the visibility in our operation, especially in a time of high inflation thanks to strong tariff indexation.
We have put a reminder of the top countries for Veolia, France, US, Spain and Czech Republic, not to mention Chile which is also a strong regulated business. For the first nine months, our Water revenue grew by 8.2% like-for-like compared to 5.9% in H1 thanks to strong volume in all geographies and works during the summer contributing to 3.8% to the Water business growth, and increased price indexation at 3.4%, an acceleration compared to 3.1% in H1. By activity our, Water operations were up 7.6% and our Water Technology revenue grew by 10.7% benefiting from strong price increase in the chemical products for WTS and strong technology sales.
Moving to slide 22. You have a look at the Waste revenue valuation plus 8.2% with strong pricing and resilient volumes. Let’s have a look at the different items. Volumes are up 1.4% with Solid Waste activities in our key countries including UK, Germany, Australia, US and hazardous waste in Europe.
We continued to remain selective in our contract renewal portfolio, especially in our commercial activity in France, which explains a slightly negative net contribution of our commerce. Price increases plus 4.3% continued accelerating compared to H1 at 3.2% as well as the full effect of the price increase decided in H1 and the additional ones implemented in H2.
In our Waste activity, we maintained a strong pricing discipline as we have always preferred the quality of the tonnes and the profitability over the volumes. The scope effect minus 3.4% is mostly coming from the disposal of assets in Australia by Suez to Cleanaway and Remondis and a few hazardous waste assets in Europe, which are to be sold as antitrust remedies and which are no more consolidated. Our hazardous waste business did contribute to the solid performance and continued with strong volumes in October.
And moving to slide 23 and you have the details of our Energy business revenue growth. You can see that 3/4 of the growth or 30% over 40% is coming from energy price increases which are passed through to the clients. Due to a strong commercial momentum in Italy and Spain, we have a significant organic growth of 7.9%. With unfavorable weather in Q1 and Q2 in Central Europe with a mild winter, we have a negative effect of minus 1.7%.
In summary, our combined heat and power generation and our district heating networks continued to drive the growth of our Energy business and delivered a very solid performance due to strong increase of heat prices and very high electricity prices in Europe.
I’m moving to slide 24, with our usual revenue bridge detailing the different variation with a strong organic growth of 13.2% and underlying revenue growth of 7.1%, excluding energy prices. You can notice a positive ForEx impact for 2.5%, linked mostly to a strong US dollar, Australian dollar, renminbi and in H1 the stronger GBP.
Organic growth is really driven by energy prices for almost 50% for more than €1.6 billion or 6.1%. We continued to have a solid commercial momentum in many geographies as Estelle highlighted and this is contributing for 2.8% to the revenue growth.
And the last significant impact is the pricing for Water and Waste for €935 million, coming both from escalation formulas for 70% of our business and voluntary price increases for the remaining 30%, especially in our industrial waste business to cover the inflation.
With the escalation formula taking more into consideration the impact of the 2022 inflation, we see an acceleration of this pricing effect in our revenue. That was 2.8% in H1 and it’s now 3.5% for nine months.
I’m moving to slide 25 and let’s have a look at the EBITDA bridge showing 5.2% organic growth in the upper range of the guidance for the year, which is 4% to 6%. And excluding the one-off effect, it is 7.2%.
It is very similar to the H1 EBITDA bridge with the same business trends. As usual, the main effect of our EBITDA increase is the efficiency and synergies for €362 million, with efficiency plan delivering €264 million, totally in line with our €350 million goal for 2022.
And as Estelle said, the synergies have delivered much more in Q3, €46 million after €52 million in H1 for a total of €98 million. The acceleration is coming from the contribution of the countries that have over delivered in Q3, thanks to the first operational synergies as the combination is well advanced in the fields. The price cost squeeze that also include contracts renegotiation we made in the same trend as H1 for a total of €133 million.
As a reminder, the last item on the bridge for minus €116 million is linked for €33 million, a positive one-off of the SUEZ scope in Q2 2021, especially for WTS in the Middle East on which we have also included the significant one-off at the — for the 2021 operating financial asset disposal for €83 million.
I’m now on Slide 26 and let’s see how the EBITDA increase is boosting the current EBIT which is growing very strongly plus 19.4%. Renewal expenses are at €222 million is almost flat despite the inflation. Amortization and provisions are just slightly up by €27 million. You can notice the Veolia operational financial asset repayment one-off for €83 million in the 2021 column.
Industrial and capital gains are linked to H1 disposal. This line is almost stable. And JVs had a good contribution, up 9% compared to last year due to the resilience of our municipal activities in China, especially our Water activities in China not affected by the COVID lockdown and a good summer.
