• Press Release
  • October 25, 2017

ARCADIS TRADING UPDATE Q3 2017

  • Gross revenues €766 million. Net revenues €585 million, organically +3%
  • EBITDA €50 million, +2%; Operating EBITA €45 million, +4%
  • Net working capital 19.8% (Q3 2016: 20.9%)
  • Free cash flow of +€41 million in Q3 leading to lower year-on-year net debt of €492 million
  • Backlog €2.0 billion, impacted by foreign exchange effects. Over the first nine months, backlog increased 1% organically
  • Capital markets day and strategy update on 21 November 2017 in London

KEY FIGURES

in € millions
Period ended 30 September
THIRD QUARTER   YEAR-TO-DATE  
2017 2016 change 2017 2016 change
Gross revenues 766 797 -4% 2,414 2,475 -2%
Net revenues 585 596 -2% 1,841 1,860 -1%
Organic growth 3%     0%    
EBITDA 50 49 2% 149 157 -5%
EBITA 40 39 4% 120 127 -5%
Operating EBITA1) 45 43 4% 136 141 -4%
Operating EBITA margin 7.7% 7.3%   7.4% 7.6%  
Free cash flow 41 40   12 -22  
Net working capital %       19.8% 20.9%  
Net debt       492 554  
Backlog net revenues (billions)       2.0 2.2  

1)  Excluding acquisition, restructuring and integration-related costs

Amsterdam, 25 October 2017 - Arcadis (EURONEXT: ARCAD), the leading global Design & Consultancy firm for natural and built assets, reports a 3% organic increase in net revenues for Q3 2017. The operating EBITA was €45 million, an increase of 4% versus Q3 2016.

CEO STATEMENT
Peter Oosterveer CEO Arcadis comments: "Organic net revenue growth in this quarter was positive for the first time in nine quarters. Our focus on clients and a positive business sentiment in the majority of our markets contributed to a net revenue increase in North America, Continental Europe, the UK and Australia. We also grew our earnings, in spite of a loss in Brazil, challenging conditions in the Middle East, and currency impacts. Furthermore, we are pleased to have received significant cash payments for milestone-based contracts in the Middle East.

The improving results, strong pipeline, and our focus on business priorities give me confidence that we will continue to make progress in the fourth quarter.

Global megatrends like urbanization, mobility, digital transformation and climate change offer many opportunities for Arcadis. In combination with the expertise and passion of our people I am convinced we can continue to grow and improve our performance in the years ahead. We will provide a strategy update during the capital markets day on November 21st 2017 in London".

REVIEW OF PERFORMANCE

Revenues by segment
Net revenues increased organically by 3% in the third quarter, trending up from previous quarters. North America, Continental Europe, the UK, and Australia delivered organic growth. Net revenues declined in Latin America, Asia and CallisonRTKL.

Americas
(31% of net revenues)

in € millions
Period ended 30 September  
THIRD QUARTER   YEAR-TO-DATE  
2017 2016 change 2017 2016 change

Gross revenues

284

297

-4%

882

904

-2%

Net revenues

181

190

-5%

576

581

-1%

Organic growth

-1%

 

 

-3%

 

 

In North America revenues increased organically by 3% in the quarter and 2% year-to-date driven by the Environmental and Infrastructure businesses. Backlog grew and we see a strong pipeline of opportunities.

Latin America's net revenues in the third quarter were in line with the first quarters in 2017, bringing year-to-date revenues 29% below last year. Additional restructuring measures were taken in Brazil to further reduce costs. Backlog dropped especially due to a contract cancellation.
             
             
Europe & Middle East
(45% of net revenues)

in € millions
Period ended 30 September
THIRD QUARTER   YEAR-TO-DATE  
2017 2016 change 2017 2016 change

Gross revenues

312

320

-3%

997

1,045

-5%

Net revenues

264

257

3%

830

838

-1%

Organic growth

8%

 

 

3%

 

 

In Continental Europe net revenues increased organically by 9% in the quarter and 6% year-to date to which all countries contributed. Revenue growth was mainly driven by Buildings, and increasingly also in Environment and Water. Strong market conditions in the private sector supported a good order intake. The infrastructure business in the Czech Republic was divested.  

