ARNHEM, The Netherlands,
May 7, 2010 /PRNewswire/ --
- Gross revenues increase 7%, net income from operations rises 10%
- Pressure in local markets impacts infrastructure and to a lesser extent
water
- Environment improves due to increased demand from private sector
clients
- Buildings stabilizes, aided by order intake from Asia and Middle East
- Good order intake leads to increase in backlog in all business lines
- Possible return to organic growth in second half of 2010
ARCADIS (EURONEXT: ARCAD), the international design, consulting,
engineering and management services company, achieved good results
in the first quarter of 2010. Gross revenues rose 7% to
EUR 448 million, aided by the merger
with Malcolm Pirnie. Net income from
operations increased 10% to EUR 17.1
million, despite a negative currency effect of 2%. The
organic revenue decline was stable compared to the fourth quarter
of 2009. In infrastructure and to a lesser extent water, the impact
is visible of pressure in local government markets that was
signaled earlier. This is offset by increasing demand in the
environmental market, particularly in the U.S., while the situation
in the buildings market has stabilized. The harsh winter had a
negative effect on revenues and income. Partly as a result of this,
the margin slightly declined.
CEO Harrie Noy commented:
"Central governments continue to invest to stimulate the fragile
economic recovery, but pressure on local government budgets weakens
growth in the infrastructure market. The budding economic recovery
leads to increased demand from the private sector, especially in
the environmental market. The commercial real estate market in
Europe and the U.S. is stable at a
low level, but the focus on niche markets and opportunities in
Asia and the Middle East again led to an increase of
backlog in buildings. Continuous attention to cost control and a
client focused approach, keeps the margin at a good level."
Key figures
Amounts in EUR million, unless otherwise noted First Quarter change
2010 2009 in %
Gross revenues 448 418 7%
Net revenues 325 291 12%
EBITA 29.3 27.9 5%
Net income from operations 1) 17.1 15.5 10%
Ditto, per share (in EUR) 1) 0.26 0.26 0%
Average shares outstanding (in millions) 66.5 60.1
1) Before amortization and non-operational items
Analysis
Gross revenues rose 7%. The currency effect was minus 1%. The
contribution from acquisitions - especially Malcolm Pirnie - was 16%. Organically, revenues
declined 8%.
Net revenues (revenues generated by our own staff) rose 12%. The
currency effect was minus 1%, the contribution from acquisitions
17%. The organic decline of 4% was at the same level as in the
fourth quarter of 2009. As a result of the completion of several
projects with a large amount of subcontracting, gross revenues
organically declined more than net revenues. In most European
countries, organic growth weakened, while in the U.S. revenues
declined organically, although less than last year especially due
to increasing demand in the private sector environmental market.
The strongest organic decline was still seen in the real estate
market in England and at RTKL,
although in RTKL a recovery is visible.
EBITA rose 5% to EUR 29.3 million.
The currency effect was minus 2%; acquisitions contributed 13%. On
balance, the organic decline was 6%. In England, last year's restructuring yielded
results, while in most other European countries results improved
slightly. Offsetting this was a limited decrease of results in
the Netherlands and Belgium, partly caused by the harsh winter,
while in Brazil a number of energy
projects generated a loss. As a result, the margin (EBITA as a
percentage of net revenues) of 9.0% was slightly behind last year
(2009: 9.6%). In the U.S. and in RTKL the good order intake in
combination with a focus on cost control had a positive effect on
results.
Just like last year, there was no contribution from the sale of
carbon credits in Brazil. The
procedures that caused the delay have almost been completed and the
sale is expected to start again in the second quarter. Also because
of the myriad opportunities in Brazil, strategic options for the Brazilian
energy projects are being reviewed.
Financing charges were EUR 4.1
million compared to EUR 2.4
million last year - after correction for the proceeds of the
unwinding of derivates of EUR 7.5
million early 2009. The increase is mainly the result of
acquisitions.
Net income from operations increased 10%. This is more than the
increase in EBITA as a result of lower taxes and a higher
contribution from associated companies.
