Bureau Veritas Sa · EURONEXT:BVI

Bureau Veritas Sa — Investor Day (September 2011)

57 slides from Bureau Veritas Sa's investor day presentation, Sep 20, 2011

  1. Slide 1: Bureau Veritas 2015 Strategic Plan

    BUREAU VERITAS 2015 STRATEGIC PLAN Tuesday, September 20, 2011 1

  2. Slide 2: BV2015: Strategic Overview

    BV2015: STRATEGIC OVERVIEW Frank Piedelièvre Chairman and Chief Executive Officer 2

  3. Slide 3: Agenda

    Agenda 2007-2011 ACHIEVEMENTS BV2015 AMBITION © - Copyright Bureau Veritas 3

  4. Slide 4: Agenda: 2007-2011 Achievements

    Agenda 2007-2011 ACHIEVEMENTS BV2015 AMBITION © - Copyright Bureau Veritas 4

  5. Slide 5: IPO commitments fully delivered

    IPO commitments fully delivered 2007-2011 2007-2011 Commitments Achievements  Top-line: Double 2006 revenue(1)  Adjusted operating margin(2): +150bps vs. 2006  Adjusted net income(2): +15%-20% p.a. on average (1) At constant exchange rates (2) Before expense relative to acquisitions and non-recur

  6. Slide 6: An outperforming shareholder return

    An outperforming shareholder return BV share price: +43% since IPO 2007-2011 TSR(1) Bureau Veritas: +43% IPO: €38 +49% CAC 40: -47% -47% CAC 40 (1) TSR: Total Shareholder Return Market data as of 16-Sep-2011 Source: Thomson © - Copyright Bureau Veritas 6

  7. Slide 7: A proven resilience to macroeconomic downturn

    A proven resilience to macroeconomic downturn 2006-2007* 2008-2010* 5.3% World GDP Growth 2.5% 8.1% World Trade Growth 1.4% 8.2% 5.8% Bureau Veritas Organic Growth 16.1% Bureau Veritas 14.8% Adj. Operating Margin Source: International Monetary Fund, World Economic Outlook Database, April 2011 * Aver

  8. Slide 8: A larger balanced portfolio

    A larger balanced portfolio Business (1) Geographies (1) 2007-2011 reshuffling GSIT 6% Consumer Marine 10% ► New Commodities business Products 12% Industry Certification 20% Fast- ► HSE refocused 10% growing ► Industry growth 46% Commodities IVS 13% 16% Mature ► Fast-growing economies footprint 54%

  9. Slide 9: A stronger global network

    A stronger global network 2011 H1 Headcount and 2011 LTM(1) Revenue by region x4 Increase in headcount vs. 2006 North America Europe 3,000 / > €250m 17,000 / ~€1.5bn x 1.1 x 1.5 Asia Pacific Africa Middle East Latin America 3,900 / > €200m 18,400 / > €850m 9,000 / > €350m x3 x 2.5 x4 Entire deployme

  10. Slide 10: A unique “Buy & Build” track record

    A unique “Buy & Build” track record ► New services launch 2011LTM(1) ► Sales force effectiveness ► Large contract execution 49% Organic ► IT/IS investments ► Lab and facilities development ► Quality and accreditations External 51% ► Commodities platform 2006 ► Latin America platform ► Electronics an

  11. Slide 11: A customized organization, tailored for our markets

    A customized organization, tailored for our markets and aligned on our strategy Leadership focus Evolutive organization ► Headcount X 2 ► Demonstrated capacity to adapt organization over time to support ► Committed management team strategy execution ► Newcomers successful integration ► Global divisi

  12. Slide 12: A winning strategy

    A winning strategy ► Brand image Global ► Large contracts execution Size ► Efficiency and scalability ► Leadership positions Building Balanced ► Growth potential a global TIC(1) leader Portfolio ► Resilience ► Superior reach Growth ► Growth potential platform ► Investment opportunities 2007-2011 ach

  13. Slide 13: Agenda: BV2015 Ambition

    Agenda 2007-2011 ACHIEVEMENTS BV2015 AMBITION © - Copyright Bureau Veritas 13

  14. Slide 14: BV2015 assumptions: no major macroeconomic boom or bust

    BV2015 assumptions: no major macroeconomic boom or bust Low macroeconomic visibility 2012-2015 assumptions ► Downturn risk in mature economies ► Persisting low growth in mature economies ► Fast growing countries’ momentum ► Resilient emerging markets ► Stock market volatility ► Growing international

  15. Slide 15: In-depth strategic review to set up a common ambition

    In-depth strategic review to set up a common ambition ► 6-month bottom-up and top-down process ► In-depth analysis of TIC(1) markets fundamentals ► Bureau Veritas’ portfolio diagnosis ► Full mobilization of all businesses and zones ► Strategic priorities, growth initiatives, and detailed action plan

