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Welcome to the conference call of Séché Environnement. I'd like to give the floor now to Manuel Andersen and Baptiste Janiaud. You have the floor, gentlemen.
Good evening, everyone. Baptiste Janiaud. I'm with Manuel Andersen. Thank you for connecting for the presentation of our quarterly revenue. This is Q3 2022, Séché Environnement. I'd like to begin by talking to you about some of the highlights over the period, then Manuel will give you some more details on changes in revenue. First of all, the main take away, the main point. We've seen continued buoyant organic growth in all of our scopes. If you look at changes, we see growth in quarterly revenue in Q3, up 16.7% real scope, and organic growth in the third quarter, up 12%. We see momentum in France, plus 11%; and momentum internationally, plus 15%. This confirms the very high level of activity in France and the continued recovery that we saw in the first half that then continued in Q3 2022.
We'd observed a technical point. The company acquired called All'Chem, its acquisition was done on 9 June 2022, isn't part of the figures we are presenting. Furthermore, the company called Assainissement 34, it's a very small company acquired in July of 2022. It's not part of the figures we're presenting to you right now either.
This very good performance in terms of growth means that this enables us to further bolster our targets that we gave to you during the annual presentation, then the half yearly presentation for 2022. Now, we can already announce to you the growth target will be in the higher end of the range we gave you. I remind you, we indicated between plus 5% and plus 10% organic growth during the most recent publication. As I mentioned, we'll be more towards the upper end of that 10%.
Manuel Andersen now will give us a breakdown and give the specifics of the revenue figures. Thank you.
Thank you, Janiaud.
Yes, we can say that the 9-month performance is very similar to the performance we presented to you previously in the half yearly report. Revenue in Q3 continues with previous trends. We've seen strong upticks in the real scope and organically. As of 30 September, we report revenue of EUR 679.5 million -- EUR 697.5 million versus EUR 579 million. This means an increase. As you see on the figure -- on the screen here, this revenue is non-contributed revenue IFRIC 12 investments. These are investments which currently we are carrying out on the [ move ] incinerator in [indiscernible]. Overall amount of the 9 months is EUR 12.2 million versus EUR 7 million last year.
Furthermore, there's the TGAP, which is the general tax on polluting activities, which we collect on behalf of the government. The amount of this TGAP tax in the first 9 months is EUR 41.9 million versus the EUR 34.5 million last year. This big change is mainly due to the increase in the tax rate, the TGAP tax rate per tonne. Contributed revenue, the one that's actually generating margin, is EUR 643.4 million versus EUR 538.1 million a year ago. This means an increase like for -- in a reported data of 19.6%. 13.4% increase like-for-like, which means same currency and currency exchange rate and same scope. This increase in revenue includes the scope effect of EUR 28.5 million, which is both the contribution from the new subsidiary Séché Assainissement in France. And internationally, 2 additional months, January and February, pertaining to Spill Tech, which was consolidated starting on the 1st of March 2021.
Organic growth is strong. Therefore, we -- as Baptiste was saying, we're seeing strong growth in all of our geographies, and in all business activities, particularly service activities, as well as the circular economy business lines.
Now to look at the specific geographies. First of all, France, representing 69.5% of our contributed revenue. Here, we're seeing revenue of some EUR 448 million. This is up 15.2% in reported data. This includes the scope effect over 9 months contribution of Séché Assainissement which is EUR 20 million. We stated for the scope effect, growth is 10% over the 9-month period. This growth, therefore, is sustained particularly in the circular economy sectors, looking positive effects from energy prices and raw material prices, which further demonstrate the interest in recovered energy. These regenerated products that are strategically important, that are available locally, that we can provide, specifically to industry and also to local municipalities.
Regarding Hazard business lines, that's -- we've got a scarcity of facilities, which has a positive effect, pretty positive price effect. Services activities also saw strong growth, especially in the first half of the year. Major contracts in environmental emergency areas.
Internationally, here, we're seeing very strong growth which just further demonstrates the recovery we've begun seeing for several -- we've been seeing for several quarters now.
In reported data, a growth of 31.1%. This includes a scope effect having to do with the contribution of 2 additional months this year from Spill Tech, the environmental agency in South Africa, environmental services. Furthermore, there is another effect, positive currency effect, EUR 4.3 million worth, mainly from the South African rand. Restage for those 2 elements growth still is strong, almost 22%, 21.8% like-for-like. Mainly the volume effect we've seen ramp-up of Mecomer's capacities at our Italian subsidiary, where we made capacity investments in 2021. Furthermore, more generally, there's a recovery in markets which are exposed to raw materials and energy, such as Solarca, works a lot with the petrochemical industry, and Latin America. Think of mining, think of oil, and it is equally true in South Africa.
