· €797 million in gross revenues, organically -4%. Net revenues €596 million, organically -5% due to lower revenues in Emerging Markets and North America, and a negative currency effect
· EBITA of €38.6 million (Q3 2015: €57.5 million). Non-operating costs €4.7 million (Q3 2015: €8.5 million)
· Operating EBITA margin 7.3% (Q3 2015: 10.3%), due to lower revenues, Brexit impact, price pressure and capacity imbalances in parts of our business
· Free cash flow Q3 €39.7 million (Q3 2015: €37.2 million). Free cash flow in the year-to-date minus €22.4 million, below last year due to lower EBITA
· Working capital 20.9% (Q3 2015: 19.3%), higher due to the Middle East
· Backlog year-to-date €2.2 billion representing 11 months of revenues, developed markets (6%-11%) partly compensating for Emerging Markets decline (17%)
· Renier Vree appointed interim CEO replacing Neil McArthur
· Outlook: Arcadis expects similar business conditions in the fourth quarter as experienced in the previous quarters of 2016 and has accelerated initiatives to improve financial performance

Key figures
in € millions
Period ended 30 September Third quarter Change Year to date Change
2016 2015 2016 2015
Gross revenues 797 854 -7% 2,475 2,547 -3%
Organic growth -4% -1%
Net revenues 596 643 -7% 1,860 1,961 -5%
Organic growth -5% -4%
EBITA 38.6 57.5 -33% 126.6 149.0 -15%
EBITA margin 6.5% 8.9% 6.8% 7.6%
Operating EBITA1) 43.3 66.0 -34% 140.8 181.8 -23%
Operating EBITA margin 7.3% 10.3% 7.6% 9.3%
Free cash flow 39.7 37.2 -22.4 7.4
Net working capital % 20.9% 19.3% 20.9% 19.3%
Backlog (organic growth)/ months - - -3%/11 -2%/11

Renier Vree, CEO: "As indicated earlier, the third quarter was challenging, comparable with the previous quarters of 2016. We experienced continuing tough conditions in Emerging Markets and our North American business. As such, the addition of Mary Ann Hopkins as Executive for the Americas to our leadership was an important development in the quarter. Whilst we are not satisfied with the results, our business priorities are clear. We will continue to focus on winning work with our clients and cash collection. Furthermore we will step up the pace in aligning our cost structure to the new market realities and simplify the organization. The strategy process remains ongoing and we will disclose our strategy update at the beginning of 2017."

Review of performance
Continental Europe, the UK, and Australia all recorded net revenue growth during the quarter. Emerging Markets faced continued significant macro-economic headwinds and reported a revenue decline, whilst North America also recorded lower revenues as a result of intense competition. Overall, net revenues decreased by 7%, and organically by 5%. EBITA decreased by 33% to €38.6 million with an EBITA margin of 6.5%. Operating EBITA was €43.3 million (Q2 2016: €46.2 million) and 34% lower than in the same quarter last year (Q3 2015: €66.0 million). The operating EBITA margin was 7.3% (Q3 2015: 10.3%), due to lower revenues, Brexit impact, price pressure and capacity imbalances in parts of our business.

Year-to-date net revenue declined -5%. The organic decline was 4%, related to lower revenues in Brazil, North America and Asia. EBITA decreased 15% and included €14.2 million in restructuring charges (2015: €32.8 million also including integration charges).

To adapt to weaker markets and improve our cost position we reduced our global workforce by ~800 FTEs versus September 2015 by reducing the number of employees in the regions by ~1,450 FTEs (-5.5%), and growing Global Design by ~650 FTEs (+50%). This led to an overall labour cost decrease of approximately 3%.

Operating EBITA decreased by 23% to €140.8 million (2015: €181.8 million). The operating EBITA margin of 7.6% (2015: 9.3%) reflects the lower contribution from North America, Brazil, Continental Europe and the Middle East.

Review of performance for Q3 year-to-date by region

North America (34% of net revenues)

Net revenues in North America declined organically by 6%, driven by Environment, Water and Architecture, offsetting good growth in Infrastructure and Buildings. Operating EBITA margin declined due to a competitive market in Water and Environment.

Emerging Markets (29% of net revenues)
The decrease in net revenues was mainly due to a 38% organic decline in Brazil. In Asia revenues declined by 12% mainly related to lower revenues in Hong Kong and Singapore.

In the Middle East, revenues were flat, but low oil prices continue to impact backlog and payments. Net working capital in this region continues to receive strong attention and as highlighted earlier, will have an impact through the middle of 2017. Australia Pacific realized a strong profitable organic growth, particularly in Infrastructure. The operating EBITA margin decreased due to an operating loss in Brazil and a lower margin in the Middle East that was partly compensated by an increase in Australia Pacific. The operating EBITA margin in Asia was stable.

Continental Europe (20% of net revenues)
Net revenues in Continental Europe were 3% higher than in the same period in 2015, mainly due to growth in Buildings. Revenues in Infrastructure and Environment were in line with last year and revenues decreased in Water. The operating EBITA margin declined due to capacity imbalances in France and Belgium.
United Kingdom (17% of net revenues)
Net revenues decreased mainly due to a 9% currency effect as a result of the decline of the British Pound. Net revenues grew organically with 3% due to good growth in Infrastructure and Water and to a lesser extent in Environment. In Buildings, revenue decline continued due to Brexit-related delays in investment decisions. A large architecture contract partly compensated for this decline. The operating EBITA margin was slightly lower.

Backlog
Current backlog is €2.2 billion, representing a stable 11 months of revenues. Backlog at the end of September decreased by 3% compared with December 2015, reflecting cancellations in Brazil, Qatar and China. Overall backlog in Emerging Markets declined by 17%, whilst backlog grew 11% in the UK and 6% in Continental Europe and North America.

Arcadis Announces Change in Leadership: Neil McArthur Leaves as CEO, Renier Vree Appointed Interim CEO
Amsterdam, 27 October 2016 - Arcadis (EURONEXT: ARCAD), Arcadis today announced that Neil McArthur, CEO since May 2012, is leaving the company by mutual agreement. Arcadis' Supervisory Board and Mr. McArthur agreed to a separation because of a difference of opinion on Arcadis' path moving forward. Consequently, the Supervisory Board will move to appoint a new CEO for the next stage of Arcadis' development. Renier Vree, currently Arcadis CFO, will serve as CEO on an interim basis with immediate effect.

"Neil McArthur has provided Arcadis with excellent leadership since he became CEO in 2012," said Niek Hoek, Chairman of the Arcadis Supervisory Board. "On behalf of the Supervisory Board, Executive Board and all of the Arcadis people, I want to thank Neil for his vision and leadership. Neil and the Supervisory Board have agreed that it is the right time for a new leader to take Arcadis forward. We will begin a search internally and externally for a new CEO. We are pleased that Renier Vree has accepted the interim CEO role. With Renier's knowledge and experience of Arcadis and its stakeholders, we are confident that he is best positioned to lead the company in the interim."

"I am proud of what we have achieved as a company over the past five years," said Neil McArthur. "Together, we have expanded our core business organically and through acquisitions, going from a EUR 2 billion 15,000 people organization in 2012, to a EUR 3.4 billion global multinational with 27,000 people under a single global brand, with a collaborative structure and culture. Now it's time for someone else to lead Arcadis through the next stage of our journey. I have no doubt that our people will continue to deliver exceptional and sustainable client solutions, and improve quality of life across the globe."

Arcadis will honour its contractual obligations with Mr. McArthur, which includes payment of a one-year base salary (EUR 630,000).


tijd 10.01
Arcadis EUR 11.895 -1,57 vol. 734.000