Arcadis : Second quarter and half year results 2022

Jul 28, 2022 | Press Release

Second quarter and half year results 2022

Arcadis reports solid set of results and sees continued strong client demand

SECOND QUARTER RESULTS

• Accelerated organic net revenue growth of 8.1%1), total net revenues of €729M

• Improved operating EBITA margin of 9.3% (Q2 '21: 9.1%)

• Free Cash flow of €41M (Q2 '21: €68M)

• Strong client demand results in organic backlog growth of 5.9%1)

• Net Working Capital improved to 13.3%, Days Sales Outstanding down to 69 days

• Intended acquisition of IBI Group to strengthen our Digital Leadership, enhance geographic presence in North America, and add strategic complementary capabilities to Places and Mobility

Amsterdam, 28 July 2022 - Arcadis (EURONEXT: ARCAD) reports organic net revenue growth of 8.1%, with an improved operating EBITA margin of 9.3%, and sees continued strong client demand resulting in organic backlog growth of 5.9% for the second quarter.

CEO STATEMENT

Peter Oosterveer, CEO Arcadis, comments: "I am pleased to report a solid set of results in the first half of 2022, fueled by growing client demand across our three Global Business Areas. This demand led to an organic net revenue growth of 8.1% in the quarter, continued strong order intake, resulting in an organic backlog growth of 5.9%, and a healthy pipeline of opportunities.

Our new operating model, launched in January 2022 and focused on the Global Business Areas (GBAs): Resilience, Places and Mobility, is yielding the expected results. We are seeing increased global collaboration, and scaling and cross selling of services across the business areas, which is helping to serve our clients more efficiently and effectively. We delivered continued strong performance particularly with clients in transportation, energy & resources, and industrial manufacturing, driving margin improvement to 9.3% for the quarter, while making further investments in Digital solutions for clients, and in the attraction, retention and development of key industry talent.

As we look to the remainder of the year, we are encouraged by increasing order intake from clients to support their Net Zero ambitions, the increased focus on global electric vehicle roll-out and the need for sustainable industrial manufacturing solutions, particularly in North America. In the current geopolitical reality, both public and private clients are looking to reduce their energy dependencies, leading to a growing appetite for energy transition solutions and sustainability advisory. The recently announced intended acquisition of the Canadian IBI Group will bring increased presence in the highly attractive North American market, enhances our Digital capabilities and positions us well for further acceleration of our profitable growth, all fully supporting our strategic agenda.

We will continue to closely watch the geo-political situation as well as the economic developments and outlook. I am confident that with the accelerated demand we are experiencing combined with the pipeline of private and public sector opportunities and our financial discipline, we are on track to deliver on our strategic targets."

1) Underlying growth excluding the impact of currency movements, acquisitions or footprint reductions, such as the Middle East, winddowns or divestments

KEY FIGURES

(Table)

REVIEW OF THE SECOND QUARTER 2022

Net revenues totaled €729 million and increased organically by 8.1%, driven by all GBAs. Growth was very strong in the UK, North America, and Australia, with Continental Europe and Brazil contributing as well. Organic growth was slightly offset by a decline in Greater China, as a result of ongoing lockdowns. The currency impact was 7.0%, mainly driven by a strong US Dollar. The operating EBITA improved to 9.3% (Q2 2021: 9.1%), driven by a better year-on-year performance from Places. Globally, the margin improved while we increased our investments in both Digital Solutions and People.

REVIEW OF THE HALF YEAR 2022

Net revenues totaled €1,418 million and increased organically by 6.9%, driven by all GBAs. The currency impact was 5.9% driven by a strong US Dollar. Non-operating costs were in line with last year and driven by restructuring costs for the wind-down of our business in the Middle East. The income tax rate was 28% (Q2 2021: 21%) and was impacted by, amongst others, non-deductible expenses and non-taxable income from divestitures. Net finance expenses decreased to €5.6 million (HY 2021: €12.5 million), driven by a lower net debt position. Net income from operations increased by 16% to €93 million (HY 2021: €80 million), or €1.04 per share (HY 2021: €0.89), driven by higher revenues, and lower interest expenses.

1) Underlying growth excluding the impact of currency movements, acquisitions or footprint reductions, such as the Middle East, winddowns or divestments
2) Excluding restructuring, acquisition & divestment costs
3) Net income before non-recurring items (e.g. valuation changes of acquisition-related provisions, acquisition & divestment costs, expected credit loss on shareholder loans and corporate guarantees and one-off pension costs)

Resilience showed continued solid revenue and backlog growth for the second quarter, driven by both public and private clients in North America, UK, Australia and Brazil. Client demand and performance continues to be strong in environmental restoration, e.g. caused by clients adhering to their environmental obligations and tightening regulation around PFAS. The current economic
and geopolitical unrest has further driven public as well as private investments in climate adaptation, energy transition and water optimization, which was reflected in solid organic backlog
growth. The margin for the half year was in line with our strategic margin target set for 2023, and driven by good performance from North America and Europe. The margin decrease versus last year was to a large extent driven by increased investments in Digital Solutions and People, as we continue to invest in attracting and retaining key industry talent to execute our growing backlog.

Share with your friends

Connect with Arcadis for more information & questions. Arcadis ,Contact Arcadis

Connect with {name}for more information & questions

Tell us your nameWhat's your emailWhat is your question?

Arcadis will use your name and email address only to respond to your question. More information can be found in our Privacy policy

I understand and consent to using my name and email address to respond to my question