- Sustained revenue growth and improved margin
Continued growth on the back of megatrends urbanization, sustainability and digitalization
Improvement areas Asia, Middle East and Latin America delivered better results
Growth investments in sustainable solutions and digital offerings
People First focus improves voluntary employee turnover
Fourth quarter financials
Organic net revenue growth of 5% to €660 million (Q4 2018: €607 million)
Strong operating EBITA margin of 9.0% (Q4 2018: 7.2%)
Full year 2019
Organic net revenue growth of 3% to €2.6 billion (gross revenues of €3.5 billion)
Operating EBITA increased by 18% to €209 million (2018: €177 million); Operating EBITA margin improved to 8.1% (2018: 7.3%)
Free cash flow of €97 million (2018: €149 million), temporarily held back by higher working capital due to the implementation of the new Oracle Cloud solution in North America
Net working capital at 16.6% (2018: 15.1%); DSO at 88 days (2018: 80 days)
Reduction of net debt to € 310 million, resulting in a Net debt/EBITDA ratio of 1.3
Proposal to increase dividend to €0.56 per share (2018: €0.47). Pay-out ratio at 40%
Share buy back up to 3 million shares to cover employee incentive plans and stock dividend
Amsterdam, 13 February 2020 – Arcadis (EURONEXT: ARCAD), the leading global Design & Consultancy organization for natural and built assets, reports a strong fourth quarter with 5% organic revenue growth and an operating EBITA margin of 9.0% (Q4 2018: 7.2%). Organic revenue growth for the year was 3% with an operating EBITA margin of 8.1%, up from 7.3% last year.
Peter Oosterveer, CEO Arcadis comments: “We are on track to achieve our strategic targets set for 2020. Our revenue and margin growth in the fourth quarter contributed to an improved performance for the full year. We are also pleased with the results in Asia, the Middle East and Latin America, following the actions we took. Our balance sheet is strong despite a lower free cash flow due to residual delays in cash collection in North America, resulting from the Oracle Cloud implementation.
I have always been convinced that the foundation for better business results starts with our people. To create an environment for people to grow, perform and succeed it is vital to attract, develop and retain the workforce of the future for Arcadis. I’m therefore proud to see that our People First approach significantly lowered our voluntary employee turnover rate compared to last year.
We continue to invest in our Innovation & Growth agenda, through the recent launch of our new digital business, “Arcadis Gen”, focused on developing digital products and services and delivering them through new business models. Arcadis Gen already demonstrated the global scalability of our enterprise asset management platform by winning a major project for Amtrak, the passenger railway operator in North America, which follows the win of a project for Transport for London late last year. In addition, we continue to enhance the digitalization of our core business. In the Netherlands we strengthened our business with the acquisition of “Over Morgen”, a consultancy focused on urban planning and energy transition.
When we announced our strategy “Creating a sustainable future” in 2017, we defined a clear path on long-term value creation, we are pleased to see that our efforts deliver results.”
IFRS 16: APPROACH AND IMPACT
The 2019 and 2018 figures in this press release are based on IAS 17, for comparison reasons, apart from the Key Figures section, where we presented the 2019 figures based on IFRS 16. The 2019 financial statements based on IFRS16, including transition disclosures, can be found in the Annual Integrated Report that will be published on 21 February 2020 on our website.
REVIEW OF PERFORMANCE FOR THE FOURTH QUARTER
Net revenues totaled €660 million for the fourth quarter; organic growth was 5%. All segments generated strong growth except for CallisonRTKL.
Operating EBITA increased to €60 million (Q4 2018: €44 million), the currency translation effect was 3%. The operating EBITA margin improved to 9.0% (Q4 2018: 7.2%) driven by better performance in all segments except for CallisonRTKL, whose margin declined to 7.8%.
REVIEW OF PERFORMANCE IN 2019
Net revenues totaled €2,577 million and increased organically by 3%, the currency impact was 3%. Revenues increased in all regions except for the Middle East and CallisonRTKL.
Operating EBITA increased by 18% to €209 million (2018: €177 million) including a currency impact of 3%. Operating EBITA margin increased to 8.1% (2018: 7.3%).
Non-operating costs were €21 million (2018: €16 million); €9 million mainly related to restructuring in Europe & the Middle East, €10 million provided for an orderly wind-down of ALEN, and €2 million for other acquisition & divestment related costs. EBITA was €189 million, 17% higher than last year (2018: €162 million).
The effective tax rate, excluding the total impact of ALEN was 26.8% (2018: 27.2%). The tax rate was impacted by, among other things, non-deductible expenses, updates to tax positions from previous years, and unrecognized losses.
Net finance expenses were €29.7 million (2018: €27.1 million). The interest expense on loans and borrowings of €25.2 million was in line with last year due to lower average gross debt, offset by higher amortization of transaction fees.
The expected credit loss on shareholder loans and corporate guarantees related to the non-core clean energy assets in Brazil was €82.4 million (2018: €53.9 million).
Net income for the year was €18 million and was impacted by the provision to cover the full exposure on the Brazilian energy assets, compared to a loss of €27 million in 2018.
Net income from operations increased 43% to €125 million (2018: €88 million) or €1.42 per share (2018: €1.01).
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