  16. Slide 16: A four pillar based strategy

    A four pillar based strategy Capitalize on the 2007-2011 built assets Pursue the strengthening of Bureau Veritas platform Leveraging our Consolidating Enhancing unique assets Developing pool leadership global (size, portfolio, of talents positions competitiveness network) © - Copyright Bureau Verita

  17. Slide 17: 2015 objectives and levers

    2015 objectives and levers Our objectives Revenue Adjusted Adjusted Leverage growth operating margin EPS(2) ratio(3) +9% to +12% p.a. +100 to 150 bps(1) +10% to +15% p.a. < 1.0x 2/3 organic 1/3 external Talent-based Technology and Scalable organization innovation network Our levers (1) Increase vs.

  18. Slide 18: Topline organic growth layers

    Topline organic growth layers 6% to 8% BV2015 average organic ► Specific initiatives to enhance leadership and growth p.a. develop footprint in existing and new markets TIC industry changes ► Clients’ buying behaviours and changing competitive landscape in favour of large TIC players TIC growth driv

  19. Slide 19: Sustainable long term growth drivers

    Sustainable long term growth drivers ► QHSE regulations strengthening ► Industrialisation of fast-growing economies ► Rising living standards and QHSE concerns among fast-growing countries’ population ► Aging assets in mature economies ► Sustainability concerns ► Supply chain complexity ► Outsourcin

  20. Slide 20: Changing growth patterns across markets

    Changing growth patterns across markets 2010 Market growth trends estimated 07-11 12-15 size (€bn) Marine 3 Consumer products 7 Commodities 5 Gov. services(1) 4 Industry 15 Construction 26 IVS 10 Certification 4 (1) Including Automotive Source: Bureau Veritas, McKinsey © - Copyright Bureau Veritas 2

  21. Slide 21: Leverage changing buying behaviors of global accounts

    Leverage changing buying behaviors of global accounts QHSE purchasing rationalization Limited number of One-stop Pricing TIC preferred shopping pressure suppliers More business volume to large TIC players at more competitive prices © - Copyright Bureau Veritas 21

  22. Slide 22: New competitive arena

    New competitive arena 2003: 2011: New tier-1 competitors ► 2 global players > €1bn ► 2 leaders ► … 6 domestic champions > €500m ► 7 players > €1bn revenues ► … and plenty of small players ► Converging strategies among leaders ► A dozen of mid-size players 2010 revenues(1) ► Pursuing M&A actively €3.

  23. Slide 23: “Fill the matrix”

    BV2015 growth initiatives “Fill the Adjacent matrix” services and markets 9% to 12% average top-line growth p.a. Bolt-on acquisitions © - Copyright Bureau Veritas 23

  24. Slide 24: 2015 footprint

    2015 footprint 2011(1) 2015 Eastern Europe 3% Middle-East 4% Eastern Europe 3% Middle-East 3% Africa 4% Africa 6% Pacific 7% Pacific 7% Europe 44% Europe 32% Asia 20% Asia 24% North America 12% North America 8% Latin America 11% Latin America 12%  Double-digit organic Fast-growing Fast-growing grow

  25. Slide 25: Continue to fill the matrix to refine growth opportunities

    Continue to fill the matrix to refine growth opportunities Commodities Construc- Certifi- Consumer Oil & Metals & Marine Industry tion IVS cation Products GSIT Petrochem. Minerals Agri Top Mature Countries Selectively filling the matrix holes where markets are open and attractive with Top fast- spec

  26. Slide 26: Develop adjacent services and markets

    Develop adjacent services and markets Non exhaustive Consumer Products Oil & Petrochemicals Marine ► Food ► Biofuels ► Bunker fuels ► Electronics and Electrical ► Petrochemicals ► Inland navigation ► Additives ► New regulations ► Upstream GSIT Industry Construction ► Single-window ► Oil & Gas Upstre

  27. Slide 27: Keep a #1 role in the TIC industry consolidation

    Keep a #1 role in the TIC industry consolidation … boosting organic growth … and complementing our initiatives global network ► Commodities network ► Non Destructive ► Mature economies: US, Canada, Testing ► O&P upstream Germany ► Drilling ► Food ► Fast-growing economies: China, South ► Power and Ea

  28. Slide 28: Narrowing profitability range

    Narrowing profitability range 2011LTM Adj. Profitability trends 2011 Operating 07-11(2) 12-15 Margin(1) Marine 28.8% +450bps Consumer products 26.8% +470bps Commodities 12.0% n.a. Gov. services 17.4% +590bps Industry 11.6% +10bps 2015 Construction 10.8% +130bps IVS 11.6% +110bps Certification 20.9%

