**Step 1: Identify the relevant industry**

Veolia Environnement is a global leader in optimized resource management, providing water, waste, and energy services. The provided methodologies cover "Regulated Utilities," "Oil And Gas Exploration And Production," "Unregulated Power And Gas," and "Transportation Infrastructure."

While Veolia has utility-like characteristics (water, waste), it operates largely in competitive markets rather than under strict rate-of-return regulation typical of "Regulated Utilities" (like US electric utilities). It is not an E&P company. It is not purely "Unregulated Power and Gas" as its core is water and waste. It is not "Transportation Infrastructure."

However, S&P often applies the **Regulated Utilities** or a hybrid utility methodology to large multi-utilities like Veolia, especially given the "Multi-utilities" subsector mention. Alternatively, if it doesn't fit perfectly, we use the general corporate baseline. The prompt instructs: "If the entity does not fit into any of the provided industry methodologies, apply the general corporate baseline formulas provided in the following steps."

Given the specific nature of Veolia (competitive bidding for contracts, concession assets), it often straddles the line. However, looking at the provided text, the "Regulated Utilities" section mentions "Multi-utilities" as a subsector. Veolia's business model involves significant concession assets (intangible assets) and long-term contracts. For the purpose of this exercise, we will apply the **general corporate baseline formulas** as instructed for entities not fitting strictly, but we will look for specific adjustments mentioned in the utility sections if they are clearly applicable (e.g., lease adjustments are standard in S&P corporate methodology now via IFRS 16, but the prompt asks to use the baseline formula which includes `adjustment_leases`).

Actually, S&P typically treats Veolia under the **Regulated Utilities** or **General Corporate** framework depending on the specific rating action. Given the prompt's explicit instruction to use the baseline if it doesn't fit, and the fact that Veolia is a complex multi-utility with significant competitive exposure (waste/energy services) alongside regulated-like water concessions, we will stick to the **baseline formulas** provided in steps 2-6, while noting that `adjustment_leases` is explicitly part of the baseline formula provided.

Let's proceed with the calculations using the data provided for fiscal years 2021 (ended Dec 31, 2021, reported as 2022-01-01 balances for BS, and 2021-01-01 to 2022-01-01 for IS/CF) and 2022 (ended Dec 31, 2022, reported as 2023-01-01 balances for BS, and 2022-01-01 to 2023-01-01 for IS/CF).

*Note on Dates:*
- "2021" data corresponds to the period `2021-01-01 - 2022-01-01` (Income Statement/Cash Flow) and balances at `2022-01-01` (which is end of 2021).
- "2022" data corresponds to the period `2022-01-01 - 2023-01-01` (Income Statement/Cash Flow) and balances at `2023-01-01` (which is end of 2022).

**Step 2: Estimate 2021 Adjusted_EBITDA**

Formula: `Adjusted_EBITDA = EBITDA + adjustment_leases + nonrecurring_losses - nonrecurring_gains ...`

First, we need to reconstruct EBITDA for 2021.
From the Income Statement (2021-01-01 to 2022-01-01):
- Revenue: 28,508.1 million EUR
- Cost of Sales: 23,905.9 million EUR
- Selling Expense: 584.0 million EUR
- General & Admin Expense: 2,308.6 million EUR
- Other Operating Income/Expense: -496.9 million EUR
- Operating Income (before share of equity income): 1,212.7 million EUR
- Share of Net Income of Equity Accounted Entities: 104.8 + 74.0 + 30.8 = 209.6 million EUR (Note: The line "Resultat Operationnel Apres Quote Part..." is 1,317.5 million. 1212.7 + 104.8 = 1317.5. The other lines seem to be breakdowns or double counted in the summary line. Let's use the explicit Operating Income before equity: 1,212.7 million).
- Operating Depreciation, Amortization, Provisions, and Impairment: 2,117.2 million EUR.

EBITDA (Reported) = Operating Income + Depreciation/Amortization/Impairment
EBITDA (2021) = 1,212.7 + 2,117.2 = 3,329.9 million EUR.

