ARNHEM, The Netherlands, August 7 /PRNewswire/ --
- Gross Revenues Increase by More Than 20% - Organic Growth Remains at Good Level, With Strongest Performance in Environment - Second Quarter Net Income From Operations Increased 16%, in the First Half Year by 18% - Strong Increases in Revenues and Profit Despite Negative Currency Effect of 6% to 7% - Further Margin Improvement Realized - Expected Increase of Net Income From Operations for Full Year 2008: 10% to 15%
ARCADIS (Euronext: ARCAD) the international consulting, design, engineering and management services company, continued its good performance into the second quarter of 2008. Gross revenues rose by 23% to EUR 427 million. At 8%, organic growth remained at a good level. The environmental market was again a major contributor to growth, while in most European countries, growth in buildings activities strengthened. Net income from operations rose 16% to EUR 16.3 million. The decline of the U.S. dollar and the British pound had a negative impact on revenues and profit of 6% to 7%.
In the first half year of 2008, gross revenues rose 22% to EUR 827 million. The organic growth was 9% and at 15% was especially strong in the environmental market. Environment is now the biggest business line within ARCADIS. Net income from operations increased 18% to EUR 31.6 million. This was the result of a growth in activities, a good contribution from acquisitions and an improvement in profitability, particularly in the United States. The margin improved to 10.1% against 9.8% last year. The currency effect was 6% to 7% negative.
After the acquisition of environmental consultancy LFR (gross revenues $127 million, 480 people) in January 2008, two smaller acquisitions followed in the quarter: Elekol in Poland (gross revenues EUR 3 million, 40 people), specialized in rail infrastructure, and VDS in Belgium (gross revenues EUR 3.5 million, 35 people), active in the infrastructure market. After the second quarter, the Italian environmental consultancy SET (gross revenues EUR 9 million, 35 people) was acquired, particularly to serve multinational clients in Italy.
CEO Harrie Noy about the half year results: "Our focus on markets with growth potential, strong client focused approach and internal cooperation aimed at synergies, forms the basis for these good results. By expanding our market share, growth in the environmental market remains at a high level. In the United States, the strong results were continued, partly due to intensified sales efforts and costs controls. RTKL benefits from its leading position in architectural design and planning and delivered results that were better than expected due to timely anticipation of the changes in the real estate market."
Amounts in EUR millions, Second First half unless otherwise noted quarter year 2008 2007 Change 2008 2007 Change Gross revenues 427 348 23% 827 680 22% EBITA 29.5 23.8 24% 57.0 46.4 23% Net income 17.0 13.2 28% 28.6 24.8 15% Net income per share (in EUR) 1) 0.28 0.22 28% 0.47 0.41 15% Net income from operations 2) 16.3 14.0 16% 31.6 26.8 18% Ditto per share (in EUR) 1,2) 0.27 0.23 17% 0.52 0.44 18%
1) In 2008 based on 60.6 million shares outstanding (in 2007: 61.3 million)
2) Before amortization and non operational items
The increase of gross revenues of 23% was impacted negatively by 6% as a result of currency declines. Through the takeover of RTKL, LFR and some smaller companies, the contribution from acquisitions was 21%. Organic growth amounted to 8% and was strongest in the Netherlands, Brazil and Chile. In the other European countries organic growth increased to 7%, despite a decline in the English real estate market. In the United States, organic growth weakened due to less third party work in the environmental market and temporary delays in the start up of new infrastructure projects.
Net revenues, the part of revenues produced by our own staff, increased 22%; excluding currency effect by 28%. Acquisitions contributed 21%. The organic growth of 7% was higher than in the first quarter. Due to shifts in the mix of projects, net revenues in the environmental market increased much stronger than gross revenues.
EBITA rose by 24%, and excluding currency effect by 31%. Of this, 20% resulted from acquisitions. The organic increase was 11%. This includes a contribution from the sale of carbon credits from the biogas production in Brazil of EUR 1.3 million, versus EUR 0.2 million last year. Excluding this effect the organic EBITA increase was 6%.