  29. Slide 29: Targeted margin improvement initiatives

    Targeted margin improvement initiatives More value More Development of added-services upstream testing Automation Lean Capex IT/IS Management Back office Pricing and offshoring Scalability contract management © - Copyright Bureau Veritas 29

  30. Slide 30: 2012-2015 Business Overview (1/4)

    2012-2015 Business Overview (1/4) Marine Organic growth Industry Organic growth Margin Margin Market Market ► Growth of international trade from ► Continued outsourcing of testing / 2010 to 2015 inspection ► New ordering cycle to start again in ► Strengthened regulation (nuclear, 2013-14 / ~GRT55m(1

  31. Slide 31: 2012-2015 Business Overview (2/4)

    2012-2015 Business Overview (2/4) GSIT Organic growth Commodities Organic growth Margin Margin Market Market ► Decreasing traditional Pre-Shipment ► Increasing demand for commodities Inspection market ► New exploration/production in remote ► Shift to Destination and scanning locations program BV2015

  32. Slide 32: 2012-2015 Business Overview (3/4)

    2012-2015 Business Overview (3/4) Consumer Organic growth Certification Organic growth Products Margin Margin Market Market ► Slowing global supply chain / ► Development of sustainability schemes increasing local domestic demand (biofuels, energy management, GHG(2) ► Sourcing to ultra low-cost count

  33. Slide 33: 2012-2015 Business Overview (4/4)

    2012-2015 Business Overview (4/4) Construction Organic growth IVS Organic growth Margin Margin Market Market ► Accelerated urbanisation in fast- ► Development in emerging countries growing economies ► Continuous privatization trend ► Cycle to restart in mature countries ► New regulations supporting

  34. Slide 34: 80,000 people by 2015

    80,000 people by 2015 > 1/3 of staff in Asia by 2015 Russia Germany x2 x2 USA x2 2015 estimated x3 China headcount ≥ 10,000 x3 ≥ 5,000 India x2 ≥ 2,000 Brazil x2 ≥ 1,000 South Africa Australia x 2011-2015 change x2 © - Copyright Bureau Veritas 34

  35. Slide 35: Strengthened processes to win the HR challenge

    Strengthened processes to win the HR challenge Sourcing Acquisitions integration Proven and distinctive track record ► > +18,000 headcount from acquisitions 80,000 since 2000 50,000 ► Management and workforce retention as a key pillar of Post-Merger Integration 25,000 Process (PMIP) 11,000 2000 2006

  36. Slide 36: Technology, innovation and operational excellence

    Technology, innovation and operational excellence Engineering applications ► Scientific applications (Marine, Industry) Information management portal enabling clients to ► Simulation software (Risk based track orders and results online to give a unique view inspection,….) of multi-tier supply chain

  37. Slide 37: A scalable network to generate synergies

    A scalable network to generate synergies ► Network organized around key hubs ► Creation of regional shared services centers for transversal functions (Finance, HR, IT) ► One global shared service center in India for mutualized services Europe North America Asia India Middle East Latin & South Americ

  38. Slide 38: A stronger local player in fast-growing economies

    A stronger local player in fast-growing economies Lab Office Brazil China, Taiwan & Hong- India Kong  3 labs and 10 offices in 11  19 labs, >30 offices in 33  18 labs and >50 offices in 47 cities cities cities  3,400 employees in 2011,  8,000 employees in 2011,  3,300 employees in 2011, >5,000

  39. Slide 39: BV2015 Moving forward with confidence

    BV2015 Moving forward with confidence Our objectives Revenue Adjusted Adjusted Leverage growth operating margin EPS(2) ratio(3) +9% to +12% p.a. +100 to 150 bps(1) +10% to +15% p.a. < 1.0x 2/3 organic 1/3 external Talent-based Technology and Scalable organization innovation network Our levers (1) In

  40. Slide 40: 2015 Financial Objectives

    2015 FINANCIAL OBJECTIVES François Tardan Chief Financial Officer Sami Badarani Deputy Chief Financial Officer 40

  41. Slide 41: Agenda: A resilient financial model

    Agenda A resilient financial model Robust top line growth and improved operating margin High cash flow generation and reduced leverage ratio © - Copyright Bureau Veritas 41

  42. Slide 42: Agenda: A resilient financial model

    Agenda A resilient financial model Robust top line growth and improved operating margin High cash flow generation and reduced leverage ratio © - Copyright Bureau Veritas 42

  43. Slide 43: A resilient financial model

    A resilient financial model 2012-2015 Achievement of 2007-2011 plan 2006 LTM CAGR Targets ► Robust organic growth 2011(1) “set at IPO” Revenues 1,778 (3) 3,277 +15% +15%  ► Significant contribution Organic growth +7% +8%  from acquisitions External growth +8% +7%  Adj. operating ► Operating margi