I’m now on Page 27 on CapEx and free cash flow items to detail the Q3 net free cash flow generation of €337 million which is a very good performance. It’s coming from a strong EBITDA contribution, stable working capital compared to H1 and controlled level of CapEx in Q3.
For nine months, with strong EBITDA generation, well-managed industrial CapEx of €2.1 billion and a stable working capital requirement compared to June due to the significant increase of our revenue and the usual seasonality of the working capital in our business the free cash flow is positive. And as we told you, the working capital will be reversed by year-end generating very significant free cash flow in Q4.
Regarding the net financial debt of €22.1 billion, it is down in Q3 before ForEx impact by €350 million, thanks to a good free cash flow generation. As I said at the beginning of my presentation, the ForEx impact is much stronger on the debt €616 million than on the EBITDA, €91 million due to the very rapid evolution of ForEx in many countries. We will gradually get the full impact on the EBITDA as I explained starting in Q4.
Taking into consideration, all antitrust disposal for the European Commission and in the UK plus the other disposals that are under process for a total of more than €3 billion and the strong free cash flow generation in Q4 that will include the reversal of the working capital, I can confirm that the leverage ratio will be below three times at the end of the year when all disposals will be closed.
On Slide 28, you have the main debt variation with the strong impact of the SUEZ transaction for almost €10.5 billion and the other items I have already mentioned.
And I’m moving now to Slide 29. After the strong Q3 performance, I can fully confirm our 2022 guidance with an EBITDA increase that will be at the upper end of the 4% to 6% range and current net income of around €1.1 billion or an increase of more than 20%. Thank you for your attention.
Estelle Brachlianoff
Thank you, Claude. And now, I will allow you to ask questions if you have some.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] The first question comes from Ajay Patel from Goldman Sachs. Sir, please go ahead.
Ajay Patel
Good morning. And thank you very much for the presentation. I have two questions please. Firstly, is there any insight you could give to unhedged position that could take advantage of higher power prices your net beneficiary. I just wanted to understand how much of an open exposure that kind of we could look at to maybe look for next year’s numbers and the coming quarter?
And then secondly, just on Slide 25 where you give the EBITDA growth bridge. I was just wondering about the price net of cost inflation number. As we — is the right way to think about this is as we go through the quarters there should be a reducing number here i.e., the negative becomes lower, and especially, as we go into next year, or is this broadly going to stay sort of at this sort of run rate per quarter or over this case of nine months. Any insights would be really helpful. Thank you.
Estelle Brachlianoff
Okay. Thank you for your question. I will start, and will allow Claude to put additional color to the answer. In terms of the power price, I guess, three basic elements if I may before we give you a little bit of element on that. One is we are a net producer of electricity in Veolia. That’s the first fact.
The second is the fact that we produce electricity as a byproduct. So we’re not power generation as you know big utilities you would have in mind. So we produce electricity as a byproduct with energy from waste as a byproduct of our cogeneration units and producing heat. So, I guess, therefore the numbers you will have in mind are counted in terawatt-hour as opposed to more than that.
The third element is the fact that therefore we’ve always wanted to protect ourselves from the volatility of the price of power. And we have a hedging policy which means we sell in advance and we actually buy what we have to buy in advance as well over three years, which means that we are benefiting from some positive effect of power price but with a little bit of lagging effect and with kind of amortization by the fact that we are hedged.
Typically for next year we’ve already in France sold almost 90% of our position; and in the UK more than 65%. So that’s quite typical. So we sold that progressively throughout the year. So, yes, there will be a positive impact but don’t do I guess a multiplication on the spot price of electricity where we are voluntary trying to hedge this. So yes a positive effect but which is counting in dozens of million euros as opposed to hundreds if you want. Claude, second question?
Claude Laruelle
And to answer the second question you are mentioning the price net of cost inflation. This — you have two effects. You have this first effect and also the contract renegotiation. In terms of contract renegotiation you know that it’s part of the business model of Veolia. We have long-term contracts. And we — because we know how to be efficient and — very efficient this is what we sell to clients.
When we are at the end of the contract and we renegotiate the contract and we renew our contracts we give back part of the value creation each time and we continue for another long-term contract and also to find efficiency gains. So it is the normal course of business that will not change and it is a significant portion of the €133 million.
On the other hand as we have talked about indexation and as inflation was growing faster this year indexation you know it’s progressive. This is what I have highlighted regarding the price indexation in our contracts on the revenue side. So we will see — we have seen a gradual effect of the indexation in 2022. So depending on the rhythm of indexation and also the inflation growth in 2023 that can vary. So it really depends on how the inflation will go in 2023 to answer your question.
