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Donnerstag,
16.02.2017 07:00
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ARCADIS REPORTS FULL YEAR RESULTS 2016
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- Gross revenues €3.3 billion, 3% below 2015. Net revenues €2.5 billion, organically -4%
- Operating EBITA €175 million (-30%); EBITA €166 million (-20%), including €28 million restructuring cost and €19 million release of Hyder related provisions following settlement of litigation cases
- Net income from operations €91 million (2015: €137 million)
- Business conditions in Brazil led to goodwill impairment of €15 million and in Q4 provision for receivables was increased by €10 million related to Brazil and the Middle East
- Regional cost reductions in Q4 generated €20 million annualized cost savings; simplified operating model will lead to €10 million lower overhead costs in 2017
- Strong free cash flow in the 4th quarter of €102 million, free cash flow 2016 €80 million (2015: €121 million). Net debt €494 million, equal to year-end 2015. At 17.5% net working capital improved from 20.9% in Q3 (2015: 17.1%)
- Net debt/EBITDA at year-end 2.3 and 2016 average covenant ratio 2.5
- Backlog €2.2 billion representing 11 months of net revenues, a decline of 6% due to project cancellations in Brazil, Middle East and China
- Dividend proposal €0.43 per share (2015: €0.63); pay-out ratio 40%
Amsterdam, 16 February 2017 - Arcadis (EURONEXT: ARCAD), the leading global Design & Consultancy firm for natural and built assets, reports a 4% organic decrease in net revenues for 2016. Net income from operations was €91 million, a decrease of 34% versus 2015.
Arcadis interim CEO Renier Vree: "2016 was a challenging year for Arcadis, which required us to take action. I am pleased that we are making good progress on the priorities set in October. We are implementing a simplified operating model which enables us to better respond to market opportunities, combined with structurally reduced overhead costs."
"Furthermore, we delivered a strong free cash flow in the fourth quarter, supported by significant cash collections in the Middle East. The market outlook starts to improve due to higher oil prices and increased Infrastructure spending in many countries. We also see higher demand from cities in Europe, North America and Asia for water resiliency, as well as for environmental consulting around the world. We continue to win large projects, such as a framework with US Army Corps of Engineers for environmental and remediation services across Europe, and for Construction Management Support Services in the $1.55 billion Regional Connector Transit Project to ease congestion around Downtown Los Angeles."
"I am confident that our actions position us for profitable growth. We will continue to focus on our clients to increase our backlog and revenues, reduce our cost base, improve project management, expand our Global Excellence Centers, while reducing working capital."
KEY FIGURES
| in € millions Period ended December 31 | FULL YEAR | FOURTH QUARTER | ||||
| 2016 | 2015 | change | 2016 | 2015 | change | |
| Gross revenues | 3,329 | 3,419 | -3% | 854 | 873 | -2% |
| Organic growth | -1% | 1% | -1% | -1% | ||
| Net revenues | 2,468 | 2,597 | -5% | 608 | 636 | -4% |
| Organic growth | -4% | 0% | -3% | -4% | ||
| EBITA | 166.3 | 208.8 | -20% | 39.7 | 59.8 | -34% |
| EBITA margin | 6.7% | 8.0% | 6.5% | 9.4% | ||
| Operating EBITA1) | 175.5 | 250.3 | -30% | 34.7 | 68.5 | -49% |
| Operating EBITA margin | 7.1% | 9.6% | 5.7% | 10.8% | ||
| Net income | 64.2 | 98.7 | -35% | |||
| Net income per share (in €) | 0.76 | 1.19 | -36% | |||
| Net income from operations | 91.0 | 137.1 | -34% | |||
| Net income from operations per share (in €) | 1.08 | 1.66 | -35% | |||
| Avg. number of outstanding shares (millions) | 84.1 | 82.6 | 2% | |||
| Net working capital % | 17.5% | 17.1% | 17.5% | 17.1% | ||
| Free cash flow 2) | 80.0 | 120.6 | 102.4 | 113.2 | ||
| Backlog (organic growth)/ months | -6%/11 | -7%/11 | -3% | -5% | ||
1) Excluding acquisition, restructuring and integration-related costs and excluding the release of Hyder related litigation provisions of €19.4 million in 2016
2) Cash flow from operating activities minus investments in (in)tangible assets
REVIEW OF PERFORMANCE
Net revenues amounted to €2,468 million and declined organically by 4%. The decrease in net revenues was mainly due to a 37% organic decline in Brazil, and lower revenues in North America, Asia and CallisonRTKL. This was partly compensated by organic revenue growth in Continental Europe, the UK and Australia.
EBITA decreased 20% and included a release of provisions of €19.4 million related to legacy Hyder claims and €28 million in restructuring, acquisition and integration charges (2015: €41.5 million). Our global workforce came down by 2% versus December 2015 (~400 FTEs). The number of employees in the regions fell by ~1,100 FTEs (-4%), while the Global Excellence Centers added ~700 FTEs (+50%).
Operating EBITA decreased by 30% mainly due to an operating loss in Brazil, lower results in North America, Europe and CallisonRTKL and a negative currency effect of the British Pound. Results were stable in the Middle East and in Asia Pacific, where a higher result in Australia compensated for a lower result in Asia. The operating EBITA margin was 7.1% (2015: 9.6%).