Let's look more specifically at Q3 revenue. We see fairly comparable growth revenue, contributed revenue in Q3, EUR 214.2 million versus EUR 22.5 million a year ago, up 16.7% like-for-like, up 12% organically. Restated, therefore, for scope effects as well as currency effects.
Next, to look specifically, France. France revenue, EUR 148.9 million, which is up 16.2%, 10.8% like-for-like. We see France is maintaining a pace of growth, organic growth which is high in the third quarter, different from the 2 previous quarters. In the third quarter, we're not seeing any major urgent contract which had bolstered growth previously, but we see that France is coming back now to a more normative pace as expected. The growth is achieved, as I mentioned, briefly in the first 9 months mainly through the circular economy business areas, especially hazardous waste, [indiscernible] recovery of materials, high added-value products, [ petro-sourced ]. This is [indiscernible] recovery of energy as well, production of energy through recovery. There are positive effects of indexation because there are index spot markets. Now, the hazardous waste, the non-hazardous waste, HWC, I mentioned there is a scarcity of facilities here domestically, so prices continue to be good. Services business lines, though we don't -- aren't booking major additional environmental emergency contracts. Nevertheless, things looking good in this area of pollution abatement.
And internationally, we see the quarterly figure growth. Real growth is 18%, 14.8% like-for-like. This confirms the good momentum internationally and recovering international markets. It's the case in all markets, especially those far out of France. Thanks to the quality of acquisitions that we conducted, they're making a contribution to growth in that scope. This is especially true in Europe, Valls Quimica in Italy, and our regenerating activities, chemical purification. Mecomer, I mentioned earlier. Next, South Africa, Spill Tech, and in this quarter especially, Interwaste, which performed beautifully.
Latin America appears more stable like-for-like, and same currency. Due to a difference -- disconnect between markets in Chile and Peru, where we're seeing normative growth again now, they have had booked some big contracts in H1. Now, we're seeing more normative growth rates currently. And then PCB markets, which underperformed slightly, but we know that these are spot markets which didn't contribute much to growth in Q3. Solarca saw a growth of 75% in the quarter, so that's really a strong recovery in markets for industrial maintenance, particularly with petrochemicals industrial clients.
Sequentially now, looking at these trends, we can see revenue in the third quarter is the second best of the 7 previous reports, so we can say that there's very [indiscernible] growth. If we look at this like-for-like, same scope. And we can say this is equally true for the international scope, which maintains very high activity levels [ EUR 65.3 million ].
As I mentioned earlier, France growth is 10.8%, [ EUR 148.9 million ] like-for-like scope. The rate of growth is moving back towards more normative levels. What this means of this growth, is that we're seeing growth in the Non-Hazardous Waste business line. [ 32.4% ] of reported data, 20.2% in like-for-like, so the Non-Hazardous Waste business line is driving growth this quarter. I mentioned earlier positive commercial effects in the French market for HW -- NWH, it's also performing well internationally, especially in South Africa and Interwaste.
Now talk about the Hazardous Waste, HW business line. EUR 132.1 million, seeing growth of 8.7% and [ 7.9% ] like-for-like. The buoyant growth in Hazardous Waste mainly under the French scope. We think of business lines in the circular economies, plus internationally, Solarca, we mentioned services where they are the ones that have been driving growth for this sector of Hazardous Waste.
Next slide, Page 8, is an illustration of the points I've been making. This can be seen by the conclusion of the points I just made. All in all, we can see here strong contribution in the quarter from Services, which includes Assainissement and even restating for that entry into a scope of Séché Assainissement, strong growth here.
Now circular economy, especially in HW -- NWH, we see the things that just alluded to. An increase in Hazardous, we see big contribution from Non-Hazardous Waste as well. Also more stable contributions coming from Hazardous Waste business lines, mainly related to the strong base we already had as of '21, particularly in France.
Now, let's go over to Baptiste for the conclusion.
Thank you, Manuel, for all these explanations.
As Manuel has just said on Slide 8, we can see that growth in Q3 was driven by circular economy activities as well as service activities. This will continue in the last quarter of the year and in all likelihood in further months, considering the potential for growth in these activities which are all in all activities with margins slightly below average margins for this group.
Overall, in terms of trends, we can see on the French part that we have a favorable evolution of our activity. On the circular economies, I was saying and on services overall, we've observed exceptional contracts, exceptionally large contracts between the first half of 2022. And we can say that the evolution during the third quarter hinges on more classic service contracts, [indiscernible] more of a classic total waste management contracts. And these are really underpinning our growth for this third quarter. So we're coming back to a more normal, more standard growth rate after a first half that was impacted by these exceptional contracts.
