2013-02-27 07:02:27 -
* Gross revenues were a record €2.5 billion, up 26%
* Net revenues, €1.9 billion, were up 30%; organic growth reaches 4%
* Strong growth from Acquisitions, Emerging Markets and Multinational Clients
* Operational margin improved again, achieving 10% target for year
* Net income from operations was a record €105.1 million, up 29%
* Dividend proposal €0.52 per share, an increase of 11% over last year
* For 2013 a further increase of revenues and profit expected
ARCADIS (NYSE EURONEXT: ARCAD), a leading international consultancy, design,
engineering and management services company, saw record revenue and profit
growth in 2012. Net income from operations increased 29% to €105.1 million or on
a per share basis €1.49, against €1.23
in 2011. The operational margin at 10.0%
(2011: 9.7%) met target driven in part by strong margin performance of our US
business, while cash flow from operations at €158.0 million (2011: €79.6
million) significantly improved. Our Leadership Balance Growth strategy targeted
growth in emerging markets and in 2012 ARCADIS doubled its business in those
geographies. This was achieved by a combination of acquisitions, accounting for
almost two-thirds of the growth, and strong organic growth. The strongest
overall growth was in the buildings business in property markets in the UK, Asia
and the Middle East, while the strongest organic growth was achieved in
infrastructure in especially South America. In developed markets in Europe and
the US, market conditions remained challenging, mostly affecting our public
sector clients in infrastructure and water business lines, partly compensated by
growth from Multinational Clients in environment, water and buildings business
lines.
It is proposed to the Annual Meeting of Shareholders to offer a dividend in cash
or in shares of €0.52 per share, 11% above the level of last year. This
represents a payout of 35% of net income from operations, in line with our
dividend policy.
Strategically, several important steps were made. Our merger process with EC
Harris was completed during the course of 2012 in an accelerated timeframe
creating significant revenue and cost synergies. In April, our merger with
Langdon & Seah was completed (2800 employees in 10 Asian countries; US$125
million in revenues), providing us with a strong foothold in the fast-growing
Asian market. In July we made a step into Switzerland with the addition of BMG
(50 people; €8 million in revenues), which has excellent client relationships
with a number of global pharmaceutical and chemical firms. In August, we
acquired ETEP in Brazil (300 people; €20 million in revenues), and became the
largest provider of water consulting services in Brazil by a wide margin.
ARCADIS CEO Neil McArthur said: "Our results reflect the success of the design
and implementation of our strategy. Our timely switch to emerging markets and
rebalancing towards private sector and multinational clients while focusing on
performance improvement and organic growth are beginning to pay off. In emerging
markets we have captured strong organic growth in South America and created
strong growth on the back of acquisitions in the Middle East and Asia. This
helped to offset lower organic growth in mature regions such as Europe and the
US, where market conditions remained difficult due to government austerity and
market uncertainties. With EC Harris, Langdon & Seah, BMG and ETEP we have added
companies that offer broad synergy potential, which we have already partly
capitalized on in 2012."
Key figures
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Fourth quarter Full year
Amounts in € millions unless otherwise noted
2012 2011 D 2012 2011 D
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Gross revenues 667 576 16% 2,544 2,017 26%
Organic gross revenue growth 2% 3%
Net revenues 489 402 22% 1,878 1,443 30%
Organic net revenue growth 4% 4%
EBITA 52.4 36.9 42% 166.4 144.4 15%
EBITA recurring( 1)) 52.4 41.7 26% 170.6 141.8 20%
EBITA operational(2)) 59.3 40.0 48% 188.8 139.0 36%
Operational EBITA margin 12.1% 10.0% 10.0% 9.7%
Net income 28.0 20.6 36% 89.0 79.5 12%
Ditto per share (in €) 0.39 0.30 30% 1.26 1.20 6%
Net income from operations (3)) 31.4 26.4 19% 105.1 81.6 29%
Ditto per share (in €) (3)) 0.44 0.39 14% 1.49 1.23 22%
Average number of shares outstanding 71.3 68.1 5% 70.4 66.5 6%
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1. Excluding € 4.2 million acquisition cost Langdon & Seah (Q1 2012), €4.8
million acquisition cost EC Harris (Q4 2011), €7.4 million gain from
divestment of AAFM (Q2 2011)
2. Excluding restructuring & integration costs and impact energy projects
Brazil
3. Before amortization and non-operational items
Fourth quarter
In the fourth quarter, gross revenues rose 16% of which 12% came from
acquisitions. Organic growth in the quarter amounted to 2%. The currency effect
was 2%.
