Antoine Frérot is overhauling France’s water-and-waste champion

WALK along Sugar Road in Aubervilliers, north-east of Paris, and it is obvious how a formerly scruffy area is gentrifying. New office blocks, a shopping mall and bistros have appeared in recent years, filling spaces left after wrecking balls flattened warehouses. Along a canal previously used by barges, commuter ferries deliver workers from richer parts of the city. A district long known for slums, cheap housing and support for the Communist Party is becoming a business hub—Chanel, a fashion firm, as well as several film producers and studios, have moved in and big banks are expected next.

The district’s centrepiece is a U-shaped glass block, the headquarters of Veolia, the world’s largest water-and-waste group. The building opened in January, after the firm moved out of central Paris to save costs and concentrate 2,000 of its 163,000 staff in one spot. Moving to a rehabilitated area carries symbolism for Veolia, which is experiencing its own recovery after years of gloom.

“In the past seven years we have transformed,” says Antoine Frérot, CEO since 2009. Change was sorely needed. Veolia (previously called Vivendi Environnement) had been lumbered with excessive debt under Jean-Marie Messier, a flamboyant former media mogul; its value collapsed after the financial crisis of 2008-09. Mr Frérot has overseen a painful recovery plan based on cutting costs (staff numbers have fallen by half), and slashing dangerously high debt by 50%, to €8bn ($8.9bn). He has also survived two coup attempts—one, in 2012, orchestrated by Henri Proglio, Mr Messier’s successor as CEO, and another, in 2014, by Groupe Dassault, a maker of fighter jets, and then the second-biggest shareholder.

Mr Frérot has lessened Veolia’s traditional over-reliance on doing business with municipalities, especially in France, and sought out more contracts from industry. Industrial clients, which provided a modest one-fifth of revenues when he took over, will soon be as valuable as the government kind, he says. Much new growth in Europe is likely to come from contracts in handling “difficult” industrial waste, ranging from dismantling retired oil rigs, trains and planes to the storage and processing of asbestos, pharmaceutical by-products or carbon dioxide. Another opportunity lies in contracts to take apart nuclear-power stations, notably in Germany, and eventually in France (where ageing plants are scheduled to begin closing in the 2020s), and to manage spent nuclear waste once the plants have shut.

Veolia’s changing focus has coincided with a loosening of ties to the French state, which last year cut its holding in the firm almost by half, to 4.6%. The sale stirred no controversy and the country’s new and centrist president, Emmanuel Macron, could next opt for full privatisation. Mr Frérot would prefer to keep some state involvement. He calls it a badge of honour that helps his firm to win contracts abroad.

Those foreign contracts have helped Veolia most of all. Its results for the first quarter confirmed that the French market is of diminishing importance: the domestic market today accounts for only one-fifth of Veolia’s business, down from two-fifths in 2010. Revenue growth in the rest of Europe was a more buoyant 7%; beyond Europe it reached 12%.

Distant prospects will continue to entice. Environmental laws in Europe and America are already fairly strict: that limits the room for growth there. But the desire of authorities in emerging markets to take action against pollution has the potential to create new markets. A new law last year in China, for example, restricting release of waste water from factories, should lift demand for Veolia’s services.

Mr Frérot hopes to stay at Veolia beyond his current term, which ends in 2018. He admits that his firm still faces headwinds, such as the possibility that some European municipalities may return water services to public control. But his reputation as someone who can clear up a corporate mess is well established.