Internationally, we expect to see this positive trend continue on the markets. No inflection on Solarca on the European part and on the South African part. In all these parts, the trend should be positive and this trend is expected to continue. This leads us overall to confirm our growth target for organic growth. We'll be hitting the upper part of our target bracket, so plus 10% compared to our 2021 perimeter of EUR 736 million, off the top of my head. And this is a level of activity which is going to be in line with expectations.
So just to remind you, the fourth quarter, as we've seen in Slide 6, is a strong basis with a quarterly level for revenue at EUR 198 million. Much more significant than the third -- second and third quarter. The third quarter was at EUR 183 million. And there have been spots on Hazardous Waste in the last part of the year which were significant. So the fourth quarter is ambitious, and it's a strong basis for us to reach our 2022 -- end of 2022 goals.
So these are the main takeaways that we wanted to highlight, and we are now available for any questions you may want to ask.
[Operator Instructions] And we have a first question by [ Nicolas Royot ].
A few questions.
The first one concerning Q4, we believe that the comparison base was quite demanding. Is that why -- so you're saying that the guidance is going to be on the upper bracket, but with plus 13% of organic growth over the year, plus in percent is practically nothing overall. So do you expect a tough situation on industrial clients? Is it something they're not talking with you about? A few weeks earlier, we were talking about normative levels of growth when you gave the first level of guidance for 2022. You said 5%, and now you think that 10% in France on Q3 is standard. So is it because of inflation? It's because I misunderstood something?
Finally, turning to profitability. You talked about services and the circular economy that are driving growth because there's less margin on services. So is an EBITDA margin of 23%, 24%, is still -- is that still the current goal?
Thank you, [ Nicolas ].
These are points that, of course, deserve to be addressed. As of today, we have to be very clear about the numbers. The figures we have available, we are comfortable. We don't see the trends slowing down, so we're comfortable with the guidance we've given.
But as I was saying, the fourth quarter has a strong comparison basis, and we won't be enjoying the exceptional contracts we enjoyed last year. At this point, a fourth quarter in line with the fourth quarter of last year is our estimation at this point.
Concerning the standard growth, maybe I didn't express myself too clearly in the presentation. We're talking about a return to a more normative growth rhythm. We haven't defined any long-term growth in France. We expect it to be around 5%, and growth is slowing down, which means we're going back down to a more normal growth percentage. But it will be high compared to the 5% in percentage, of course, above 5%.
Over the longer term, we will have to have a better idea of the evolution of our potential in the circular economy and in services. We are currently in a very strong position given the attitude of our clients, especially with regards to energy production and the solvent regeneration. Our positioning in the market allows us to take advantage of this growth. The fact that we've diversified the services that we make available to our clients allows us to increase our revenue in services. We observe it during Q3, and I believe that this is structural. It will be a long-term trend.
Will this mean that we will be enjoying normal growth rates which are higher than what we can roughly consider to be our normal growth rates? Well, we need more time to be able to say. What we can see today is that our positions are in line with current trends and the current expectations of our customers. What we see today is that overall, there is an increase of revenue on service activities with lower margins than the overall margins of the group. And these are services that don't have a lot of added value, but they are nevertheless key services. Total waste management, for instance, allows us to offer a gamut of services to our customers and to secure customers with regards to their needs. So this is the first point to keep in mind.
And the circular economy, typically, as of today, in activities that enjoy the source of growth. So for instance, purification, regeneration of solvents. These activities are suffering from the energy crisis in a broader sense, the increase of the price of energy. And so the margin contribution is being eroded.
And on that part, I wanted to highlight the fact that there's a lot of pressure on margins. As we've highlighted at this current point, there is no change in our guidance for our margin level, which remains between 23% to 24% for 2022. I want to explain that a bit more in detail by saying that you cannot directly, mechanically and proportionately translate an increase in turnover in operating margin, given the inflation pressures because of the mix of activities that is enjoying growth.
And now, a question from Jean-Francois Granjon from ODDO BHF.
You've already partially answered some of my questions.
Nevertheless, concerning the organic growth dynamic, should we expect -- given the high level of standard growth, should we expect that growth of revenue internationally will be down a bit? But today, mechanically, we should -- should we expect organic growth that's going to be lower in Q4? And to continue on [ Nicolas' ] question on margin, we're not extrapolating from the guidance for turnover. The fact that we're on the high level of the bracket for EBITDA margin, could you give us the magnitude of the scope effect contribution which hasn't been taken into account as of yet for Assainissement 34 and All'Chem? What will be the turnover contribution for Q3 that will be taken into account a bit later?