*Adjustments:*
- **Leases:** Under IFRS 16, lease expenses are embedded in operating costs. S&P often adds back the interest portion of lease liabilities to EBITDA or treats the entire lease payment as a debt service item in FFO, but for EBITDA, the standard adjustment is to add back the depreciation of right-of-use assets and the interest on lease liabilities if they were deducted to arrive at Operating Income. However, the prompt formula says `+ adjustment_leases`. In many S&P corporate calculations, `Adjusted EBITDA` adds back the implied interest on leases or simply uses reported EBITDA if leases are already capitalized (depreciation is in D&A, interest is in Finance Costs).
    - Reported Operating Income usually includes depreciation of ROU assets.
    - Finance Costs include interest on leases.
    - Standard S&P adjustment for EBITDA: Add back Depreciation of ROU assets (already in D&A) and Interest on Leases (not in Operating Income, so not in EBITDA yet? No, EBITDA is Earnings Before Interest, Tax, Depreciation, Amortization).
    - Let's check the position of Lease Interest. It is in "Net Finance Costs". EBITDA is *before* interest. So Lease Interest is already excluded from EBITDA.
    - Depreciation of ROU assets is in "Operating Depreciation...". So it is added back to Operating Income to get EBITDA.
    - Therefore, Reported EBITDA already includes the add-back for ROU Depreciation and excludes Lease Interest.
    - Does S&P make further adjustments? Often, S&P defines Debt to include Lease Liabilities. For EBITDA, they might adjust for "operating leases" if using old standards, but under IFRS 16, Reported EBITDA is often close to Adjusted EBITDA regarding leases, *unless* they want to treat leases as debt service entirely.
    - However, a common S&P adjustment is to add back "Non-recurring items".
    - Let's look for non-recurring items. "Other Operating Income Expense" is -496.9 million. This is significant. Is it non-recurring? Veolia often has restructuring or integration costs (Suez acquisition). The Suez acquisition closed in early 2022, but costs might have been incurred in 2021. The 2022 number is -769.2 million.
    - Without explicit tagging of "non-recurring", we must estimate. The prompt asks to estimate.
    - Let's look at Cash Flow from Operations (CFO).
    - CFO (2021) = 3,147.2 million.
    - Change in Working Capital = -382.5 + 146.3 = -236.2 million.
    - Cash flow from ops before WC = 3,213.2 million.
    - This is close to EBITDA (3,329.9) minus Taxes paid (285.6) minus Interest paid (357.4) plus/minus other items.
    - 3329.9 - 285.6 - 357.4 = 2686.9. The difference is due to changes in provisions, equity income, etc.

Let's stick to the reconstruction:
EBITDA 2021 = 3,329.9 million EUR.

Are there lease adjustments?
S&P often calculates `Adjusted EBITDA` by adding back the *interest* component of leases if it was deducted, but it wasn't (it's below EBITDA).
Sometimes, S&P adds back "Non-controlling interests" or other items? No.
Let's assume `adjustment_leases` is 0 for EBITDA calculation under IFRS 16 unless specified otherwise, as the depreciation is in D&A and interest is below EBITDA.
However, some methodologies add back the *entire* lease payment to EBITDA and treat it as debt service. But the formula provided is `Adjusted_EBITDA = EBITDA ... + adjustment_leases`. If we treated leases as debt-like, we would add back the principal repayment? No, that's FFO.
Let's assume standard S&P Corporate: Adjusted EBITDA ≈ Reported EBITDA + Non-recurring losses.
Is the -496.9M "Other Operating Income Expense" non-recurring? It likely contains integration costs. Let's assume a portion is non-recurring. However, without specific breakdown, we might have to treat it as recurring or look at the "Operating Income" line.
Let's look at 2022. Operating Income 2,206.3. D&A 3,178.6. EBITDA = 5,384.9.
Other Op Exp -769.2.

Let's refine the EBITDA calculation.
2021:
Op Income (before equity): 1,212.7
D&A: 2,117.2
EBITDA = 3,329.9

2022:
Op Income (before equity): 2,206.3
D&A: 3,178.6
EBITDA = 5,384.9

*Lease Adjustment:*
S&P typically adds back the interest on lease liabilities to EBITDA? No, interest is already excluded.
Does it add back the principal? No.
Does it add back the depreciation of ROU? Yes, included in D&A.
So, `adjustment_leases` is likely 0 or negligible for EBITDA if we start from Reported EBITDA.

*Non-recurring items:*
Veolia's 2021 results were impacted by the Suez transaction. The "Other Operating Income Expense" of -496.9M likely includes transaction costs. In 2022, -769.2M likely includes integration costs.
S&P usually adds these back. Let's assume the entire "Other Operating Income Expense" is non-recurring/adjustable for a conservative "Adjusted" view, or at least a significant portion. However, "Other" can also include recurring items.
Let's look at the Cash Flow statement for "Other Adjustments To Reconcile Profit Loss".
2021: 116.0 million.
2022: 282.3 million.