Estelle Brachlianoff
And in addition to what Claude said on the price-cost squeeze shall I remind that we’ve been on the other hand delivering for now pretty much 10 years consequently very, very good and high efficiency gains and cost cutting on which we retain between 30% and 50%. So it more than compensates for the price-cost squeeze and the value creation we have to give back to our customers at the end of the contract. So we are able to grow our margin thanks to this efficiency plan typically that we retain between 30% and 50%.
Ajay Patel
Fantastic. Thank you very much. Great answers.
Operator
The next question comes from Arthur Sitbon from Morgan Stanley. Sir, please go ahead.
Arthur Sitbon
Yes, hello. Thanks for taking my question. The first one is on recycled prices. I think you still have, well, a lower but still positive impact in the third quarter from recycled prices on your Waste business. I was wondering what you expect for the next quarter? And why it is positive in 3Q despite the strong fall in paper prices?
The second question is on the PPA charge related to the Suez acquisition. I was wondering when we could hear news on that? And what impact it could have on your P&L?
And my last question is well given your performance at the end of nine months and given the fact that there is I think easy comps for the Q4 with a negative one-off in Q4 last year I was wondering what led you not to increase your guidance for the year? Are there any potential negatives in Q4 that we’re not aware of, or any thoughts on that would be helpful. Thank you very much.
Estelle Brachlianoff
I will start by answering your third question and let Claude answer the first and the second one. So I guess we are very confident we should achieve our guidance for the year, which I remind you is very good growth on all across the board because it’s a plus 4% to 6% EBITDA increase, plus a 20% net result increase just to mention two figures. So I think it’s an ambitious growth and we are very happy we should reach that.
I’ve just said this morning that we target the upper part of the range in EBITDA guidance. So if you ask, okay, why should I not raise the guidance I guess we are on the 9th of November. And in Veolia we have a guidance, which is a yearly one and it’s a matter of principle like we target the higher we can, but the guidance is a yearly guidance. It’s not meant to change that every quarter. And again an element of understanding for you is the fact that we target the upper part of the range for the EBITDA growth.
Claude Laruelle
And Arthur I can confirm on recycled prices that we have a positive impact for Q3 both on revenue and EBITDA. So you understand that for Q4 that will be slightly different, but you understand the full confidence that we have for the Q4 delivery. And with price effect with very strong electricity prices, we are talking to our Waste BUs. They are very confident for Q4. So we expect and this is the reason why we have said that we’ll be in the upper range of the guidance after a very good month of October we will deliver a strong Q4.
So in terms of PPA charges, we are still working on it. It’s a massive exercise for Veolia, because we have to work with all the different BUs. So I would say that the wholesale price did not help a lot. Because we are on the wholesale price for a long period of time, so we had a full range of work I mean still under process. So we have not finalized the numbers yet, and we aim to finalize the numbers by the end of the year because the final target is January 18th. So we will release for the full year 2022 results that will be on March 2nd, the PPA number. So you will have those numbers released by — with the full set of results for 2022 that year.
Arthur Sitbon
Thank you.
Operator
The next question comes from Jenny Ping from Citi. Madam, please go ahead.
Jenny Ping
Thank you very much. Two questions please. One just going back to slide 22. You mentioned briefly around this negative 1.3%, commerce and selectivity impact. I just wondered whether you can give a little bit more clarity around what this is. Is this customer’s actually not having the volumes so therefore, you’re walking away from some of the contracts, or are they not having the affordability, so you’re walking away? So some color around that would be great. And then just following on from the previous PPA question, can I just confirm that you will or will not be reporting EPS numbers with PPAs in there? Thanks.
Estelle Brachlianoff
Just on the first part of your question, we’re not talking about like customers, who couldn’t afford our service or anything like that. And I guess in a way, it shouldn’t be news, because we’ve been sending the message of value over volume for a few quarters now, and a few – I mean, you know that, probably more two or three years something like that, because we want to focus the attention of all our teams on where we can create the most value, and where we can have the most differentiation and the customers are ready to pay for that, and a very high level of service.
So typically here, when we walk away we would be talking about municipal waste collection contract where there is no differentiation at times. There is no treatment associated with it. And in some tenders, we see the lowest price is the only criteria for selecting a service provider, plus you have to buy trucks, so it could be as well CapEx intensive. And anything we’re trying to do in terms of say digitalization is not even contemplated.
When you tick all, or you don’t tick any of those boxes we at times don’t even answer to the tenders. So that’s why we are very selective. And typically, in the municipal waste collection activity, we still answer to many tenders when we think we can make the difference and the customers are ready to pay for the quality of the service we offer. But when it’s not the case, we just simply walk away. So in a way, it’s a voluntary minus something in terms of volume that you have on the slide 22. Claude, maybe on the second question?