Developments per business line
Figures noted below concern gross revenues for the first three
months of 2010 compared to the same period last year, unless
otherwise noted. As of 2010, Water is a separate business line,
whereas before this was part of Infrastructure.
- Infrastructure (25% of gross revenues)
Gross revenues declined 4%. The currency effect was 3%. The
organic revenue decline of 7% in part resulted from the completion
late last year of a number of large projects with extensive
subcontracting. Net revenues declined only slightly, also as a
result of the harsh winter. After local markets came under pressure
in the U.S. earlier, this was now also noticeable in Europe. Central government programs generated
growth in Belgium, the Netherlands and Central Europe. A consortium with ARCADIS was
selected for the high speed rail line Tours - Bordeaux, the largest PPP project ever in
France.
- Water (20% of gross revenues)
Gross revenues more than doubled as a result of the merger with
Malcolm Pirnie. The currency effect
was minus 1%. Organically, gross revenues increased 1% and net
revenues by 4%, especially due to increased demand in water
management. In Brazil, a large
contract was won for the São Francisco
River to combat continual water shortages. Pressure on local
government budgets also impacts the water market, but to a lesser
extent. Malcolm Pirnie is able to
offset declines in the western and southern U.S. with more work in
the northeast.
- Environment (35% of gross revenues)
Gross revenues rose 2%. The currency effect was minus 3% and the
contribution from acquisitions 11% (environmental activities
Malcolm Pirnie). The organic decline
was 6%, but in net revenues was limited to 1%, a clear improvement
from previous quarters. This also resulted from the large contract
wins in the U.S. in 2009 and from a gradually increasing demand
from companies as a result of the economic recovery. In
Europe, activities rose almost
across the board. A five year framework contract was signed with
ExxonMobil for environmental services in ten European
countries.
- Buildings (20% of gross revenues)
Revenues were down 15% at a currency effect of minus 2%. A small
acquisition in the healthcare field in the Netherlands contributed 1%. Organically
gross revenues were down 13%, net revenues 14%. The commercial real
estate market in England and the
U.S. has stabilized at a low level. RTKL compensates the decline in
the U.S. and Europe with projects
in Asia and the Middle East. The assignment for the design of
the Shanghai Changzheng Pudong hospital, the largest new hospital
in China, marks the breakthrough.
In Belgium demand for industrial
services is increasing.
Outlook
The economic recovery is becoming more visible, especially in
the United States. However, the
recovery is fragile and it remains to be seen to what extent
economic conditions will impact the different markets in which
ARCADIS is active.
The infrastructure market remains healthy because governments
continue to invest, mostly based on multiyear investment programs.
In Europe, ARCADIS is involved in
many of these programs. The attraction of PPP initiatives, for
which ARCADIS is very well positioned, is increasing. The stimulus
package in the U.S. helps, but the effect on our activities will be
limited. Brazil offers many
opportunities for growth, both in the public and the private
sector, while in Chile
reconstruction work is done following the earthquake.
In the water market the need for drinking water, a cleaner
environment and flood protection are important growth drivers. This
is strengthened by the attention for climate change. The effect of
pressure on local government budgets is expected to be limited.
Synergy with Malcolm Pirnie offers
many opportunities in this market. Currently the strategy for water
is being worked out with the aim of also expanding internationally.
Priorities are Brazil,
Chile and the Middle East.
In the environmental market regulation and sustainability
provide a solid basis. Clients use the recession to focus on their
core business, while outsourcing portfolios of contaminated sites
for clean-up. This trend, which in the U.S. led to a number of
large contracts, is expected to continue. Our strong competitive
position, based on international presence and advanced technology,
will allow us to gain market share, especially now that private
sector demand comes up again and vendor reduction is increasing. We
also benefit from growing demand for consultancy on energy savings
and carbon footprint reduction.
The buildings market appears to be bottoming out. For the second
quarter in a row backlog increased. The commercial market
stabilized, without expectations for a recovery in the short term.
At RTKL the situation clearly improved as a result of strong order
intake in Asia, the Middle East and in healthcare. This
development, and the fact that demand from the public sector,
including schools and healthcare, remains at a good level, may lead
to a recovery of revenues in the second half of 2010. Facility
management can also contribute to this.