Let's try a different approach: Use Funds From Operations (FFO) directly from Cash Flow if possible, or reconstruct.
S&P FFO = Adjusted EBITDA - Cash Interest - Cash Taxes.

Let's calculate Cash Interest and Cash Taxes.
2021:
Cash Interest Paid: 357.4 million (from "Interest Paid").
Cash Taxes Paid: 285.6 million (from "Income Taxes Paid...").

2022:
Cash Interest Paid: 637.7 million.
Cash Taxes Paid: 557.4 million.

Now, let's determine Adjusted EBITDA more precisely.
If we assume no major non-recurring adjustments other than what might be in "Other", and given the lack of specific "non-recurring" tags in the data, we will use Reported EBITDA as a proxy for Adjusted EBITDA, or add back the "Other Operating Income Expense" if we deem it non-recurring.
Given the magnitude of the Suez deal, it is highly probable S&P would add back transaction/integration costs.
Let's assume `Adjusted_EBITDA` = `Reported EBITDA` + `Other Operating Expenses` (treating them as non-recurring losses).
2021 Adjusted EBITDA = 3,329.9 + 496.9 = 3,826.8 million EUR.
2022 Adjusted EBITDA = 5,384.9 + 769.2 = 6,154.1 million EUR.

*Alternative Check:*
Often, "Other Operating Income Expense" includes recurring items. If we don't add it back:
2021 Adj EBITDA = 3,329.9
2022 Adj EBITDA = 5,384.9

Let's look at the "Operating Income Before Share Of Net Income Loss Of Equity Accounted Entities".
2021: 1,212.7
2022: 2,206.3
Growth is significant.

Let's check the lease liability impact.
Lease Liabilities (Current + Noncurrent):
2021: 410.6 + 1,298.1 = 1,708.7 million.
2022: 496.5 + 1,656.2 = 2,152.7 million.

S&P adds lease liabilities to Debt.
For EBITDA, if we use the standard definition, we don't adjust for leases further than D&A add-back.

Let's proceed with **Reported EBITDA** as **Adjusted EBITDA** to be conservative, unless the "Other" is clearly defined. Without a breakdown, adding back the entire "Other" bucket is aggressive. However, Veolia explicitly guides on "Recurring Operating Income". The difference between Operating Income and Recurring Operating Income is often the "Other" bucket.
Let's assume S&P adjusts for these.
Let's calculate both scenarios mentally.
Scenario A (No Add-back):
2021 EBITDA: 3,330
2022 EBITDA: 5,385

Scenario B (Add-back Other):
2021 EBITDA: 3,827
2022 EBITDA: 6,154

Let's look at FFO.
FFO = Adj EBITDA - Cash Interest - Cash Taxes.
2021 (A): 3,330 - 357 - 286 = 2,687
2021 (B): 3,827 - 357 - 286 = 3,184

2022 (A): 5,385 - 638 - 557 = 4,190
2022 (B): 6,154 - 638 - 557 = 4,959

**Step 4: Estimate 2021 Adjusted_Debt**

Formula: `Adjusted_Debt = reported_debt + leases + pension_deficit + guarantees + hybrid_debt_portion + other_debt_like_items - eligible_cash`

*Reported Debt:*
We need Interest-bearing debt.
From Balance Sheet (2022-01-01, i.e., End 2021):
- Noncurrent Financial Liabilities Excluding Concession Liabilities: 10,462.5
- Noncurrent Lease Liabilities: 1,298.1
- Noncurrent Concession Liabilities: 1,588.4
- Current Financial Liabilities Excluding Concession Liabilities: 8,624.3
- Current Concession Liabilities: 169.4
- Current Lease Liabilities: 410.6
- Bank Overdrafts: 241.9

Total Reported Financial Liabilities (Debt):
Noncurrent: 10,462.5 + 1,298.1 + 1,588.4 = 13,349.0
Current: 8,624.3 + 169.4 + 410.6 + 241.9 = 9,446.2
Total Debt = 22,795.2 million EUR.

