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Arcadis bullish about growth as revenue rises 5%

Arcadis is predicting “strong” growth in its infrastructure business after posting a healthy set of full-year results, the first since its acqusition of Hyder last year.

The Dutch-headquartered outfit, which also owns UK project manager EC Harris, reported total revenue of £1.95bn (€2.64bn) for 2014, a 5% increase on the previous year.

Net income from operations grew 11% to £91.2M (€123.6M).

Arcadis enjoyed a particularly strong final quarter, with revenue up 26% to €808m (£596m), compared to €643m (£474m) for the same period in 2013.

A statement from the firm said: “The acquisitions of Hyder Consulting and Callison and various smaller transactions completed during the year in review contributed 6% to revenue growth for the year. Organic growth was strong in particular in the Middle East and Asia, while the UK and Continental Europe were also on a positive trajectory.”

However, revenues declined in North America and Chile.

Arcadis said “strong overall growth” is expected in the infrasructure market during 2015. Its activities in the UK, Middle East, Continental Europe, Asia and Australia Pacific will benefit from growth through the Hyder acquisition, the firm added. In the UK, it forecasts increased government spending.

In North America, where market conditions are “tough”, particularly in environment and water, Arcadis has started a two-year improvement programme, which aims to return the business to growth and improve margins. Its North American business represents 35% of 2014 net revenues and 39% of profit.

CEO Neil McArthur said: “2014 was a year of investment in sustainable growth. We have completed two major transactions - Hyder Consulting and Callison - thereby strengthening our engineering and design capabilities.

“With our strong market positions, strategic progress, recent acquisitions, and record backlog, we expect 2015 revenues and profit to increase significantly.”

Review of operations

Infrastructure (25% of gross revenue)

The acquisition of Hyder drove growth in the UK, Continental Europe, Asia, the Middle East and Australia Pacific, said Arcadis. But organic net revenue growth in Infrastructure was flat, with the UK, Continental Europe and North America generating growth, while Latin America suffered from lower levels of capital investment by mining clients.

Water (14% of revenue)

Strong organic growth in Latin America was the main driver behind the overall performance in Water, Arcadis explained. During the year no improvement in demand was seen in the municipal market in North America, while revenues were slightly down in Continental Europe and flat in the UK. Hyder contributed to growth in the UK and Middle East.

Environment (29% of revenue)

Despite contract wins in the third and fourth quarter, revenues in North America declined, as market conditions in the US federal market remained soft and competition in private sector remained strong. Continental Europe was relatively stable, however in the UK revenues declined.

Buildings (32% of revenue)

In Buildings, Callison and Hyder contributed to overall revenue growth. Strong organic growth was achieved in the emerging markets, Arcadis reported. Growth was also achieved in Continental Europe and in the UK, where activity outside of London increased, while demand in the capital held up.




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