CEO Harrie Noy concluded: "In the
first quarter our backlog again grew by 5%. All business lines
contributed to this growth. Although infrastructure growth weakens
due to pressure in local markets, this is offset by the improving
outlook for environment and buildings, also resulting from
increasing demand from private sector clients. This means that in
the second half further recovery is possible and organic activity
growth may occur. Maintaining margins remains a priority. The
integration with Malcolm Pirnie
creates synergy opportunities and as of 2011, operational benefits.
Further expansion through acquisitions remains on our agenda.
Themes like sustainability, climate change, urban renewal,
mobility, water and energy offer a positive long term outlook.
Because of uncertainties about the economy, it is too early to give
a specific outlook for 2010."
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
15,000 employees and EUR 1.8 billion
in revenues, the company has an extensive international 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:
http://www.arcadis.com
ARCADIS NV
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Amounts in EUR millions, unless otherwise
stated First quarter
2010 2009
Gross revenue 448.2 418.0
Materials, services of third parties and
subcontractors (122.7) (127.5)
Net revenue 325.5 290.5
Operational cost (289.8) (257.0)
Depreciation (6.5) (5.9)
Other income 0.1 0.3
EBITA 29.3 27.9
Amortization identifiable intangible assets (1.6) (1.2)
Operating income 27.7 26.7
Net finance expense (4.1) 5.1
Income from associates 0.7 0.1
Profit before income taxes 24.3 31.9
Income taxes (8.2) (11.5)
Profit for the period 16.1 20.4
Attributable to:
Net income (Equity holders of the Company) 15.9 20.2
Minority interest 0.2 0.2
Net income 15.9 20.2
Amortization identifiable intangible assets
after taxes 1.0 0.8
Lovinklaan employee share purchase plan 0.2 0.1
Net effects of financial instruments (5.6)
Net income from operations 17.1 15.5
Net income per share (in euros) 0.24 0.34
Net income from operations per share (in
euros) 0.26 0.26
Weighted average number of shares (in
thousands) 66,526 60,108
ARCADIS NV
CONDENSED CONSOLIDATED BALANCE SHEET
Amounts in EUR millions
March 31 December 31,
Assets 2010 2009
Intangible assets 359.0 342.7
Property, plant & equipment 85.3 84.8
Investments in associates 27.8 26.2
Other investments 0.2 0.2
Other non-current assets 22.1 19.8
Derivatives 0.2 1.2
Deferred tax assets 20.0 18.0
Total non-current assets 514.6 492.9
Inventories 0.5 0.5
Derivatives 0.4 0.1
(Un)billed receivables 577.5 555.1
Other current assets 46.1 35.9
Corporate tax assets 13.9 6.2
Cash and cash equivalents 155.8 224.5
Total current assets 794.2 822.3
Total assets 1,308.8 1,315.2
Equity and liabilities
Shareholders' equity 365.4 351.7
Minority interest 17.7 16.8
Total equity 383.1 368.5
Provisions 29.5 28.4
Deferred tax liabilities 20.1 10.8
Loans and borrowings 362.1 342.1
Derivatives 2.7 0.8
Total non-current liabilities 414.4 382.1
Billing in excess of cost 155.5 158.8
Corporate tax liabilities 8.2 7.4
Current portion of loans and borrowings 5.3 5.6
Current portion of provisions 5.0 6.0
Derivatives 4.6 2.7
Accounts payable 109.3 128.9
Accrued expenses 15.6 21.3
Bankoverdrafts 8.1 12.0
Short term borrowings 15.7 14.9
Other current liabilities 184.0 207.0
Total current liabilities 511.3 564.6
Total equity and liabilities 1,308.8 1,315.2
ARCADIS NV
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Amounts in EUR millions
Share Share Hedging Cumulative
Capital Premium Reserve Translation
Reserve
Balance at December 31,