*Leases:* Already included in the financial liabilities above (Lease Liabilities). The formula says `+ leases`. If "reported_debt" includes leases, we shouldn't double count. Usually, "Reported Debt" in these contexts refers to interest-bearing borrowings. The line items "Noncurrent Financial Liabilities..." and "Current Financial Liabilities..." *exclude* concession liabilities but do they exclude leases?
The line is "Noncurrent Financial Liabilities **Excluding Concession Liabilities**". It does not say excluding leases.
However, there is a separate line "Noncurrent Lease Liabilities".
So, Total Debt = (Fin Liab excl Concession) + (Lease Liab) + (Concession Liab) + (Overdrafts).
My sum above includes all of these. So `reported_debt` = 22,795.2.
The formula `Adjusted_Debt = reported_debt + leases ...` implies we might need to add leases if they weren't in reported debt. Since I included them, I will set the `+ leases` adjustment to 0 to avoid double counting, OR interpret `reported_debt` as only the "Financial Liabilities" lines and add leases separately.
Let's assume `reported_debt` = Noncurrent Financial Liab (excl Concession) + Current Financial Liab (excl Concession) + Overdrafts.
Reported Debt (strict) = 10,462.5 + 8,624.3 + 241.9 = 19,328.7.
Then add Leases: 1,298.1 + 410.6 = 1,708.7.
Then add Concession Liabilities? Are they debt-like?
S&P often treats Concession Liabilities as debt in utilities/infrastructure. The prompt mentions "Regulated Utilities" and "Transportation Infrastructure" (concessions). Veolia has significant concession assets. Concession liabilities are obligations to grantors. They are debt-like.
Let's include Concession Liabilities in Adjusted Debt.
Concession Liab: 1,588.4 + 169.4 = 1,757.8.

*Hybrid Debt:*
"Titres Super Subordonnes A Duree Indeterminee" (Perpetual Subordinated Securities).
2021: 2,460.7 million.
S&P typically treats 50% of hybrids as debt and 50% as equity, or 100% debt if equity credit is not given. For "Adjusted Debt", we usually add the debt portion. If we assume 50% equity credit, we add 50% to debt. If 0% equity credit, we add 100%.
Standard S&P corporate methodology often gives 50% equity credit to hybrids with strong features. Let's assume 50% equity credit, so 50% is added to debt.
Hybrid Debt Portion = 50% * 2,460.7 = 1,230.35 million.

*Pension Deficit:*
Not explicitly provided in the balance sheet lines. "Noncurrent Provisions" might include it, but we don't have a breakdown. We will assume 0 or negligible for this estimation, or that it's included in provisions which are not debt. S&P adjusts for underfunded pensions. Without data, we assume 0 adjustment.

*Eligible Cash:*
"Cash And Cash Equivalents": 10,518.7 million.
S&P deducts unrestricted cash.
Are there restrictions? "Actifs Financiers Operationnels" might be restricted?
Usually, we deduct total Cash & Cash Equivalents.
Eligible Cash = 10,518.7 million.

*Calculation 2021 Adjusted Debt:*
Debt Components:
1. Financial Liab (excl Concession): 19,328.7
2. Lease Liab: 1,708.7
3. Concession Liab: 1,757.8
4. Hybrid Debt Portion: 1,230.4 (50% of 2,460.7)
Total Gross Adjusted Debt = 19,328.7 + 1,708.7 + 1,757.8 + 1,230.4 = 24,025.6 million.
Less Eligible Cash: 10,518.7 million.
Net Adjusted Debt 2021 = 24,025.6 - 10,518.7 = 13,506.9 million EUR.

*Refinement on Concession Liabilities:*
In utility/infrastructure methodologies, concession liabilities are often treated as debt.
*Refinement on Hybrids:*
If S&P gives full equity credit, debt portion is 0. If none, 100%. 50% is a common default for "Titres Super Subordonnes".

Let's check 2022 Data for consistency.

**Step 7-9: 2022 Estimates**

*2022 Adjusted EBITDA:*
Using Scenario B (Add-back Other Op Exp):
EBITDA 2022 = Op Income (2,206.3) + D&A (3,178.6) = 5,384.9.
Add back Other Op Exp (769.2) = 6,154.1 million EUR.

*2022 FFO:*
FFO = Adj EBITDA - Cash Interest - Cash Taxes
Cash Interest 2022: 637.7 million.
Cash Taxes 2022: 557.4 million.
FFO 2022 = 6,154.1 - 637.7 - 557.4 = 4,959.0 million EUR.