Claude Laruelle
Yes, yes. So when we highlighted the value creation for the SUEZ acquisition, as a reminder 10% accretion this year, and 40% accretion in 2024, it’s without PPA, before PPA impact. So to answer your question, yes, we will report EPS before PPA impact. So you can understand the value creation of the SUEZ acquisition, of course, compared to the Veolia stand-alone. So to answer your question, yes, we will report EPS before PPA.
Jenny Ping
Brilliant. Thank you so much.
Operator
The next question comes from Olly Jeffery from Deutsche Bank. Sir, please go ahead.
Olly Jeffery
Thank you very much. Two questions for me, please. The first one is just the continuation of talking about the full year guidance. With regards to the €1.1 billion net income you mentioned October has been in line with Q3 trends. You seem – the impression I get is you seem very confident that, you’re going to see the €1.1 billion. And the reality is that, if we continue to have a mild impact from industrial production and waste volumes, should we now think of this somewhere landing between potentially up to €1.2 billion for the full year? I’m just trying to get a sense of, if we don’t see a slowdown in the rest of the year in your business, where could the net income number come up to in terms of a range? Could it be €1.1 billion to €1.2 billion or even beyond that perhaps? So any view on that would be very helpful.
And the second question is just on inflation. As you pointed out on the slide, in the presentation that you’re well protected against inflation and broadly a net neutral impact. But I just would like to get some of your thoughts on 2023 and inflation, because the largest component of your cost base is wages. I believe a large amount of your wage increases would have gone through at the start of this year, before much of the impact of inflation have been seen. So do you have a view for the next year, if you will be a net neutral impact from inflation, or is it simply too early to tell because we haven’t gone through the round of the annual process of the majority of the wage increases? So your thoughts on inflation and the net impact on the business for 2023, how do you see it would be very helpful? Thank you.
Estelle Brachlianoff
So, I guess, I would start with the guidance, again. I think, I’m asked each time we publish a very good result and — like we’ve been publishing very good results for a few quarters, and few is probably not the right word. I think, it’s really like a dozen or something like that, I should count them.
Each time I’m asked or before me Antoine was asked okay should we raise the guidance. So I want — like again guidance is an annual objective. And again plus 20% increase in net result is exactly what we’ve guided for this year leading to €1.1 billion and it’s a very good performance given the global context we just highlighted in terms of inflation and the energy crisis in Europe and so on and so forth. So I’m very happy and confident we should aim at that and we will deliver that. But, I guess, as far as the rest is concerned I will let you do your own bet because I’m more into delivering what we promised but — and I think it’s important we stick to that.
In terms of the — leading into 2023, I guess, two elements but we have a natural increase in our revenue base by the full year effect if you want of indexation because the number we published are the nine months. But, of course, we had anniversary date in January, in April, in July, in September and so on and so forth. So in a way there will be a natural already granted on the computed indexation which will allude to a natural increase as well in 2023 just by the full year effect of the indexation we’ve seen throughout the year.
Water France is a good example. I share the indexation figures where we had plus 3.8% indexation year-to-date but plus 4.3% in Q3 which means we’ll be beyond 5% probably at one point in the next few weeks if you look at the global effect of that…
Claude Laruelle
Took as an example.
Estelle Brachlianoff
…which means on the cost base it goes in the same — in parallel if you want. And everything we do including in wages is to ensure that our cost base doesn’t increase by more than the indexation we have and you know that we protect our margin.
In terms of wages increase, we’ve already granted wages increase for the year including in September another series of wage increase in France only for the lower wage — lower paid people in the organization. But we’ve checked each time that which was covered by the indexation we already had computed. So fully protected including for the wage increase and the pressure on wages that we’ve seen everywhere.
I’ve just given you the example in France. So we’ll be at more than 5% of indexation and we have granted roughly around 5% of wages increase for the lower paid and less than that for the higher paid in the organization.
Olly Jeffery
Thank you.
Operator
The next question comes from Vincent Ayral from JPMorgan. Sir, please go ahead.
Vincent Ayral
Yes. Good morning. Thank you for the presentation and the added slides that was interesting. A quick one. We tend to have a lot of top-line. I’m interested in EBITDA impact. We had a very, very strong Q3, especially, in Water with the hot weather. So could you help us and isolate what was the impact there in order to help update and better understand the dynamic there.
The second question I would have is actually a follow-up. It’s already been asked, but I’d like to follow up for more detail. It’s regarding the power exposure merchant exposure. You have activities in EFW cogen district heating. Cogen and district heating is mostly a cost plus. EFW is not.
Could you give us some order of magnitude of the unhedged volumes in terawatt-hours you have for 2023 and 2024? You’ve given percentages but we don’t necessarily have a clear split of how much terawatt-hours is produced where. So that would be extremely useful.
And the last question is regarding Waste activity. Could you give us a bit of color on the exposure per industry and what the dynamics you’re seeing on the ground at the moment. We see that Waste volumes seemed still resilient in Q3 but some color at an industry-specific would be very interesting. Thank you.
