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Arcadis NV — Interim / Quarterly Report 2017
Apr 20, 2017
3811_iss_2017-04-20_108ef87b-ca84-421a-bbd6-970d3f42b56e.pdf
Interim / Quarterly Report
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PRESS RELEASE
ARCADIS NV Gustav Mahlerplein 97-103 P.O. Box 7895 1008 AB Amsterdam The Netherlands Tel +31 20 2011 011 www.arcadis.com
ARCADIS TRADING UPDATE Q1 2017
- Gross revenues €818 million, -3% vs. Q1 2016. Net revenues €628 million, organically -1%
- EBITDA €52 million (Q1 2016: €56 million); operating EBITA €47 million, higher than in previous three quarters (Q1 2016: €51 million)
- Net working capital 19.9% (Q1 2016: 18.9%); net debt €556 million (Q1 2016: €541 million); impacted by a stronger US dollar and working capital in the Middle East where important milestones are expected to be reached in Q2 and Q3 leading to cash collections in 2017
- Backlog €2.3 billion, representing 11 months of net revenues. Strong order intake in Q1 led to a 5% year-to-date increase (Q1 2016: 3%)
- New CEO Peter Oosterveer nominated; appointment subject to approval by shareholders at the AGM to be held on 26 April 2017
Amsterdam, 20 April 2017 – Arcadis (EURONEXT: ARCAD), the leading global Design & Consultancy firm for natural and built assets, reported a 1% organic decrease in net revenues for Q1 2017. The operating EBITA was €47 million, a decrease of 9% versus Q1 2016.
"The priorities we set in October last year are now resulting in meaningful signs of improvement in large parts of our business," commented Arcadis' interim CEO and CFO Renier Vree: "Arcadis' operating EBITA in Q1 was higher than the previous three quarters, and we have increased our backlog in North America, the UK, Continental Europe, and Australia. We see a healthy pipeline of market opportunities across our businesses. Our operating model has been simplified and we realized the associated structural cost savings. We see a positive business sentiment in most geographies, but we remain cautious about market developments in Brazil, the Middle East, and parts of Asia. We will continue to focus on winning work with our clients, reducing working capital and sustaining our momentum."
KEY FIGURES
| in € millions | FIRST QUARTER | ||
|---|---|---|---|
| Period ended March 31 | 2017 | 2016 | change |
| Gross revenues | 818 | 846 | -3% |
| Organic growth | -4% | 3% | |
| Net revenues | 628 | 634 | -1% |
| Organic growth | -1% | -3% | |
| EBITDA | 51.9 | 55.6 | -7% |
| EBITA | 42.2 | 46.6 | -9% |
| EBITA margin | 6.7% | 7.4% | |
| Operating EBITA1) | 46.7 | 51.4 | -9% |
| Operating EBITA margin | 7.4% | 8.1% | |
| Net working capital % | 19.9% | 18.9% | |
| Net debt | 556 | 541 | |
| Backlog net revenues (billions) | 2.3 | 2.4 |
1) Excluding acquisition, restructuring and integration-related costs
REVIEW OF PERFORMANCE
REVENUES BY SEGMENT
Overall net revenues declined organically by 1%. Continental Europe, the UK, and Australia delivered good organic net revenue growth in the quarter, whilst revenues in North America were nearly flat. Net revenues declined in Latin America, the Middle East, Asia, and CallisonRTKL. A stronger US Dollar, Brazilian Real, and a weaker British Pound had a small positive impact on revenues.
AMERICAS
(31% of net revenues)
| in € millions | FIRST QUARTER | ||
|---|---|---|---|
| Period ended March 31 | 2017 | 2016 | change |
| Gross revenues | 297 | 310 | -4% |
| Net revenues | 196 | 198 | -1% |
| Organic growth | -6% | -10% |
Net revenues in the Americas were in line with Q1 2016. In North America, organic growth was nearly flat after a sustained period of declining revenues. Revenues in Brazil decreased significantly, leading to an operating loss and additional restructuring costs.
EUROPE & MIDDLE EAST
(46% of net revenues)
| in € millions | FIRST QUARTER | ||
|---|---|---|---|
| Period ended March 31 | 2017 | 2016 | change |
| Gross revenues | 350 | 364 | -4% |
| Net revenues | 288 | 292 | -1% |
| Organic growth | 3% | 4% |
The organic growth in net revenues of 3% consisted of 7% growth in Continental Europe, 8% increase in the UK, compensating for a 12% decrease in the Middle East.
