Global engineering consultancy Arcadis has reported strong third quarter results with gross revenue increasing year-on-year by 34% to €650 million (£522 million).
The company said growth was fuelled by strong organic growth in emerging markets and a growing contribution from acquisitions, including EC Harris, Langdon & Seah, ETEP and BMG.
EBITA rose 35% to €42.7 million on the same period last year, while net income from operations rose 46% to €26.5 million.
In the third quarter, organic gross revenue growth amounted to 1%, and net revenue growth to 3%, with strong growth in emerging markets being partly offset by challenging market conditions in Europe and increasingly also in the United States, Arcadis said.
Infrastructure was again the strongest growth segment, led by operations in South America. Profitability improved as evidenced by the quarter-over-quarter increase of the operational margin to 9.9%, in part fuelled by Langdon & Seah and margin improvements in EC Harris.
For the first nine months gross revenues grew 30% to €1,878 million. Organic growth was 4% (in net revenues also 4%). Net income from operations rose 33% to €73.7 million for the first nine months.
In early August, Arcadis completed the acquisition of ETEP (300 people, revenues €20 million), the largest water engineering and consultancy company in Brazil.
In the company’s water division, which contributed 15% of total gross revenue, gross revenue increased 13%, with the contribution from acquisitions (EC Harris, ETEP) was 6%. Its water-for-industry program continues to “grow in significance”, also outside of the US. With the addition of ETEP in Brazil, Arcadis said its position in that market has significantly strengthened, also creating opportunities for synergy with its US water activities in technology exchange.
The company said the outlook for the water market is healthy in the USA and Brazil, while for Europe the company stated:
“In Europe we expect the water market to be stable. The water management market is still difficult due to lack of public funding.”
CEO Neil McArthur said:
“Our strategy to grow our presence in emerging markets is clearly paying off. Our continued organic growth was derived from our strong performance in South America and the Middle East. EC Harris demonstrated growth, combined with further margin improvement.
“In mature markets, conditions are still challenging, with the US and some European markets showing further signs of a slowdown. We continue to focus on margin improvement and were able to close in on our target margin level of 10%, achieving 9.9% in the quarter. Our programs to improve working capital and cash flow are starting to pay off and we were able to significantly improve our cash flow in the quarter.”