2008 1.2 36.2 (40.2)
Profit for the period
Exchange rate differences 3.9
Taxes related to
share-based compensation
Other comprehensive income 3.9
Total comprehensive income
for the period 3.9
Dividends to shareholders
Share-based compensation
Options exercised
Balance at March 31, 2009 1.2 36.2 (36.3)
Balance at December 31,
2009 1.3 106.8 0.1 (28.4)
Profit for the period
Exchange rate differences 2.5
Effective portion of
changes in fair value of
cash flow hedges (1.3)
Taxes related to
share-based compensation
Other comprehensive income (1.3) 2.5
Total comprehensive income
for the period (1.3) 2.5
Dividends to shareholders
Share-based compensation
Purchase of shares
Options exercised
Balance at March 31, 2010 1.3 106.8 (1.2) (25.9)
Table continues below
Amounts in EUR millions Retained Total Minority Total
earnings Share- Interest equity
holders'
equity
Balance at December 31, 2008 210.4 207.6 12.3 219.9
Profit for the period 20.2 20.2 0.2 20.4
Exchange rate differences 3.9 0.7 4.6
Taxes related to share-based
compensation - - -
Other comprehensive income - 3.9 0.7 4.6
Total comprehensive income for
the period 20.2 24.1 0.9 25.0
Dividends to shareholders (0.1) (0.1)
Share-based compensation 1.5 1.5 1.5
Options exercised 0.1 0.1 0.1
Balance at March 31, 2009 232.2 233.3 13.1 246.4
Balance at December 31, 2009 271.9 351.7 16.8 368.5
Profit for the period 15.9 15.9 0.2 16.1
Exchange rate differences 2.5 0.7 3.2
Effective portion of changes in
fair value of cash flow hedges (1.3) (1.3)
Taxes related to share-based
compensation (0.5) (0.5) (0.5)
Other comprehensive income (0.5) 0.7 0.7 1.4
Total comprehensive income for
the period 15.4 16.6 0.9 17.5
Dividends to shareholders - -
Share-based compensation 2.5 2.5 2.5
Purchase of shares (7.2) (7.2) (7.2)
Options exercised 1.8 1.8 1.8
Balance at March 31, 2010 284.4 365.4 17.7 383.1
ARCADIS NV
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Amounts in EUR millions First quarter
2010 2009
Cash flows from operating activities
Profit for the period 16.1 20.4
Adjustments for:
Depreciation and amortization 8.1 7.1
Taxes on income 8.2 11.5
Net finance expense 4.1 (5.1)
Income from associates (0.7) (0.1)
35.8 33.8
Share-based compensation 2.5 1.5
Change in fair value of derivatives in operating income 0.2
Change in inventories - 0.2
Change in receivables (17.3) 10.8
Change in deferred taxes 8.4 3.0
Change in provisions (0.7) 1.0
Change in billing in excess of costs (9.1) (3.4)
Change in current liabilities (64.8) (50.5)
Dividend received - 0.1
Interest received 0.6 1.3
Interest paid (3.2) (6.1)
Corporate tax paid (6.0) (16.0)
Net cash from operating activities (53.6) (24.3)
Cash flows from investing activities
Investments in (in)tangible assets (4.8) (9.0)
Divestments of (in)tangible assets - 0.5
Investments in consolidated companies (2.8) (1.1)
Investments in associates and other financial
non-current assets (2.0) (1.8)
Divestments of associates and other financial
non-current assets 0.7 1.1
Net cash used in investing activities (8.9) (10.3)
Cash flows from financing activities
Proceeds from options exercised 1.8 0.1
Purchase of own shares (7.2)
New long-term loans and borrowings 1.6 0.3
Repayment of long-term loans and borrowings (2.4) (6.3)
Changes in short-term borrowings 0.2 1.0
Settlement of financing derivatives (2.5)
Net cash from financing activities (8.5) (4.9)
Net change in cash and cash equivalents less
bankoverdrafts (71.0) (39.5)
Exchange rate differences 6.2 2.0
Cash and cash equivalents less bankoverdrafts at
January 1 212.5 111.7
Cash and cash equivalents less bankoverdrafts at March
31 147.7 74.2