Net revenues rose 22%, with the contribution from acquisitions being 16%, and a
currency effect of 2%. Organic growth was 4%, mainly from South America and the
Middle East. The lower organic growth of gross revenue can be explained by the
completion of the Floriade project in the Netherlands, which included
significant subcontracting. In Europe, German and French activities grew, but
were offset by declines elsewhere in the region. Overall the US was flat, but
did see an increase in water revenues as a result of the emergency support work
which followed Hurricane Sandy on the East Coast. EC Harris as well as
multinational clients contributed to organic growth.
Recurring EBITA was €52.4 million, a 26% increase. The currency effect was 2%,
while the contribution from acquisitions was 37% fuelled by profits from EC
Harris and Langdon & Seah. Higher profits from Brazil, Chile, EC Harris, Belgium
and RTKL were insufficient to offset lower results in other European countries
leading to an organic EBITA decline of 13%. This also includes reorganization-
and integration costs of €6.9 million (2011: €2.1 million) related to the
integration of EC Harris. Corrected for these, organic EBITA declined 1%.
The operational margin (operational EBITA as a percentage of net revenues)
reached 12.1% (2011: 10.0%). Results in Q4 benefited from lower management costs
at EC Harris due to the benefits from continuing its partnership structure. The
impact on EBITA was a gain of €7 million, of which €5 million relates to the
first three quarters. It is expected that the annual gain in future years will
be around €4 million. At €6.3 million financing charges were above last year
(€5.0 million) due to the investments in acquisitions. The tax rate came out at
28.2% compared to 31.1% last year. Net income from operations increased 19% to
€31.4 million.
Full year
Gross revenues grew by 26%, reaching more than €2.5 billion, while net revenues
increased by 30% to €1.9 billion. After the merger with EC Harris in November
2011, another important merger was realized in April 2012 with Langdon & Seah in
Asia. The acquisitions of BMG in Switzerland and ETEP in Brazil also contributed
to the revenue increase from acquisitions and the overall growth of 26%. Organic
gross revenue growth was 3% and for net revenue 4%. The organic growth was
driven mainly by growth in South America, where in addition to continued demand
from the private sector, public sector work is also increasing. In developed
markets in Europe, revenues declined due to challenging market conditions for
public sector clients. Nevertheless, France and Germany realized revenue growth
on the back of a strong performance in respectively rail work and environmental
consulting. US revenues were 1% higher with growth for private sector clients at
strong margins, being partly offset by environmental and water services to
public sector clients.
On a recurring basis, EBITA increased 20% to € 170.6 million (2011: €141.8
million). The currency effect was 6%, while acquisitions contributed on balance
16%. Organically EBITA declined 2%. EBITA was impacted by organizational
adjustments due to reduced market demand, and integration of activities due to
recent mergers. This resulted in €18.2 million of costs for reorganization and
integration (2011: €12.7 million). Excluding these costs, operational EBITA was
€188.8 million (2011: €139.0 million), an increase of 36%.
The margin (recurring EBITA as % of net revenue) was 9.1% (2011: 9.8%).
Excluding reorganization and integration costs, the underlying operational
margin was 10.0%. This compares to 9.7% in 2011 and reflects the business shift
to more profitable emerging markets.
Financing charges were lower than last year at €21.8 million (2011: €23.4
million). On balance they were €2.4 million higher as last year's amount
included €3.9 million one-off costs for the refinancing of loans. This increase
was mainly caused by investments in acquisitions and somewhat higher interest
rates on the debt that was refinanced in 2011. The effective tax rate was
28.1%, at the same level as 2011 (28.0%). In 2011 the tax rate was supported by
the favorable impact of the non-taxable profit related to the divestment of
AAFM. In 2012 the change in geographical spread, as well as the positive impact
of taxes related to share based payments supported a lower tax rate.