Estelle Brachlianoff
Okay. I will just start with the first two questions and I’ll hand over to Claude. On the – and the Claude will complement. But just to say if your question is how come we’ve gone we’ve been able to deliver plus 9.3% like EBITDA growth in Q3, which is a very, very strong result, which I would agree yes, we’ve been helped by the hot weather this summer but not only and just efficiency plan was a big help. But the other very strong component is the synergies.
And I would like to highlight that because it’s not only I guess weather element. There is I wouldn’t say self-help but there is an element of we’re not only resilient, we’re very agile and quick to delivering the synergies with SUEZ. And again to being able to achieve our annual target in less than nine months is a very, very, very strong performance I’m super happy with.
And we did a lot of preparation and a very, very good quality of execution. So I guess it’s really the two together which has helped to deliver some strong EBITDA growth, such as the plus 9%.
In terms of power, I will let Claude give you terawatt-hour figures. But just in terms of Waste activity and you’re right, unhedged part of it is the electricity we generate in our Waste-to-Energy activities typically in the UK with PFI. In an example like that, we are on the free market if you want. So it’s not a regulated market as such. So we will benefit and we are benefiting from higher power price.
We’ve hedged part of it over three years, as I’ve explained plus we have some profit sharing with local authorities. So it’s the mixture of all that which will lead to in the end plus a few dozens of millions of euros as I explained of EBITDA. So you have to take into account the hedging as well as the sharing profit with the local authorities. But maybe in terawatt-hour…
Claude Laruelle
In terawatt-hour to give you numbers in France, we are producing 1.2 terawatt-hours and we are selling 0.5 on the free market. And in the UK it’s 1.5 terawatt-hours and everything is sold on the market. And as Estelle mentioned, we told you that during 2022, we did not fully benefit from the high price of electricity because it was hedged in 2021 for most of it. And so we have this gradual effect to be able to give you a guidance at the start of the year including of course the hedging policy of the electricity.
And the last question was in the Waste activity. What we told you is very clear last fall. In October, we are very much aligned with what we have seen in Q3. So we continue and the latest data I got from the UK, the U.K. is exactly at the same trend from C&I as it is in Q3. So we continue to see a good momentum. We continue also to see the same – let’s take hazardous waste. October hazardous waste, Europe is very strong same in the US. So we continue to have the same momentum in October as what we have seen in Q3.
Vincent Ayral
Thank you very much.
Operator
We have no further questions. [Operator Instructions]. We have a new question from Tancrede Fulop from Morningstar. Please go ahead.
Tancrede Fulop
Hello, good morning. Thank you for taking my question. I have just one. If you could share your view on the cardboard prices and maybe tell us what are the drivers of the drop of price — of the recent drop in prices, if it is a slowdown in e-commerce or overcapacity and maybe share your view on the price evolution going forward. Thank you.
A – Claude Laruelle
So in terms of recycled prices, the main evolution of course is the cardboard. So what we have seen, we have seen the shutdown of a couple of plants in Germany. We understand that it was also linked to a high inventory. So high inventory, will be resolved gradually. So we don’t — so we saw the cardboard price going down, but it is more than compensated in Q3 and it will be in Q4, by high electricity prices. So when you look at the cardboard today, the market is slow, because we have a slowdown in e-commerce on one side, and also we have this shutdown in Germany. That will not last forever. So we’ll see in our view, a gradual — a better effect in the months and the quarters to come. Estelle, maybe you want to add something?
Estelle Brachlianoff
No. I think that’s – again, the underlying trend of recyclates, that’s what I want to add on the mid- and long-term basis. The need to have plastic recycled as opposed to virgin out of Veolia, the need to have cardboards linked with e-commerce, recycled and so on and so forth is here to stay and to grow over the years. And that’s what we’ve seen. If you de-zoom, if you want that’s what we’ve seen, and that’s what we anticipate. Like the scarcity of natural resource, is not only here to stay, but even to be reinforced. Hence, the solution which is recycling and circular economy, is here to be developed.
Tancrede Fulop
Very interesting. Thank you.
Operator
The next question comes from Olly Jeffery from Deutsche Bank. Jeff, Please go ahead.
Olly Jeffery
Thank you. Two follow-ups, please. The first one is just on China. Because of the way in which that business is structured, it’s not always obvious the impact that you’ve had from that business this year. So sorry, to say that more, clearly. Can you say for the nine months of the year and possibly for the full year as well, what the EBITDA slowdown impact you’ve seen from China. And also both at the EBITDA and the net income level, if you were able to give that for the full year or nine months that would be very helpful, just to get a sense of the scale that that slowdown is causing on the business.
