Second Quarter 2010
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Transcript of Second Quarter 2010
Imagine the result
Second Quarter 2010Harrie Noy, Chief Executive OfficerRenier Vree, Chief Financial Officer
August 4, 2010
© 2009 ARCADISApril 19, 20232
DISCLAIMER• Statements included in this presentation that are not historical facts (including any
statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward looking statements. These statements are only predictions and are not guarantees. Actual events or the results of our operations could differ materially from those expressed or implied in the forward looking statements. Forward looking statements are typically identified by the use of terms such as “may,” “will,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology.
• The forward looking statements are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward looking statements.
© 2009 ARCADISApril 19, 20233
Operationally good second
quarter
Improved profit on back of strong revenue growth
No further organic revenue decline
Infrastructure and Water remain solid
Environment and Buildings are improving
Especially U.S. private environmental market increases
Margin at good level excl. non-recurring items
Integration Malcolm Pirnie on schedule, extensive synergy
For full year 2010 slight profit increase expected
Well positioned to benefit from economic recovery
Imagine the result
Results Second Quarter 2010Renier Vree, Chief Financial Officer
August 4, 2010
© 2009 ARCADISApril 19, 20235
Gross revenue
Net revenue
EBITA
Income1)
Ditto per share1,2)
2009
415
287
28.5
17.1
0.28
_ _
23%
23%
12%
8%
0%
Income Q2 2010
€ 18.5 million
2010
512
353
31.8
18.5
0.28
1) Net income from operations before amortization and non-operational items
2) In 2010 based on 66.1 million shares outstanding (2009: 60.2 million)
Positive currency effect of 5% from stronger US$, Brazilian real
© 2009 ARCADISApril 19, 20236
Gross revenue
Net revenue
EBITA
Income1)
Ditto per share1,2)
2009
833
577
56.3
32.6
0.54
_ _
15%
18%
9%
9%
0%
Income H1 2010
€ 35.6 million
2010
960
679
61.1
35.6
0.54
1) Net income from operations before amortization and non-operational items
2) In 2010 based on 66.3 million shares outstanding (2009: 60.2 million)
Positive currency effect of 2% from stronger US$, Brazilian real
© 2009 ARCADISApril 19, 20237
Organic gross
revenuedevelopment
improved
Currencyeffect 1%0% -3%-4% -1% 5%
© 2009 ARCADISApril 19, 20238
EBITARecurring
H1
In € million
61,156,3
46,4
35,3
57,0
0
10
20
30
40
50
60
70
2006 2007 2008 2009 2010
9%Increase 51% 31% 23% -1%
© 2009 ARCADISApril 19, 20239
In € millionModest organic
improvement EBITA in Q2-
2010
0 5 10 15 20 25 30 35 40
EBITA Q2 2010
Other organic
Energy project
Acquisitions /divestments
Currency
EBITA Q2 2009 28.5
31.8
5%
14%
2%
-/- 9%
Q2: better results in U.S., Brazil, RTKL and England, less profit western Europe (including NL) due to price pressure
+12%
© 2009 ARCADISApril 19, 202310
In H1 EBITA organically flat
excluding energy project
In € miljoen
0 10 20 30 40 50 60 70
EBITA Q2 2010 YTD
Other organic
Energy projects
Acquisitions /divestments
Currency
EBITA Q2 2009 YTD 56.3
61.1
1%
14%
1%
-/- 8%
+9%
© 2009 ARCADISApril 19, 202311
Margin stays at good level
2008
9.9%
10.2%
10.7%
12.5%2)
10.8%2)
Q1
Q2
Q3
Q4
year
2010
9.5%3)
9.7%3)
2009
9.6%
9.9%
10.1%1)
11.0%
10.2%1)
Margin: recurring EBITA as % of net revenue 1) Recurring EBITA excludes one-off impact share participation
program of Lovinklaan2) Excluding impact sale hydropower plants Brazil3) Excluding loss on energy project Brazil
Reorganization and integration costs:
H1 2009: € 5.3 million; H1 2010 € 3.3 million
© 2009 ARCADISApril 19, 202312
Some financial details
• As last year limited contribution from carbon credits
• Contribution from carbon credits expected to increase in fourth quarter
• Financing charges excluding derivatives:• H1-09: € 3.7 million• H1-10: € 8.7 million
• Increase mainly resulted from financing for acquisitions
• Tax pressure H1 2% lower
• Income from associates higher (Brazil)
© 2009 ARCADISApril 19, 202313
Net income from operations
and EPS H1-2010
Earnings per share (in €)
35.6
32.631.6
26.8
21.2
0
10
20
30
40
2006 2007 2008 2009 2010
In € millions
0.35
0.44
0.520.54 0.54
In 2010 10% more shares outstanding
Increase +9%+60% +26% +18% +3%
© 2009 ARCADISApril 19, 202314
Net debt / EBITDA 1)
1.11.3
1.01.4
0,00,20,40,60,81,01,21,41,6
2007 2008 2009 2010
Balance sheet stays
healthy
Net debt June 30, 2010 € 273 million (December 31, 2009: € 174 million)
Increase debt € 50 million due to currency
Net debt/EBITDA: 1.4 calculated conform bank covenants
1) 2008, 2009 and 2010 calculated conform bank covenants
15 © 2009 ARCADISApril 19, 2023
Business lines
INFRASTRUCTURE
WATER
ENVIRONMENT
BUILDINGS
© 2009 ARCADISApril 19, 202316
Infrastructure H1-2010: 0% organic: -5%; acquisitions: 0%; currency: +5%
• Gross revenue lower after completion projects with substantial subcontracting (Brazil)
• Organic net revenue growth was 2%
• Growth from central governments in NL, Belgium, France and Central Europe
• Pressure in local markets slows growth
• U.S. declines due to lower state/city budgets
• Mining Brazil and Chile contributes to growth
Connecting Central Europe
© 2009 ARCADISApril 19, 202317
Water H1-2010: +128% organic: 0%; acquisitions: +125%; currency: +2%
• Gross revenue more than doubled by merger with Malcolm Pirnie
• Organic net revenue growth was 5%
• Demand water management grew in all markets
• Brazil large waste water system contract
• Pressure in local markets impacts water less
• Malcolm Pirnie compensates decline in western and southern U.S. with growth in northeast
Water treatment, U.S.