The income tax rate was 19.3% (2015: 23.0%). Financing charges were slightly higher at €29.0 million (2015: €26.1 million) due to foreign exchange effects. Income from associated companies was a loss of €2.6 million (2015: loss of €3.2 million), related to non-core energy assets in Brazil.
Net income declined 35% to €64.2 million or €0.76 per share, compared to €98.7 million
or €1.19 per share in 2015. Net income from operations decreased 34% to €91.0 million (2015: €137.1 million) or €1.08 per share (2015: €1.66).
CASH FLOW, WORKING CAPITAL AND BALANCE SHEET
Working capital as a percentage of gross revenues was 17.5% (Q4 2015: 17.1%). Strong free cash flow in the fourth quarter supported by significant cash collections in the Middle East improved this ratio from 20.9% in Q3 2016. The days sales outstanding decreased from 101 days in Q3 to 91 days in Q4 2016 (2015: 84 days). The increase compared to last year is mainly due to the Middle East. Net debt at the end of December was €494 million (2015: €494 million).
Based on the average net debt for June 2016 and December 2016, the covenant leverage ratio was 2.5 (2015: 2.2). Return on invested capital was 6.8% (2015: 9.3%).
Backlog
Backlog at the end of 2016 stood at €2.2 billion, representing 11 months of net revenues. Backlog at the end of December decreased by 6% compared with December 2015, due to project cancellations in Brazil, Qatar and China.
REVIEW OF PERFORMANCE FOR THE FOURTH QUARTER
Net revenues were €608 million, an organic decline of 3%. Revenues in the Americas were organically lower by 5% due to a 2% decrease in North America and a continued decline in Brazil. Organic growth in Continental Europe and the United Kingdom compensated for a decline in the Middle East. Revenues in Asia Pacific were almost in line with last year. CallisonRTKL revenues declined organically due to Asia. The currency effect was -2%.
Operating EBITA was €34.7 million (Q3 2016: €43.3 million), 49% lower than in the same quarter last year (Q4 2015: €68.5 million). The operating EBITA margin was 5.7% (Q4 2015: 10.8%), due to lower revenues in Brazil and CallisonRTKL, less favorable business mix in the United Kingdom, capacity imbalances in France and an addition to provisions for receivables in Brazil and the Middle-East of € 10 million. EBITA decreased by 34% to €39.7 million and includes a release of provisions of €19.4 million related to legacy Hyder claims and a restructuring charge in the quarter of €13.9 million, mainly related to capacity adjustments in France and Brazil and to reduce overhead costs.
Review by segment
Reflecting the simplified operating model and to align reporting to the responsibilities of the members of the Executive Board, Arcadis will now report in four segments: (1) Americas, (2) Europe and Middle East, (3) Asia Pacific and (4) CallisonRTKL.
Americas
(31% of net revenues)
| in € millions Period ended December 31 | FULL YEAR | FOURTH QUARTER | ||||
| 2016 | 2015 | change | 2016 | 2015 | change | |
| Gross revenues | 1,227 | 1,282 | -4% | 323 | 324 | 0% |
| Net revenues | 769 | 832 | -8% | 187 | 188 | -1% |
| Organic growth | -9% |
|
| -5% |
|
|
| EBITA | 26.3 | 53.5 | -51% |
|
|
|
| Operating EBITA1) | 36.1 | 64.1 | -44% |
|
|
|
| Operating EBITA margin | 4.7% | 7.7% |
|
|
|
|
| Backlog organic growth | -4% | -6% |
| -4% | -1% |
|
1) Excluding acquisition, restructuring and integration-related costs
The decrease in net revenues in the Americas was mainly due to a 37% organic decline in Brazil driven by the economic recession. The decline in operating EBITA relates to an operating loss in Brazil of €9 million (2015: +€12 million), including an increase in provisions for trade receivables of €6 million. The operating results in North America were slightly lower than in 2015.
NORTH AMERICA
In North America revenues declined organically driven by Environment and Water.
- The Environmental Market saw lower prices caused by reduced oil & gas spending and increased competition from regional competitors
- Buildings and Infrastructure generated high organic growth
- In the second half year, the region started to benefit from the improved backlog, including strong order intake from Arcadis FieldTech Solutions (AFS) and in Canada
- The performance improvement program that began in 2015 contributed to an almost stable operating margin despite lower revenues
LATIN AMERICA
The deep recession in Brazil caused project postponements across a range of private and public clients.
- Due to the significant revenue decline, the number of employees dropped to 1,250 (2015: 1,950)
- In order to maintain our leadership position and to be able to respond when the market recovers we have kept our core capabilities in place
Europe & Middle East
(45% of net revenues)
| in € millions Period ended December 31 | FULL YEAR | FOURTH QUARTER | ||||
| 2016 | 2015 | change | 2016 | 2015 | change | |
| Gross revenues | 1,398 | 1,406 | -1% | 353 | 367 | -4% |
| Net revenues | 1,117 | 1,151 | -3% | 279 | 299 | -6% |
| Organic growth | 1% |
|
| 0% |
|
|
| EBITA | 67.0 | 99.0 | -32% |
|
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