And then just a follow-up on the recyclates really. When I look at — if I see recyclate prices stay where they are for next year currently for cardboard, I see that as roughly being a €60 million EBITDA headwind into next year. If cardboard and paper prices stayed at the same level, would you agree that the headwind into next year at the EBITDA level, is around that mid-double-digit level? Thank you.
Estelle Brachlianoff
So, globally to answer so on China, we’ve seen a drop obviously, of the level of activity in China following the shutdown in the spring in Shanghai in particular, which we have published at that time. What we see now is going up to a more standard level, what we’ve seen in Q3 and what we anticipate will go on in Q4. So I guess, it’s coming back to a more normal level of activity in China. And that’s of course, included in the numbers.
In terms of the effect of recyclate price ups and down, you have a good idea on our bridge, which was published where we published the effect in nine months and you have the answer to your question looking at the bridge here. And you can anticipate, if they were to stay at the lowest level they are now what would be the potential negative impact going into next year. But on the other hand as Claude said, we anticipate a positive impact on the power price with all the lagging effect and the sharing with the customer, that we’ve explained. So all in all, we don’t anticipate the net effect to be negative, if you want of the power plus and the recyclate minus, if the price were to stay where they are.
Olly Jeffery
Okay
Operator
The next question comes from Juan Rodriguez from Kepler. Sir, please go ahead.
Juan Rodriguez
Thank you. Good morning. And thank you for taking my questions. I have two if I may. The first is on the synergies going ahead of expectations. So I want to better understand what is going on that. it’s better than initially expected.
And I want to confirm there are no sales synergies within your €98 million performance? And then, given this that — or the confirmation that the €500 million, that you’re targeting is still ex-SUEZ U.K. disposal. So that will be the first one.
And the second one is I want to better understand, the new ADNOC hazardous waste project. You first signaled that you were targeting, a €1 billion revenue for those assets. I want to understand better the horizon where you’re expecting to reach this €1 billion target.
And the second is what could be expected in terms of the profitability, I guess, on the EBITDA or the margins broadly in line with all the hazardous waste that you have for the group. Thank you.
Estelle Brachlianoff
So on the synergies a few different questions. Why are we going ahead of plan? Because it was well prepared well executed, that’s the global answer. And in terms of to give you a little bit more color, we started the first part of the year with more HQ type of synergies typically like having two teams going from two different buildings in the same city into saving rent by being into the same HQ, which we’ve seen across the globe.
Now we’ve moved in the third quarter, into more operational type of synergies. Typically in Australia, in the U.S., or in Latin America we are delivering very, very good as in millions of euro in each of those geographies in the third quarter only; of synergies which are more operational as in you know like rounds merger in Australia typically or in the U.S.A. combining our non waste water assets from the SUEZ and Veolia in this country. So very operational and very I guess, deep into the organization already if you want.
In terms of the target, I can confirm all the numbers I’ve mentioned. So the €100 million — or €98 million already at the end of Q3 as well as the target €500 million are cost synergies only. So they don’t include revenue synergies. And I’m able to confirm that we’ll achieve €500 million cost synergies cumulated, irrespective of the fact that we are selling the SUEZ U.K. business. So the answer is yes. In terms of the €1 billion target in the Middle East, Claude, do you want to take that one?
Claude Laruelle
So the €1 billion, you are talking about the contract that we have just signed. So we are very pleased to have signed this contract. It has been a long negotiation with ADNOC. But we are very pleased to have this very significant customer part of our customer portfolio.
So the target in terms of revenue first is the revenue is around €50 million. And we are transforming a plant that was run by ADNOC into a merchant plant. And so the target for EBITDA is around as you have said what we have for hazardous waste which is around 20% EBITDA target.
Estelle Brachlianoff
And I expect to double the capacity of the plant in the next five years or something like that.
Juan Rodriguez
Perfect. Quite clear. Thank you, guys.
Operator
The next question comes from Philippe Ourpatian from ODDO BHF. Sir, please go ahead.
Philippe Ourpatian
Yes. Good morning to all of you. I have in fact three questions, quite very easy. You mentioned — you just mentioned that the €500 million were cost synergies and excluding any revenue synergies.
Have you started to work on the revenue synergies? Is there some extraction to be expected in Q4, or I do suppose 2023 one of the most easy way would be to offer energy services to the former SUEZ clients which have not had this opportunity regarding the SUEZ perimeter. Where are you in this area? That’s the first question.
The second one is concerning and specifically for Claude, the U.S. fiscal tax perimeter. Where are you about the integration of the U.S. regulated water activity in this fiscal perimeter in order to benefit from the compensation of the tax credit Veolia had versus the tax paid in the U.S. If you just remind us also the amount of the tax credit in this area?