Financing charges were strongly influenced by the effect of financial derivatives used to hedge interest rate and currency risks. Excluding this effect, financing charges rose to EUR 3.1 million (2007: EUR 1.7 million), mainly caused by through investments for acquisitions. Net income from operations rose 16% to EUR 16.3 million. This is lower than the increase of EBITA as a result of a larger minority interest resulting from growth in Brazil, higher financing charges and somewhat higher taxes.
First half year
Gross revenues rose 22%, excluding currency effect by 28%. The contribution from acquisitions was 19%. The organic growth amounted to 9%. The Netherlands continued to develop favorably with organic growth of 13%, while Belgium, France, Central Europe, Brazil and Chile also delivered solid contributions. The 9% organic growth in the United States was entirely achieved in the environmental market, where our performance remains strong.
Net revenues increased by 20%, excluding currency effect by 26%. Of this, 19% was the result of acquisitions, while organic growth was 7%.
EBITA increased by 23%, excluding currency effect by 30%. The contribution from acquisitions was 22% while the organic increase amounted to 8%. The contribution from the sale of carbon credits was slightly below last year. Nevertheless, the margin (EBITA as a percentage of net revenues) improved to 10.1% versus 9.8% in 2007.
Net income from operations increased by 18%. This is somewhat less than the increase in EBITA, especially due to higher financing charges and higher taxes. Excluding the derivatives which are used to hedge interest rate and currency risks, financing charges rose to EUR 6.8 million (2007: EUR 2.6 million), mainly as a result of investments in acquisitions. Taxes increased because of lower deductability of option costs and a larger profit share from the United States.
Developments per business line
Figures noted below concern gross revenues for the first half year of 2008 compared to the same period last year, unless otherwise noted.
Gross revenues increased 2%. The contribution from acquisitions and divestments on balance was 1% negative. The currency effect was minus 2%. The organic growth of 5% was negatively affected by the earlier decline in land development in the United States. Excluding this effect, organic growth amounted to 7%. In Europe, especially the Netherlands, France and Central Europe contributed to this, while in Brazil and Chile, mining and energy generated growth. In the second quarter, organic growth weakened because in the United States some delays occurred in the start up of projects, although the backlog in especially water increased considerably.
Gross revenues grew 19%, despite a negative currency effect of 12%. The contribution from acquisitions (LFR and Vectra) was 15%, organic growth was also 15%. In the United States, organic growth remained at a high level at 17%, despite a shift in the project mix leading to less third party work. In the Netherlands and Belgium activities also saw strong growth, among other things in environmental impact assessments in which we have a strong position. In England and Brazil, growth was mainly the result of an expansion of our services to multinational clients, including the oil- and gas industry.
Gross revenues increased by 74%, of which 72% as a result of the acquisitions of RTKL and APS. The currency effect was minus 4%. The 6% organic growth was mainly the result of an increase in activities in most European countries in the second quarter, while in the United States, project management activities grew again. Mainly in England, our project management business was affected by delays in (commercial) real estate projects, with a negative effect on revenues. Even though RTKL has also experienced that financing of some projects appears to be somewhat more challenging, activities increased as a result of growth in non-commercial projects and the international market.
The infrastructure market offers ample opportunities with often longer term investment programs in Europe and private financing to accelerate implementation. In Central Europe, high investment levels are maintained due to European Union funding; Brazil and Chile grow in mining and energy. In Brazil, ARCADIS Logos continues to develop a portfolio of energy projects, especially small hydro power plants. In the United States, the transportation market appears stable, while the framework contract for New Orleans, with already more than $45 million in task orders this year, provides a solid basis in the water market.
Sustainability and regulation generate continued high demand in the environmental market. An increasing number of multinationals want to work with a limited number of international service providers, as a result of which our market share can grow. The strong demand from the oil- and gas industry and utilities, more GRiP(R) contracts from the U.S. Army, the application of GRiP(R) in Europe and the synergy with LFR offer growth opportunities. Climate change leads to a diversification of our services to industrial clients, such as carbon footprinting and emission reduction.