*2022 Adjusted Debt:*
Balance Sheet at 2023-01-01 (End 2022):
- Noncurrent Financial Liab (excl Concession): 19,692.1
- Noncurrent Lease Liab: 1,656.2
- Noncurrent Concession Liab: 1,680.5
- Current Financial Liab (excl Concession): 6,521.4
- Current Lease Liab: 496.5
- Current Concession Liab: 243.2
- Bank Overdrafts: 213.6

Reported Debt (strict financial): 19,692.1 + 6,521.4 + 213.6 = 26,427.1
Leases: 1,656.2 + 496.5 = 2,152.7
Concession: 1,680.5 + 243.2 = 1,923.7
Hybrids: "Titres Super Subordonnes": 3,496.3 million.
Debt Portion (50%): 1,748.15 million.

Total Gross Adjusted Debt = 26,427.1 + 2,152.7 + 1,923.7 + 1,748.2 = 32,251.7 million.
Less Eligible Cash: 9,012.2 million.
Net Adjusted Debt 2022 = 32,251.7 - 9,012.2 = 23,239.5 million EUR.

**Step 5 & 6: 2021 Ratios**

Adjusted EBITDA 2021 = 3,826.8 million (Scenario B).
FFO 2021 = 3,184.0 million.
Adjusted Debt 2021 = 13,506.9 million.

Leverage (Debt/EBITDA) 2021 = 13,506.9 / 3,826.8 = **3.53x**
FFO/Debt 2021 = 3,184.0 / 13,506.9 = **23.57%** (0.236)

**Step 10 & 11: 2022 Ratios**

Adjusted EBITDA 2022 = 6,154.1 million.
FFO 2022 = 4,959.0 million.
Adjusted Debt 2022 = 23,239.5 million.

Leverage (Debt/EBITDA) 2022 = 23,239.5 / 6,154.1 = **3.78x**
FFO/Debt 2022 = 4,959.0 / 23,239.5 = **21.34%** (0.213)

**Step 12: Trend Analysis**

Signal 1: Leverage Change
2022 Leverage (3.78x) - 2021 Leverage (3.53x) = **+0.25x**
Threshold: ≥ +0.2x is **Deteriorating**.

Signal 2: FFO/Debt Change
2022 FFO/Debt (0.213) - 2021 FFO/Debt (0.236) = **-0.023**
Threshold: ≤ -0.03 is Deteriorating. Between -0.03 and +0.03 is Stable.
Change is -0.023, which is **Stable** (barely, but within the -0.03 to +0.03 band).

*Conflict Resolution:*
Signal 1: Deteriorating
Signal 2: Stable

Rule: "If one is Stable and the other is Improving or Deteriorating, return the non-Stable category."
Therefore, the trend is **Deteriorating**.

*Sanity Check on Assumptions:*
What if we didn't add back "Other Operating Income Expense" (Scenario A)?
2021 EBITDA: 3,330. FFO: 2,687. Debt: 13,507.
Lev 2021: 13,507 / 3,330 = 4.06x.
FFO/Debt 2021: 2,687 / 13,507 = 19.9%.

2022 EBITDA: 5,385. FFO: 4,190. Debt: 23,240.
Lev 2022: 23,240 / 5,385 = 4.32x.
FFO/Debt 2022: 4,190 / 23,240 = 18.0%.

Change in Leverage: 4.32 - 4.06 = +0.26x (Deteriorating).
Change in FFO/Debt: 0.180 - 0.199 = -0.019 (Stable).

Result is still Deteriorating based on the rule.

What if Hybrid Debt was treated as 100% Debt?
2021 Debt increases by ~1,230. New Debt ~14,737.
2022 Debt increases by ~1,748. New Debt ~24,988.
Lev 2021: 14,737 / 3,827 = 3.85x.
Lev 2022: 24,988 / 6,154 = 4.06x.
Change: +0.21x (Deteriorating).

What if Concession Liabilities were NOT treated as Debt?
2021 Debt reduces by ~1,758. New Debt ~11,749.
2022 Debt reduces by ~1,924. New Debt ~21,316.
Lev 2021: 11,749 / 3,827 = 3.07x.
Lev 2022: 21,316 / 6,154 = 3.46x.
Change: +0.39x (Deteriorating).

In all reasonable scenarios, the leverage ratio increases by more than 0.2x due to the significant increase in debt (driven by the Suez acquisition financing) outpacing the EBITDA growth, or at least maintaining a higher leverage profile. The FFO/Debt coverage drops slightly but stays within the "Stable" band (-0.03 to +0.03).

According to the combination rule: One Stable, One Deteriorating -> Return Deteriorating.

<answer>Deteriorating</answer>