  44. Slide 44: Agenda: A resilient financial model

    Agenda A resilient financial model Robust top line growth and improved operating margin High cash flow generation and reduced leverage ratio © - Copyright Bureau Veritas 44

  45. Slide 45: A robust organic growth profile

    A robust organic growth profile Historical organic growth 2012-2015 13% ► Average organic growth of 6% to 8% p.a. 10% 7%  By business: AVG • Strong organic growth in Industry, 7% Commodities • Solid organic growth in Consumer Products, Certification, GSIT 3% 2% • Moderate organic growth in Marine,

  46. Slide 46: Targeted acquisitions to continue to fuel growth

    Targeted acquisitions to continue to fuel growth Historical acquisition spend 2012-2015 (€m) 568 ► Continue relutive acquisitions €260m ► Acquisitions to contribute between p.a. 3% to 4% to growth 319  Expand position in high growth markets 210  Increase footprint in key platform countries  Devel

  47. Slide 47: Margin expansion through Operational Excellence

    Margin expansion through Operational Excellence Historical adjusted operating 2012-2015 margin (1) ► Adjusted operating margin up 100bps (% of revenues) to 150bps (3) 16.7% +180 16.4% ► Mix effect bps 16.3% • Marine & Consumer to sustain high margin rates but lower than 2011 rates 15.1% 15.2% • All

  48. Slide 48: Scalability through network and process optimization

    Scalability through network and process optimization Corporate cost (1) 2012-2015 (% of revenues) ► Central costs slightly down as 2.3% a percentage of Group 2.2% revenues despite IS investment 2.0% 1.9% ► Continental shared services 1.6% ► Back offices offshoring 2007 2008 2009 2010 H1 2011 (1) Cen

  49. Slide 49: A new IS production Core Model to enhance efficiency

    A new IS production Core Model to enhance efficiency Back Office 2012-2015 Reduce cost Improve contract management ► A core model system Improve scheduling of operations Inspector / auditor addressing the five dimensions Client of the production process Improved productivity Increase satisfaction Mo

  50. Slide 50: Disciplined integration of acquisitions

    Disciplined integration of acquisitions to optimize synergies and goodwill retention Post Merger Integration Plan 2012-2015 ► Disciplined integration process Human Finance Resources Communication  9 modules and 150 actions  Dedicated integration teams  6 to 18 months plan Corporate Business Infor

  51. Slide 51: Agenda: High cash flow generation and reduced leverage

    Agenda A resilient financial model Robust top line growth and improved operating margin High cash flow generation and reduced leverage ratio © - Copyright Bureau Veritas 51

  52. Slide 52: Superior cash flow generation

    Superior cash flow generation Historical CF from operating activities 2012-2015 (€m) ► Disciplined Working Capital €1.4Bn management over 4Y 419 397  Management focus and incentive 315 235  WCR to represent 6% to 7% of revenues ► Capex representing 3% to 4% p.a. of revenues 2007 2008 2009 2010  E

  53. Slide 53: Strong Balance Sheet with reduced leverage ratio

    Strong Balance Sheet with reduced leverage ratio Net financial debt bridge 2012-2015 (€m) 1,117 ► Levered free cash-flows to finance acquisitions and 367 dividends 1,157 60 ► Leverage ratio(2) below 1x EBITDA by 2015 640 907 (subject to no major acquisition) Net Debt at Acquisitions Levered Dividend

  54. Slide 54: A long-maturity debt profile

    A long-maturity debt profile Financial debt(1) maturities 2012-2015 (€m) ► €190m of undrawn facilities €168m of cash at June, 30, 2011 438 190 undrawn ► Refinancing ahead of 2013 364 (Private Placement, bond) 236 thanks to strong financial profile 200 and high shadow rating 30 2011 2012 2013 2014 20

  55. Slide 55: Double digit growth in Adjusted EPS and dividends

    Double digit growth in Adjusted EPS and dividends Historical Adjusted EPS (1) 2012-2015 (€) 2.91 2.53 ► 10-15% average annual growth 2.15 in Adjusted EPS 1.84 1.46 ► Pay-out ratio consistent to prior year, around 40% 2006 2007 2008 2009 2010 Y-o-y increase 26% 17% 18% 15% Dividend (€) 0.60 0.72 0.84

  56. Slide 56: Continue on proven track record

    Continue on proven track record 2012-2015 ► Average organic growth between 6% and 8% p.a. ► Acquisitions representing 3% to 4% of growth p.a. on average ► Adjusted operating margin up 100bps to 150bps ► CAPEX representing 3% to 4% p.a. of revenues ► Strong balance sheet with leverage ratio <1 ► 10-1

  57. Slide 57: Disclaimer

    Disclaimer This presentation contains forward-looking statements which are based on current plans and forecasts of Bureau Veritas’ management. Such forward-looking statements are by their nature subject to a number of important risk and uncertainty factors such as those described in the Document de

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