So of course, you will be doing your own estimations for Q4. I don't expect any slowdown internationally during Q4. Internationally, on Slide 6, we're talking about EUR 4 million. I don't expect it will be negative on that part, but if you consider that the plus 10% overall from an organic standpoint is conservative, well, this is my message today.
On the basis of a Q4, of a strong Q4, and given what we expect this year, uncertainties on the end of the year and what happened at the end of last year, my message is that we enjoyed a strong level of activity over the last month. Will it happen again? Well, I cannot say as of yet. I can't be more precise in my answer. We just want to say that at least we'll have a turnover in Q4, which will be similar on a national level.
There was the contribution of the scope effect also to address.
What we've indicated is the contribution of activities of acquisitions to our online activities that are up to expectations, and we're talking about EUR 4 million for Assainissement [indiscernible] per year as well.
Concerning the EBITDA bracket, I forgot the last question.
My last question was we talked about it. So you're on the top of your guidance bracket, but not on the top -- for the top line, but not for margin.
So we can't be very precise. But today, overall, we are in line with the bracket. We indicated 23%, 24% because of a very strong increase on activities that are impacted by energy costs for consumables, or because we've had very good activities on services that don't have that much margin [ discrete ] pressure on EBITDA. Of course, this doesn't call into your question, your EBITDA expectations, that's why I'm not going to go over those. But your expectations for EBITDA margin shouldn't be based on our Q3 revenue.
And now, a question from Arnaud Palliez.
Yes, I hope you can hear me properly. Many of my questions have been answered. I wanted nevertheless to talk about external growth and the contribution of acquisitions. In Q4, we'll have a contribution of All'Chem [indiscernible], and there's also the activity at Veolia. Should we expect that to be implemented as soon as Q4?
So concerning the All'Chem and [indiscernible] acquisitions, these are consolidated starting on the first of July. So you'll have half a year on these 2 activities, but they're currently not integrated in numbers we've presented today because we are setting up the information system that will allow us to consolidate the figures as we speak, and this will take a little bit of time. So everything will be impacted on the Q4, there will be no retroactive effect on Q3. Yes, that's the case.
Maybe we'll indicate the level of revenue for the scope. You'll be able to deduct it because we publish all quarters at constant scope. And these are small acquisitions, which aren't going to change things dramatically in terms of your analysis. But I understand why you want to have precise numbers. So this will naturally impact Q4, yes.
So Manuel, that's what you have to do.
Concerning the conclusion of our transaction with Veolia, currently, we are having a discussion with the market authorities, and this consultation is ongoing. The conclusion will be reached between mid-November and mid-December, but we are not in charge. And so closing will happen as soon as we have a decision, but you shouldn't expect anything in terms of revenue for 2022 as far as that acquisition is concerned.
It's a matter of calendar, but this acquisition will happen. We are confident that we will be -- we will get our authorization.
I had a second question concerning something that might have a significant impact on the growth of international revenue, which is doubling the capacity of Mecomer. Is there any way to isolate the progression? This represents for the third quarter.
So I have an idea from quarter-to-quarter, Mecomer has grown by about 30% in terms of revenue. But I wouldn't be able to say precisely the contribution of the price effect or the specific contribution of the increase in capacity. The goal on this evolution of Mecomer is not to instantly desaturate them because if you seek volumes in a desperate way, the price effects are negative. The idea is to scale up the Mecomer facilities while maintaining a positive trend on prices that we expect in Italy. So the capacity increase is done in line with the needs of the market and not at a brisk pace, but we clearly have volume effects that are positive from one quarter to the other.
But when you expect stability for international turnover in Q4, there's an increased contribution of Italy. Yes, that is the case.
My final question is much more general. If we think about 2023, which is the preoccupation for investors currently. In your current forecast, you expect a return to normal rates of growth. But you don't account for significant risk for recession in Europe.
I don't have any crystal ball, of course. I have to confess today -- I mean, when we drafted our budget, our position is broadly there will be weak growth. Good pressure on costs, which would continue. At this juncture, I don't have the results of the budget. But what I can say -- so I cannot tell you -- we're talking about quarterly revenue here. So we can just talk about broad trends, but we can't look ahead all the way through 2023.
But what we are seeing today, to nonetheless answer the first question, we, as far as we're concerned, aren't expecting any deterioration in business in 2023.
There are no further questions in the queue. [Operator Instructions]
Okay, well then thank you very much for taking part. Thank you for your attention. I'll be available if you have any follow-up questions, of course. Have a good evening. Thank you, one and all.
Thank you for taking part in today's call. You can now hang up.