© 2009 ARCADISApril 19, 202318
Environment
H1-2010: +13% organic: 0%; acquisitions: +11%; currency: +2%
• Contribution acquisitions is environmental business Malcolm Pirnie
• Organic gross revenue decline Q1 turned around in 7% increase in Q2
• Environmental market U.S. picks up: large remediation contracts with lot of subcontracting
• Increase in net revenue offset by delays in some European countries
• Organic net revenue decline 1%
• Environmental market Brazil also shows improvement
Measuring carbon footprint for the city of Gent in Belgium
© 2009 ARCADISApril 19, 202319
Buildings H1-2010: -9% organic: -9%; acquisitions: +1%; currency: 0%
• Net revenue declined 11%
• Decline in Q2 less than Q1
• Commercial property market has stabilized
• RTKL compensates decline in U.S. and Europe with growth in Asia and Middle East
• Pressure on activities in Belgium
• Growth in public projects in U.S. and Germany
Designed and delivered the Shell new Technology Center in Amsterdam
Imagine the result
OutlookHarrie Noy, Chief Executive Officer
August 4, 2010
© 2009 ARCADISApril 19, 202321
Water20%
Buildings19%
Infrastructure25%
Environment36%
Well diversified portfolioFigures H1-2010
Business lines Geographic
Netherlands21%
Other Europe17%
Rest of world9%
United States53%
Provides robustness versus economic cyclesIn markets with long term growth potential
© 2009 ARCADISApril 19, 202322
Good spread across client
types
Private clients
44%
Public sector37%
Utilities19%
© 2009 ARCADISApril 19, 202323
InfrastructureMarket stays healthy, but growth weakens
• In Europe many projects for which financing is committed
• Investments in Dutch rail and road network
• In NL financing form natural gas (FES fund)
• Also large projects Central Europe with European funding
• Demand for infrastructure drives PPP-initiatives in Europe and the U.S.
• Brazil: large projects basis for growth and World Cup (2014) and Olympics (2016)
© 2009 ARCADISApril 19, 202324
• Climate change and increasing threat of flooding drive water management
• Demand for clean drinking water and waste water treatment increasing, globally
• Financing from specific water charges: water is a utility
• Specialist know how globally applicable
• Synergy with Malcolm Pirnie offers many chances also internationally (Chile, Brazil, Middle East)
WaterStrong drivers for growth
© 2009 ARCADISApril 19, 202325
• Regulation and sustainability provide solid basis
• Economic recovery drives demand from business
• Large contracts because companies focus on core business and outsource portfolios
• Vendor reduction increases
• Growth market share due to strong competitive position
• Growing demand for energy savings and carbon footprint reduction
EnvironmentGradual recovery from increasing demand
© 2009 ARCADISApril 19, 202326
• Commercial property stable at low level, no recovery in sight
• New legislation U.S. causes delays in healthcare
• Backlog RTKL healthy due to Asia and ME: commercial and healthcare projects
• Demand (semi) public sector continues
• New contracts in Facility Management
BuildingsBottom reached, revenue advance in H2
© 2009 ARCADISApril 19, 202327
Outlook 2010
• Backlog healthy and up 8% from year-end 2009
• Growth in Q2 came from Infrastructure and to a lesser extent water and environment, buildings weakened somewhat
• Modest organic growth in second half
• Maintaining margins remains priority
• Synergy with Malcolm Pirnie and in 2011 operational benefits
• Further expansion through acquisitions is on the agenda• For full year 2010 slight increase of 0-5% of net income from
operations (barring unforeseen circumstances)
ARCADIS Building Global Leadership
28 © 2009 ARCADISApril 19, 2023
Imagine the result