The United Kingdom delivered 9% organic net revenue growth in the quarter and 6% year-to-date. Especially Infrastructure, Water, and Buildings contributed to the growth. Backlog further improved after winning a number of strategic pursuits.

Net revenues in the Middle East were organically flat for the quarter and declined year-to-date by 9%. Backlog came down due to selective bidding and lower demand.

Asia Pacific
(14% of net revenues)

in € millions
Period ended 30 September  
THIRD QUARTER   YEAR-TO-DATE  
2017 2016 change 2017 2016 change

Gross revenues

92

98

-6%

288

281

3%

Net revenues

87

88

-2%

258

254

2%

Organic growth

1%

 

 

0%

 

 

Net revenues in Asia declined organically by 2% in the quarter and 4% year-to-date. Singapore generated lower revenues due to a slower buildings market and from exiting low margin services. Revenues in China were higher. A small associate company in Brunei was divested. The backlog in Asia is flat.

In Australia organic net revenue grew 9% in the quarter and 8% year-to-date, as a result of delivering key infrastructure, buildings and environmental projects across major urban areas. Order backlog increased significantly, while the pipeline is strong.

CallisonRTKL
(10% of net revenues)

in € millions
Period ended 30 September  
THIRD QUARTER   YEAR-TO-DATE  
2017 2016 change 2017 2016 change

Gross revenues

79

81

-4%

247

245

1%

Net revenues

53

61

-13%

177

187

-5%

Organic growth

-8%

 

 

-4%

 

 

Net revenues declined organically by 8% in the quarter and 4% year-to-date, mainly due to lower activity levels in US commercial real estate. Despite an almost stable backlog in the third quarter, year-to-date backlog is down 9%.
             
             
CASH FLOW, WORKING CAPITAL AND BALANCE SHEET
At the end of September, net working capital as a percentage of gross revenues was 19.8% (Q3 2016: 20.9%). Days sales outstanding decreased with 5 days to 96 days (Q3 2016: 101 days). Free cash flow in the third quarter was €41 million (Q3 2016: €40 million), while year-to-date free cash flow was €12 million (2016: -€22 million) reflecting lower working capital. Net debt at the end of September was €492 million (September 2016: €554 million).

Arcadis will invest up to €20 million over the next 6 to 9 months to optimize value creation of the non-core clean energy assets in Brazil ahead of a future divestment.

Backlog
Backlog at the end of September 2017 was €2.0 billion, negatively impacted by foreign exchange effects (-9% year-to-date) and a significant contract cancellation in Brazil. Over the first nine months, backlog increased 1% organically.

Backlog grew especially in North America, the UK, Continental Europe, Asia and Australia, while Latin America, the Middle East and CallisonRTKL saw a declining backlog.

outlook 2017

  • In general, positive business sentiment in most regions
  • Increased infrastructure spending in many countries
  • Uncertainty around Brazil and the Middle East remains
  • Strong pipeline and cost reductions supporting profitable growth

Leadership priorities 2017

  • 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
  • Driving innovation through digitalization
  • Finalizing the strategy update and progressing the strategic review of CallisonRTKL
     

Financial Calendar 2017
21 November 201 7        Capital Markets Day, including strategy update
15 February 2018          Publication Full year results 2017

For further information please contact:

Arcadis Investor Relations
Jurgen Pullens
Telephone: +31 20 2011083
Mobile: +31 6 51599483
E-mail: jurgen.pullens@arcadis.com

Arcadis Group Communications
Joost Slooten
Mobile: +31 6 27061880
E-mail: joost.slooten@arcadis.com

Conference Call
As of 2017, Arcadis will host an analyst meeting, conference call, and webcast with the
publication of the half year and full year results.

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 the 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.

Joost Slooten

Director of Sustainability and External Affairs +31 20 2011083 / +31 6 27061880 Ask me a question