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FEB 16, 2023

Arcadis Fourth Quarter and Full Year Results 2022

Strategic repositioning with strong set of results

  • Continued strong client demand
  • Record backlog, organic pro forma backlog growth of 8.9%4)
  • Strong set of financial results: improved operating margin and high cash conversion
  • Global Business Area model successfully implemented
  • Integration of IBI Group and DPS Group on track

Fourth quarter results:

  • Net revenue at €861 million; organic growth of 11.2%1)
  • Operating EBITA margin of 10.0% (2021: 10.7%)
  • Strong free cash flow of €146 million (2021: €129 million)

Full year results:

  • Record net revenue at €3,019 million; organic growth of 8.9%1)
  • Record backlog at €3,119 million; pro forma organic backlog growth year-on-year of 8.9%4)
  • Operating EBITA margin improved to 9.8% (2021: 9.6%)
  • Net Working Capital and DSO remained strong at 10.7% and 63 days
  • Sound free cash flow generation of €173 million (2021: €234 million)
  • Proposed dividend growing 6% to €0.74 per share (2021: €0.70)

Amsterdam, 16 February 2023 – Arcadis (EURONEXT: ARCAD) reports a strong set of results, record net revenue of €3,019 million for the full year 2022 and organic growth of 8.9%. The operating EBITA margin improved to 9.8%. Arcadis sees continued strong client demand resulting in a record backlog of € 3,119 million. Arcadis proposes to increase its dividend by 6% to €0.74 per share.

Peter Oosterveer, CEO Arcadis said: “I am pleased to report that 2022 has been another successful year for Arcadis, while being foundational and pivotal for the future success of our business. We are in a strong position, with profitable organic growth and record net revenue and backlog. We have made significant progress in delivering on our strategic priorities by fully implementing our Global Business Area (GBA) structure and significantly advancing our strategic repositioning, notably adding attractive companies and new talent to our business. Providing sustainable solutions to clients remains integral to successful project delivery and with the launch of our new GBA, Intelligence, we are poised to become a digital leader in our industry.

We achieved our strong results in the context of geo-political turbulence and increased economic uncertainty, but despite these challenges, national governments, public agencies and the private sector continued to invest. They recognize the need to tackle climate change and to address biodiversity loss to enable healthier lives, thriving nature, effortless transport, and more enjoyable places. The recent US Inflation Reduction Act, US and European CHIPS Acts and the REPowerEU energy plan in Europe are examples of investment packages which provide plentiful opportunities for Arcadis to offer our expertise and create sustainable results for our clients and the communities in which we operate.

With the integration of our acquired companies well underway, we are pursuing additional opportunities to better serve our clients. This includes our enhanced Architecture & Urbanism offering resulting from the IBI acquisition, new process technology advisory and clean room capabilities from the DPS acquisition - both within the Places GBA – as well as innovative and customer-centric digital products through our fourth GBA, Intelligence. The progress we have made on the integration keeps us well on track to deliver the synergies envisaged from these acquisitions.

With the continued strong client demand, combined with our record backlog, predictable performance and financial discipline, we are confident we are on track to deliver on our strategic targets in 2023.”

Arcadis successfully closed the acquisitions of IBI Group on 27 September 2022, and DPS Group on 1 December 2022. As a result, Arcadis’ fourth quarter Profit and Loss statement includes one quarter of IBI Group and one month of DPS Group results.

Net revenues totaled €861 million and increased organically by 11.2%, driven by all GBAs, with a currency impact of 4.7%. Our recent acquisitions added €128 million of net revenues to the quarterly net revenue results. Growth was particularly strong in the North America, UK and Australia, with Continental Europe and Brazil contributing as well. The protracted lockdowns in Greater China resulted in a slight hampering of growth.

Operating EBITA was 10.0% (Q4 2021: 10.7%), with improved performance year-on-year not fully offsetting the impact of fewer working days in the quarter.

Net revenues totaled €3,019 million and increased organically by 8.9%, driven by all GBAs with a currency impact of 6.3%. The operating EBITA increased by 20% to €295 million (2021: €246 million). The operating EBITA margin improved to 9.8% (2021: 9.6%), driven by a year-on-year improvement in Places, mostly in the UK and the US.