In the buildings market the credit crisis causes delays in commercial real estate projects, especially in England and the United States. RTKL has successfully opted to go after non-commercial projects in the U.S. and projects in Asia, Central and Eastern Europe and the Middle East. For project management we see opportunities in infrastructure, but also in the Middle East. The new facility management contract with Philips is an excellent basis for further expansion of this service.
CEO Noy concludes: "The markets in which we operate offer many opportunities. Sustainability, climate change, urban renewal, mobility and energy are important drivers for growth. With our strong home market positions and distinguishing service offering, we are well positioned to benefit from these developments. Our backlog is strong. Still, the economic uncertainty demands cautiousness. That is why we give high priority to cost controls and intensified sales efforts in attractive areas. Further expansion through acquisitions remains high on the priority list. Barring unforeseen circumstances, we expect for 2008 a further increase of net income from operations of 10% to 15%."
ARCADIS is an international company providing consultancy, design and engineering and management services in infrastructure, environment and buildings, to enhance mobility, sustainability and quality of life. ARCADIS develops, designs, implements, maintains and operates projects for companies and governments. With more than 13,500 employees and EUR 1.5 billion in gross revenue, the company has an extensive international network that is supported by strong local market positions.
The information provided in this press release is derived from the Interim Financial Statements 2008, which are available on the ARCADIS website http://www.arcadis-global.com
ARCADIS NV CONSOLIDATED STATEMENT OF INCOME Amounts in EUR millions, Second quarter First half year unless otherwise stated 2008 2007 2008 2007 Gross revenue 427.4 348.0 827.3 680.1 Materials, services of third parties and subcontractors (138.5) (111.7) (261.5) (206.8) Net revenue 288.9 236.3 565.8 473.3 Operational cost (253.9) (208.0) (497.9) (418.2) Depreciation (5.8) (4.5) (11.4) (8.7) Other income 0.3 0.5 EBITA 29.5 23.8 57.0 46.4 Amortization identifiable intangible assets (3.5) (1.7) (5.6) (3.5) Operating income 26.0 22.1 51.4 42.9 Net finance expense 1.0 (1.4) (5.5) (2.2) Income from associates (0.1) (0.2) 0.1 (0.7) Profit before taxes 26.9 20.5 46.0 40.0 Income taxes (8.7) (6.8) (15.4) (13.4) Profit for the period 18.2 13.7 30.6 26.6 Attributable to: Net income (Equity holders of the Company) 17.0 13.2 28.6 24.8 1.2 Minority interest 0.5 2.0 1.8 Net income 17.0 13.2 28.6 24.8 Amortization identifiable intangible assets after taxes 2.4 1.1 3.8 2.3 Option costs UK share save scheme 0.1 0.2 Net effects of financial instruments (3.2) (0.3) (1.0) (0.3) Net income from operations 16.3 14.0 31.6 26.8 Net income per share (in euro's)(1) 0.28 0.22 0.47 0.41 Net income from operations per share (in euro's)(1) 0.27 0.23 0.52 0.44 Weighted average number of shares (in thousands)(1) 60,636 61,287 60,614 61,194
(1) The comparison figures have been adjusted to reflect the 3:1 stock split as effectuated in the 2nd quarter.