Net income from operations was €105.1 million or €1.49 per share (2011: €81.6
million or €1.23 per share). The increase in net income from operations of 29%
was higher than in recurring EBITA (+20%) due to a lower effective tax rate and
lower minority interests following the acquisition of Arcadis Logos.
Cash flow, investments and balance sheet
At €158.0 million (2011: €79.6 million) net cash from operating activities was
much stronger. The improvement stems from lower financing costs and tax charges
paid, as well as an improvement in working capital from 15.1% in 2011 to 14.9%
in 2012. Free cash flow, after regular investments in ongoing businesses, was
€124.0 million (2011: €44.9 million).
Balance sheet total rose to €1,771 million (2012: €1,559 million), mainly
resulting from acquisitions and exchange rate differences. Net debt (cash and
cash equivalents minus interest-bearing debt) rose to €282 million (2011: €268
million). Balance sheet ratios remained strong at year-end 2012. Average net
debt to EBITDA (calculated according to bank covenants was 1.5 (2011: 1.4),
while the interest coverage ratio was 8 (2011: 7).
Developments per business line
Figures noted below concern gross revenues for the full year 2012, compared to
the same period last year, unless otherwise mentioned. Operational margin is
based on recurring EBITA, excluding restructuring & integration charges and the
impact from energy projects in Brazil.
* Infrastructure (26% of revenues)
Gross revenues grew by 18%, of which the contribution from acquisitions was
10%. Organic gross revenues increased by 9% and net revenues by 16%, the
difference explained by reduced subcontracting in Brazil. Our strategy to grow
in emerging markets paid off, with strong organic growth in Brazil and Chile
from ongoing work in energy and mining, and new public infrastructure projects.
This offset declines in most European countries. Our operational margin declined
to 8.1% (2011: 9.2%) due to lower margins in continental Europe, which were in
part compensated by improvements in EC Harris.
* Water (15% of revenues)
Gross revenues increased by 16%. The contribution of acquisitions (EC Harris,
ETEP) was 6%. The currency effect was 6%. Organically, gross revenues were flat,
while net revenues declined 2%. The difference can be explained by higher
subcontracting in the US. Compared to last year, the US market is stabilizing,
supported by industrial water projects and new opportunities for local
municipalities. Organic growth was strong in Chile and Brazil. The Middle East,
UK and the Netherlands also generated growth in water treatment. The water
management market saw lack of public funding although in the fourth quarter,
ARCADIS became involved in emergency water projects triggered by Hurricane
Sandy. The operational margin was 9.3% (2011: 9.4%).
* Environment (33% of revenues)
Gross revenues grew 11% of which 4% from organic growth and 7% as a result of
currency effects. Net revenues increased organically by 2%. The year started off
strong with growth in private sector environmental work in the US, and South
America, offsetting declines in US government markets. As economic uncertainty
prevailed during the year, clients slowed investments in environmental issues
and private sector growth decelerated. Oil and gas clients, our biggest client
sector in environment, continued to contribute to growth. As a result of strong
cost management, the operational margin improved to 12.6% (2011: 12.2%).
* Buildings (26% of revenues)
Overall gross revenue growth was 78% and for net revenue 82%. Two strategic
mergers contributed to the very strong growth. EC Harris and Langdon & Seah each
grew their revenues, in part as a result of synergies. - Total synergy bookings
were approximately €70 million during the year. EC Harris improved its margin
through the year, delivering more than 9% EBITA for the year, putting us on
track to achieve the 10% margin target already by 2013, one year ahead of plan.
Langdon & Seah retained its high margin at well above average levels. In Europe
and the US, revenues were under pressure, with the notable exception of London,
where demand for high-end residential property increased. RTKL had a strong
performance in the Middle East and Asia. Organically, gross revenues declined by
5%, the currency impact was 5% and net revenue declined organically by 4%. The
contribution from performance improvement and successful acquisitions helped to
increase the operational margin to 9.9% (2011: 7.0%).
Outlook
In the Infrastructure market, our involvement in many multi-year large projects,
and our strong position in Brazil and Chile provide a good basis for continued
growth. Although mining clients pace their investments in these countries,
public sector work is on the rise. Government budget cuts in continental Europe
are likely to also impact investments in large projects, which may affect our
growth. Projects using alternative financing and delivery concepts, like PPP,
and increased government outsourcing provide opportunities to combat this.