Non-operating costs were €62 million (2021: €9 million). This includes transaction costs relating to the acquisitions, net non-cash losses on the divestment of our operations in Singapore, Malaysia, Hong Kong Design & Engineering business, Vietnam, Thailand, Switzerland, Czech Republic, Slovakia and our Environmental Restoration business in France, as well as restructuring costs. The underlying income tax rate was 31.3% (2021: 25.1%) and was impacted by, amongst others, non-deductible acquisition-related costs and non-deductible losses on divestments. Net finance expenses increased to €24 million (2021: €19 million). The interest expense on loans and borrowings of €14 million (2021: €11 million) increased due to higher average gross debt to finance the acquisition of IBI Group and DPS Group and higher interest rates. Income from associates was €1.6 million (2021: €11 million). In 2021 an exceptional income was included due to a favorable outcome of a commercial arbitration. Net income from operations increased by 15% to €202 million (2021: €175 million) or €2.26 per share (2021: €1.96).

Market conditions continue to be strong, especially in North America and Europe with the energy transition, demand for sustainable solutions and climate adaptation high on the agenda. Water clients shift their focus from capital investment to operational efficiencies, increasing the attractivity of our digital product offering. Environmental restoration services including PFAS are in high demand, particularly as the regulatory environment expands to more sectors.

Various key clients are increasingly looking for strategic sustainability advisory in combination with engineering solutions, Arcadis Sustainability Advisory addresses this demand and grew to over 200 FTE since it was founded in 2021. Furthermore, the ageing energy asset base in Europe and the transition to renewables is generating opportunities for our teams to demonstrate the full range of capabilities, from decommissioning to the planning and consent of new developments.

We invested in growth areas such as digital water optimization solutions and energy transition through the acquisitions of HydroNET, a provider of digital water solutions and Giftge Consulting, a leading player in the German energy transition market. Furthermore, Arcadis invested in its nature-based and biodiversity solutions, expanding its already leading global position in this high growth market. The operating EBITA margin was strong at 10.8%, in line with 2021, driven by North America and Europe.

The Resilience business closed the quarter at a backlog of €895 million, with a year-over-year organic growth of 7.6% and representing 29% of total Arcadis backlog.

Places has undergone significant strategic repositioning during 2022. The strategic objective to increase exposure to high growth markets combined with addressing the strong demand from clients for integrated offering led to the complementary acquisitions of IBI Group and DPS Group. Increased focus on core profitable activities and scalable geographies resulted in the divestment of operations in mostly Southeast Asia. China was impacted by the property freeze causing delay in projects, further increasing our selectivity on bids and new orders. Furthermore, the Architecture & Urbanism Business Unit was set up into Places, bringing together former IBI Group and CallisonRTKL expertises, which already resulted in design wins using key differentiators such as the sustainable mass timber. Adding DPS to the portfolio has already resulted in a joint bid for a microelectronics company facility in Europe, whereas former IBI Group and Arcadis collaborated successfully on commissions for the expansion of Pharma facilities.

Revenue growth was driven from good demand for sustainable and intelligent buildings, including the development of datacenters and gigafactories for electric vehicle battery production. Order intake and growth from European and US clients, particularly from investments in industrial manufacturing facilities, was strong. This was offset by delayed investment decisions from several Property & Investment sector clients in Asia, validating our decision to strategically reposition the portfolio.

The operating EBITA margin improved to 9.1%, as operating performance improved year-on-year and as the Places GBA started to really benefit in Q4 from the geographic repositioning.

The total backlog of the Places increased by 67% year-on-year to €1,573 million, representing 50% of Arcadis’ total backlog and inclusive of €308 million backlog from IBI Group and €460 million backlog from DPS Group. IBI Group and DPS Group showed very strong order intake over 2022, and the Places organic backlog growth pro forma of IBI Group and DPS Group grew by 10.7%. 2022 Has been a pivotal year for Places which ends with a repositioned backlog, including 30% of Industrial Manufacturing projects.

Market conditions remain strong in the mobility and infrastructure sector, with ongoing programs and stimulus packages continuing to drive a solid revenue and backlog growth. Decarbonization and climate change remain a high priority. Airports investments are picking up; with operators investing in Net Zero goals, and developers investing in greenfield airports in Europe. Committed funding in the US, ageing infrastructure in Australia and UK investments in rail and road upgrades have led to significant order intake on large projects. We see further rail opportunities in Canada where we can now take a combined offering to clients, including station design and program management.

Continued strong revenue growth is driven by mostly public large transportation clients in US and UK. The acquisition of the IBI Digital Mobility portfolio is providing opportunities to serve large key clients such as State Departments of Transportation in the US; reducing congestion through the use of digital SaaS products such as CurbIQ; mapping curbside data to help cities like Los Angeles take control over the curb space.

The operating EBITA margin was slightly lower than last year was driven by increased investments in digital solutions and talent attraction and development.

The backlog at the Mobility amounted to €538 million, representing 17% of Arcadis’ total backlog.