And the last question is more let’s say, a general one. You’re already advanced regarding your cost cutting, mainly linked to — I mean, the — globally, I would say, the €500 million, but also cost-cutting on the bracket stand-alone basis the €350 million. If there is an economic slowdown, let’s say, as hypothesis what kind of additional cost cutting you would be able to extract just to illustrate your capacity to be a little bit more agile. Many thanks.
Estelle Brachlianoff
I will take maybe the first and the last one and let Claude answer. As you mentioned, you want Claude to answer to that one so, I am very, very pleased to have him answer to the tax in the US one.
So in terms of synergies of revenue, you’re right, we’re targeting as well some synergies of revenue. Typically, what are we talking about? And we started now, you’re right, like selling energy services to ex-Suez customers. Suez, as you know, didn’t have any energy activities quite contrary to Veolia is an obvious one.
And as you can imagine, with the energy crisis in Europe, everything we do to tap into untapped sources of energy such as non-recyclable waste or wastewater is very valuable as its local renewable energy as opposed to importing fossil fuels. So, I guess, everything which has to do with biogas and RDF, as we speak, is very, very much a big push on the economical and geopolitical standpoint in Europe.
But we have, as well, a lot of other revenue synergies in mind. And when I say, in mind, which are planned and with a specific working group to be delivered. One is by merging the activities of VWT and WTS. So our portfolios — combined portfolios of Water Technologies.
And just to give you an idea to put evapo crystallization together with membrane is a perfect solution for a lot of industrial customers which are facing water scarcity, typically mining in the south of the world. So there is another source of synergies, a large one here.
A third example, if you allow me, would be the reuse of water, because we have great technologies in Veolia, but we didn’t have so much of references yet, which we’ve combined with the — now Veolia activities in Spain, as well as in the western part of the US, where they’ve developed the reuse water much earlier on than typically France has. So it’s three examples of revenue synergies on which we’re talking about, but I can confirm the target of €500 million is only covering cost synergies.
In terms of your third question, okay, what-if scenario. So I had the what-if scenario on like economic slowdown and whatever, I’d rather give you real examples of what we’ve been able to deliver. And it’s not such a long time ago, because we’re talking about the COVID moment, where you remember that in addition of our efficiency plan, we’ve launched a recover and adapt plan which was very specific and an additional cost-cutting plan. And that has allowed us to come back to the pre-COVID results in less than six months. And that was between the spring 2020 and the autumn 2020.
And if you remember, well, in the autumn 2020, we’re not at all out of the woods in terms of general vaccination or COVID altogether. So that’s a real example of our agility and ability to deliver, in case we are facing specific headwinds. Maybe, Claude on the specific question to you.
Claude Laruelle
Yes. For the tax credit, which is a little bit more than $300 million, $330 million to be precise. In order to take — to get the tax benefit, we have to merge Veolia North America with Suez North America. So we have to do the combination. So the combination has been prepared and it will be done this month.
It has been a lot of work, massive work done by the US teams; prepared under whole separate management. And now it’s ready to be implemented this year before year-end, in November, this month in fact. When — so we will get the full benefit in 2023 and in 2024 up until 2026, the full benefit of this tax group that we have created — that we will have created at the end of the month. That’s the reason why when we have talked about what will be the tax rate for Veolia, we’re high this year we are around 29%.
So, we will be able to decrease this tax rate one-by-one year-by-year in order to reach our goal which is around 25%. So, we are creating the tax group that will give a benefit next year Philippe. And with other countries, we will get also other benefits as we will create also tax integration in other countries.
Philippe Ourpatian
Many thanks. Just one — maybe
Operator
Go ahead.
Philippe Ourpatian
I have an additional comment, yes. Just — my question was not exactly your capacity to recover. I was discussing about the potential. I was discussing about the potential additional synergy. But as the fact that when the synergies are done it’s difficult to duplicate them. The sources of the reserve of synergy are still existing in case of economic slowdown it was really the sense of my question in fact.
Estelle Brachlianoff
Okay. So, maybe I misunderstood your question. I guess we have big additional sources of not only I would say cost-cutting, but I would say efficiency altogether with the ReSource plan I’ve launched in March this year which is about energy savings and producing more energy. So, this is an additional one on top of the traditional efficiency plan as well as the cost synergies.
And we are already like preparing all the projects to be able to deliver on that one. So, energy is a big potential for Veolia to be expanded altogether based on our Waste and Water activities if you want on top of, of course, the traditional energy activities.
I shall remember that we are already number two in the market in the district heating worldwide and one of the top players in the energy efficiency market as well. And as I said energy efficiency is a market which is meant to be developed together with the high price of energy as we speak.
Philippe Ourpatian
Very clear. Many thanks.
Operator
The next question comes from Verity from HSBC. Please go ahead.