ARCADIS NV CONDENSED CONSOLIDATED BALANCE SHEET Amounts in EUR millions June 30, 2008 December 31, 2007 Assets Non-current assets 350.9 332.9 Current assets 687.1 588.8 Total 1,038.0 921.7 Equity and Liabilities Shareholders' equity 179.5 187.7 Minority interest 11.9 11.5 Total equity 191.4 199.2 Non-current liabilities 312.1 216.7 Current liabilities 534.5 505.8 Total 1,038.0 921.7
ARCADIS NV CHANGES IN SHAREHOLDERS' EQUITY Amounts in Share Share Cumulative Retained Total Minority Total EUR millions capital premium translation earnings share- interest equity reserve holders' equity Balance at 1.0 44.2 (7.6) 151.3 188.9 11.8 200.7 December 31, 2006 Exchange (2.9) (2.9) 0.6 (2.3) rate differences Taxes 4.9 4.9 4.9 related to share-based compensation Income directly recognized in equity (2.9) 4.9 2.0 0.6 2.6 Profit for the period 24.8 24.8 1.8 26.6 Total income / (expenses) for the period (2.9) 29.7 26.8 2.4 29.2 Dividends to shareholders (20.4) (20.4) (1.1) (21.5) Own shares purchased for granted options (1.2) (1.2) (1.2) Share-based compensation 1.2 1.2 1.2 Options exercised 1.4 1.4 1.4 Expansion ownership (1.8) (1.8) Balance at June 30, 2007 1.0 44.2 (10.5) 162.0 196.7 11.3 208.0 Balance at December 31, 2007 1.0 44.2 (29.8) 172.3 187.7 11.5 199.2 Exchange rate differences (16.8) (16.8) 0.4 (16.4) Taxes related to share-based compensation 1.1 1.1 1.1 Income directly recognized in equity (16.8) 1.1 (15.7) 0.4 (15.3) Profit for the period 28.6 28.6 2.0 30.6 Total income / (expenses) for the period (16.8) 29.7 12.9 2.4 15.3 Dividends to shareholders (24.8) (24.8) (1.2) (26.0) Stock split 0.2 (0.2) Own shares purchased for granted options - - - Share-based compensation 2.9 2.9 2.9 Options exercised 0.8 0.8 0.8 Expansion ownership (0.8) (0.8) Balance at June 30, 2008 1.2 44.0 (46.6) 180.9 179.5 11.9 191.4
ARCADIS NV CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS First half year 2008 2007 Net income 28.6 24.8 Depreciation and amortization 17.0 12.2 Gross cash flow 45.6 37.0 Net working capital (97.2) (60.0) Other changes 8.2 4.3 Net cash provided/(used) by operating activities (43.4) (18.7) Investments/divestments (net) in: (In)tangible fixed assets (13.5) (0.1) Acquisitions/divestments (34.5) (14.4) Financial assets (2.4) (8.6) Net cash used in investing activities (50.4) (23.1) Net cash provided by financing activities 73.8 42.6 Change in cash and equivalents less bank overdrafts (20.0) 0.8 Exchange rate differences (2.9) (0.8) Cash and cash equivalents less bank overdrafts at January 1 71.7 78.4 Cash and cash equivalents less bank overdrafts at 48.8 78.4 June 30
SEGMENT INFORMATION (First half year) Gross revenue external EBITA 2008 2007 2008 2007 The Netherlands 195.1 170.7 12.1 11.9 Europe, excluding the Netherlands 175.8 158.7 10.2 8.2 United States 389.2 288.3 28.3 19.8 Rest of World 67.2 62.3 6.4 6.5 Eliminations and others - 0.1 827.3 680.1 57.0 46.4 Inter segment revenue Total Consolidated 827.3 680.1 57.0 46.4
The reconciliation of recurring EBITA to total profit before income tax is as follows:
2008 2007 EBITA, recurring 57.0 46.4 Amortization (5.6) (3.5) Net finance expense (5.5) (2.2) Income from associates 0.1 (0.7) Profit before taxes 46.0 40.0
Geographical information only differs from the segment information above as a result of the activities in RTKL and APS, which geographically also are represented in Europe and Rest of World. The geographical information is as follows:
Gross Revenue by origin 2008 2007 The Netherlands 195.1 170.7 Europe, excluding the Netherlands 183.9 158.6 United States 377.3 288.4 Rest of World 71.0 62.3 Eliminations and others - 0.1 Total Consolidated 827.3 680.1
ARNHEM, The Netherlands, August 7 /PRNewswire/ --
For more information, contact: Joost Slooten of ARCADIS NV at +31-26-3778604, outside regular office hours please call +31-6-2706-1880; email: email@example.com; ARCADIS NV, Nieuwe Stationsstraat 10, P.O. Box 33, 6800 LE Arnhem, The Netherlands, Tel +31-26-3778-292, Fax +31-26-4438-381