ASIA PACIFIC
(13% of net revenues)
| in € millions | FIRST QUARTER | ||
|---|---|---|---|
| Period ended March 31 | 2017 | 2016 | change |
| Gross revenues | 91 | 88 | 3% |
| Net revenues | 83 | 80 | 3% |
| Organic growth | -2% | -3% |
The organic decline of 2% in Asia Pacific related to a 10% decline in Asia, mainly due to a fall in commercial development in Singapore and Hong Kong. This was partly compensated by 13% organic growth in Australia, where we delivered major infrastructure projects.
CALLISONRTKL
(10% of net revenues)
| in € millions | FIRST QUARTER | ||
|---|---|---|---|
| Period ended March 31 | 2017 | 2016 | change |
| Gross revenues | 80 | 84 | -5% |
| Net revenues | 61 | 64 | -5% |
| Organic growth | -6% | -6% |
Revenues declined organically, mainly due to lower activity levels in commercial real estate. Revenues in the retail business were up, while activities in workplace and healthcare were in line with last year.
EBITA
EBITA decreased by 9% to €42.2 million (Q1 2016: €46.6 million). Operating EBITA decreased also by 9% to €46.7 million (Q1 2016: €51.4 million). Operating EBITA was higher in Europe and Australia and lower in Latin America, Asia and the Middle East. The operating EBITA margin was 7.4% (Q1 2016: 8.1%). Non-operating costs were €4.5 million (Q1 2016: €4.8 million), mainly related to restructuring programs in Brazil and Europe.
CASH FLOW AND WORKING CAPITAL
EBITDA in Q1 was €51.9 million (Q1 2016: €55.6 million). Days of sales outstanding was 96 days (Q1 2016: 90 days), while net working capital as a percentage of gross revenues was 19.9% (Q1 2016: 18.9%). Net debt in the first quarter was €556 million (Q1 2016: €541 million), due to a stronger US Dollar and higher working capital in the Middle East, where important milestones are expected to be reached in Q2 and Q3, leading to cash collections in 2017.
BACKLOG
Backlog at the end of Q1 2017 stood at €2.3 billion, representing 11 months of net revenues. The backlog increased organically by 5% year-to-date compared to a 3% increase in Q1 2016. Compared to the backlog at the end of Q1 2016, there was a decline of 5% due to cancellations during 2016. In the first quarter, backlog grew especially in North America, the UK, Continental Europe, and Australia, while Brazil, the Middle East and parts of Asia saw a declining order book.
MARKET OUTLOOK 2017 UNCHANGED
- In general, positive business sentiment with private sector clients; some uncertainty in Asia
- Higher oil prices contribute to an improved business climate in the Oil & Gas sector
- US Administration sends positive signals for Infrastructure and Buildings. Large corporations and cities/states continue to support sustainability goals
- Increased Infrastructure spending planned in many countries
- Uncertainty around Brazil remains; improvement in economy expected for 2nd half 2017
LEADERSHIP PRIORITIES 2017
Our leadership priorities are geared towards improving our financial performance:
- Focusing on Clients, leading to growth in backlog and revenues
- Reducing costs by simplifying organization structure, strengthening project management and expanding Global Excellence Centers
- Reducing working capital
- Finalizing the strategy, including innovation through digitalization
FINANCIAL CALENDAR 2017
26 April 2017 Annual General Meeting of Shareholders 27 July 2017 Half year results 2017 25 October 2017 Third quarter results 2017
As of 2017, Arcadis will host an analyst meeting, conference call, and webcast with the publication of the half year and full year results.
For further information please contact:
ARCADIS INVESTOR RELATIONS
Jurgen Pullens Telephone: +31 20 2011083 Mobile: +31 6 51599483 E-mail: [email protected]
ARCADIS GROUP COMMUNICATIONS
Jeremy Cohen Mobile: +31 6 21639411 E-mail: [email protected]
ABOUT ARCADIS
Arcadis is the leading global Design & Consultancy firm for natural and built assets. Applying our deep market sector insights and collective design, consultancy, engineering, project and management services we work in partnership with our clients to deliver exceptional and sustainable outcomes throughout the lifecycle of their natural and built assets. We are 27,000 people active in over 70 countries that generate €3.3 billion in revenues. We support UN-Habitat with knowledge and expertise to improve quality of life in rapidly growing cities around the world. www.arcadis.com.
REGULATED INFORMATION
This press release contains information that qualifies, or may qualify as inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
FORWARD LOOKING STATEMENTS
Statements included in this press release that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward looking statements. These statements are only predictions and are not guarantees. Actual events or the results of our operations could differ materially from those expressed or implied in the forward looking statements. Forward looking statements are typically identified by the use of terms such as "may," "will," "should," "expect," "could," "intend," "plan," "anticipate," "estimate," "believe," "continue," "predict," "potential" or the negative of such terms and other comparable terminology. The forward looking statements are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward looking statements.
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