Verity Mitchell
Thank you for the presentation and the extra disclosure. I just wanted to ask about the timing of completion of the SUEZ acquisition of the UK Waste and also about rising interest rates and the need for new debt perhaps in 2023. So, how your balance sheet — you’ve given some targets but how you see — whether you’ll be able to avoid the pressure on rising interest rates in your business expansion. So, that’s my first question.
And my second one is just on page 20. And I was just interested how strong your industrial services segment towards. And you mentioned that that has been strong growth in Europe. I mean do you see that continuing? And was that a surprise, or is that very much in line? It seems a very positive figure. Thank you.
Estelle Brachlianoff
So, on the first question on basically as I understand when would we have the clearance the full clearance of the CMA if I translate well my understanding of your question. The answer is imminent, imminent as in days as we already have been granted what’s called the findings — or the final undertaking sorry. And the last element is for the CMA to approve the buyer which is again very imminent which means that we anticipate the closing of the sale by year-end.
In terms of the interest rate and industrial services, I will let Claude answer. Maybe just a specific comment as in altogether, when we say with Veolia we have a municipal customer base and an industrial customer base, actually we should say more that we have an industrial and customer base, because we group everything which is not municipal into the category in our portfolio, which means that we are talking from like pharmaceutical companies through to large hospitals for instance in the category, which we call industry. But Claude maybe…
Claude Laruelle
Yes. And part of it is also, we are delivering some energy. We are delivering services could be water services, energy services, but also sometimes we provide the energy to the client, which is also a pass-through to the client. For example, the business that we have for industrial customers in Spain is heat and power generation and we provide the gas. So part of the inflation is coming — part of the growth is coming from the inflation of energy prices. And the second part is very promising, as Estelle explained, is growing and growing — the growing number of contracts that we have on these segments, which is very promising, because we see more and more clients asking for energy savings as energy and energy prices are very high. So it’s a promising segment.
The second — your second question about the rising interest rates. So the first thing to — as a reminder, 85% of our debt is at fixed rate. And if you look at the remaining part we will be cash-rich at the end of the year after we have sold all the disposals. So in front of the variable debt, we will have the cash: cash coming from the UK, cash coming from also the antitrust disposal. So we said more than €3 billion will be disposed. So we’ll be cash-rich in order to have this cash-rich in front of the variable debt. And in terms of schedule of emission of new bonds, we have no need for refinancing. We have no need to refinance any bond before — we will reimburse bonds at the end of 2023 sorry, but we have no need to reissue new bonds in 2023.
Verity Mitchell
Great. Thank you.
Estelle Brachlianoff
Maybe one last question.
Operator
Yes. The last question comes from Arnaud Palliez from CIC Market Solutions. Sir, please go ahead.
Arnaud Palliez
Yes. Good morning everyone. I have just one remaining question about financing cost evolution — two questions in fact. The first one you mentioned on Page 27 of the slide show the €30 million savings coming from the repurchase of a GBP note. So I would like to know if you have some other opportunities of this type for repurchasing existing bonds?
And the second question is also part of your debt is in strong currencies such as US dollar. So I would like to know also what proportion of your debt is denominated in strong currencies and what is the impact on the financing costs?
Claude Laruelle
So to answer the first question, yes, we took the opportunity, I have to say of struggling UK in terms of Head of UK and rising interest rates in October in order to secure a very nice financial operation, because we had the rising interest rates in the UK above 4%, plus the spread that we put on top of it we were able to repurchase €535 million of this GBP note ending in 2037 at 6% — above 6% coupon for zero impact on the P&L. I repeat zero impact on the P&L. And we will have of course the savings of €30 million next year. So that was a very nice financial operation.
And we see an additional opportunity also for a very long-term debt. We still have a remaining €300 million of long-term debt in the US so expiring in 2038. So we will have this long-term debt, we will try to repurchase this long-term debt and we are launching in fact the operation this week in order to try to get as much as we can we have said up to €300 million, which is a remaining part in order again to reduce the financial cost for next year.
So if you look your second question is your — in currency what is in currency. So first of all you have to look at what is the growth, which is boosted by SUEZ in fact. And we have — in terms of currency around $10 billion of — 10%, sorry 10% of the debt which is in local currency and with impact of strong — in dollar — sorry is 10% of US dollar debt to answer precisely your question.
Arnaud Palliez
Okay.
Claude Laruelle
Okay 10% of US dollar.
Arnaud Palliez
Yes. Yes. Thank you.
Claude Laruelle
Thank you.
Estelle Brachlianoff
Okay. Thank you very much, and for this conference call again very good set of results. Confident for the rest of the year and for the years ahead given the full potential we have in the company, including positioning in very uniquely markets of ecological transformation. Thank you very much.
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