The Intelligence GBA was established in late 2022 to advance Arcadis digital value propositions and signals a further transformational step in the development of new digital services, products, and solutions at Arcadis. The GBA Intelligence was created in October 2022 and combines Arcadis Gen, Intelligence business of IBI Group and other digital activities coming from Arcadis. The consolidated Intelligence GBA will act as a growth enabler for the other GBAs - Resilience, Places and Mobility - and provides attractive opportunities for efficiencies and enhanced client delivery.

The performance of the Intelligence GBA in the fourth quarter is slightly dilutive to Arcadis group, reflecting the combined organisation before cost optimization has been created.

Backlog and order intake were strong with continued good order intake in tolling solutions and several wins in major cities for our smart city platform. The Group was also awarded a key contract by a US transportation client to upgrade their asset management systems. The total backlog is €113 million as of year-end, representing 4% of total Arcadis backlog. The strong Q4 order intake at €31 million reflects the opportunity this newly created GBA provides.

Net working capital as a percentage of annualized gross revenues and Days Sales Outstanding (DSO) was strong and in line with last year, with respectively 10.7% and 63 days, demonstrating Arcadis’ discipline in working capital management.

Free cash flow generation during the quarter was strong at €146 million generating a full year free cashflow of €173 million (2021: €234 million), in line with usual seasonality. Higher capex, financing cost and normalization of working capital levels contributed to the lower free cash for the year.

As the acquisition of the IBI Group successfully closed on 27 September 2022 and the acquisition of DPS Group successfully closed on 1 December 2022, the Arcadis balance sheet as of yearend 2022 fully includes the assets and liabilities of both IBI Group and DPS Groups. The €600 million bridge loan has been drawn and the €150 million accordion option exercised, bringing net debt to €1,005 million at year-end (2021: €168 million). This resulted in a net debt to pro forma Operating EBITDA ratio at year-end of 2.2x (2021: 0.5x), well within our strategic target range of 1.5x to 2.5x.

As of 31 December 2022, backlog, expressed in expected net revenues, reached a record high level of €3.1 billion (2021: €2.2 billion) reflecting a book-to-bill ratio of 1.03. The group secured €3.0 billion order intake during the year and added €494 million of backlog from IBI Group and €460 million from DPS Group. The organic backlog growth was 4.2% and 8.9% pro forma, as the IBI Group backlog grew by 10% in 2022 and the DPS Group backlog by 34%.

Arcadis will propose a cash dividend of €0.74 per share (2021: €0.70) to its shareholders, representing 6% increase year on year, and with a pay-out ratio of 33% this is in line with our dividend policy of 30-40% of Net Income from Operations.

2022 has been both a foundational and pivotal year for Arcadis’ future, and significant progress has been achieved in delivering our ‘Maximizing Impact’ strategic targets.

The Global Business Areas
Resilience, Places and Mobility have been up and running for 12 months. The new model enables us to share expertise and capabilities globally to better serve our clients, win new projects, and provide exciting opportunities for our people.

The Group also started to demonstrate better cross-GBA collaboration. For example, in the Places and Mobility businesses there has been close collaboration to grow industrial manufacturing expertise, particularly around the building of gigafactories to support battery production and the rollout of electric vehicles. This new organizational operating structure has allowed Arcadis to accelerate its organic growth and deliver 8.9% of net revenues organic growth.

Strategic portfolio repositioning
As part of its ‘Focus and Scale’ strategic pillar, Arcadis achieved its geographical positioning, reducing its footprint in Asia and in Continental Europe in countries in which we had a relatively small presence, focusing on geographies where it has a sufficient scale and the right portfolio of projects and capabilities.

Meanwhile, the business successfully delivered the acquisitions of HydroNET, a provider of digital water solutions and Giftge Consulting, a leading player in the German energy transition market. These acquisitions strengthen the offering and solutions for the Resilience business. Arcadis successfully delivered the acquisitions of IBI Group and DPS Group. This has accelerated the shift of the Places portfolio by increasing Arcadis’ footprint in North America and towards an increased share in industrial manufacturing, especially life sciences and semiconductors. The creation of a fourth GBA, Intelligence, will help advance its digital value propositions and signals a transformational step in the development of new digital services, products, and solutions at Arcadis.

These strategic acquisitions grew Arcadis talent to nearly 36,000 people globally, strengthening its position in North America and Europe, drive growth of its combined solutions and accelerate its strategy.


  • 4 May 2023 – Q1 2023 Trading Update
  • 12 May 2023 – Annual General Meeting
  • 27 July 2023 – Q2 & HY 2023 Results
  • 26 October 2023 – Q3 2023 Trading Update
Christine Disch

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Christine Disch, Global Investor Relations Director

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