In the water market tight government budgets are causing revenue pressure,
although in some markets, such as the US, we are able to offset this with
private sector work and projects for network improvements. Flood protection
work, such as related to Hurricane Sandy may offer additional opportunities. In
addition, we target further expansion in selected markets in Europe and are
capitalizing on opportunities in the Middle East. In South America, especially
in Brazil and Chile, recent investments in water companies have considerably
strengthened our position and create new avenues for growth.
The environmental market is growing slightly, driven by the private sector. In
the US, we benefit from the trend that private sector firms outsource non-core
activities, but we still face challenging public sector conditions. Our advanced
technology allows us to bring contaminated sites to closure quicker and at lower
cost. We believe that we are gaining market share, especially in complex
projects and portfolios of sites and our Guaranteed Outcomes offering should
help us maintain a strong position in these markets. Mining, energy and
manufacturing projects drive demand for environmental services in Brazil and
Chile. In Europe, demand from the private sector is picking up, compensating for
a decline in government work.
In the buildings market, we now have a strong position with excellent
opportunities for synergies and global growth. The commercial real estate market
in Europe is in decline while the US market is starting to recover. In London,
Asia and the Middle East we have a strong position where we see significant
growth potential. We are well positioned to help our clients with large
investment programs and provide built asset consultancy to maximize value
throughout an asset's lifecycle.
Europe
ARCADIS announced the introduction of a new pan-European operating model that is
directed at better serving our multinational, large national and local clients,
by leveraging our best practices and capabilities. The model combines client
proximity at the country level with a pan-European leadership team and shared
services in support functions. These initiatives are expected to generate annual
cost savings of €25 million, which should bring Continental Europe to an EBITA
margin of 10% by the fourth quarter of 2014 (compared with 5% in 2012). Total
restructuring charges in 2013/2014 are expected to be approximately €20 million.
CEO Neil McArthur concluded: "We have excellent potential for continued
synergies with newly acquired companies and stronger positions in key growth
markets. Our backlog developed in line with revenue growth and is steady at 11
months of revenue. We expect continued growth in infrastructure and buildings, a
stable market in environment, and a further recovery in water. Maintaining, and
where possible, improving our margin is an important priority. We have developed
a clear path for margin improvement in Europe, which should help us achieve
overall target levels, also in 2013. Further strengthening our position through
acquisitions remains on the agenda. For full year 2013 we expect a further
increase of revenues and profit. This is barring unforeseen circumstances."
For more information, please contact Joost Slooten of ARCADIS at +31-202011083
or outside office hours at +31-627061880 or e-mail
joost.slooten@arcadis.com.
About ARCADIS:
ARCADIS is an international company providing consultancy, design, engineering
and management services in infrastructure, water, environment and buildings. We
enhance mobility, sustainability and quality of life by creating balance in the
built and natural environment. ARCADIS develops, designs, implements, maintains
and operates projects for companies and governments. With 22,000 employees and
more than EUR 2.5 billion in revenues, the company has an extensive global
network supported by strong local market positions. ARCADIS supports UN-HABITAT
with knowledge and expertise to improve the quality of life in rapidly growing
cities around the world. Visit us at: www.arcadis.com
This press release has been drafted in the period between the preparation and
adoption of the annual accounts of ARCADIS NV. The figures in this press release
for the full year 2012 have been derived from the annual accounts of ARCADIS NV
which are not yet public at the moment this press release is issued. These
annual accounts were audited and the auditor has issued an unqualified report.
The annual accounts have not yet been adopted by the General Meeting of
Shareholders. The figures related to the fourth quarter 2012 in this press
release are unaudited.
This press release contains forward looking statements, which are predictions
only and not guarantees. The forward looking statements are based upon our
current expectations, plans, estimates, assumptions and beliefs that involve
risks and uncertainties. Assumptions relating to the foregoing involve
judgments on matters and circumstances 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.
- - - Tables are included in the pdf attachment - - -
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Source: Arcadis N.V. via Thomson Reuters ONE
[HUG#1681322]
