Bureau Veritas Sa · EURONEXT:BVI
Bureau Veritas Sa — H1 2016 Earnings Presentation
60 slides from Bureau Veritas Sa's earnings presentation, Jul 28, 2016
Slide 1: Half-Year Results
HALF-YEAR RESULTS July 28, 2016 © Copyright Bureau Veritas
Slide 2: 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 d
Slide 3: Agenda
Agenda H1 2016 Highlights Financial review Business review 2016 Outlook Strategic update Conclusion Q&A Appendix July 28, 2016 / H1 2016 results / © Copyright Bureau Veritas
Slide 4: Highlights
Highlights July 28, 2016 / H1 2016 results / © Copyright Bureau Veritas
Slide 5: H1 2016 Highlights
H1 2016 Highlights Moderate revenue growth at constant cur. (+0.7%) Resilient margin: 15.8%, stable at constant currency ● Slight decrease in organic revenue (-0.6% H1 & Q2) ● Excellence@ BV (Lean, SSC), proactive cost management - Further drag from both Oil & Gas and Up. Minerals Adjusted net profi
Slide 6: Acquisitions & Partnerships in H1 2016
Acquisitions & Partnerships in H1 2016 6 new acquisitions all supporting BV’s Growth initiatives Date Footprint 2015 Revenue BUILDING & INFRASTRUCTURE HCD February UK €10m CHINA Chongqing Liansheng March China €30m AGRI-FOOD DTS* April Australia €35m MARINE & OFFSHORE TMC May UK €8.5m AUTOMOTIVE VEO
Slide 7: Financial review
Financial review July 28, 2016 / H1 2016 results / © Copyright Bureau Veritas
Slide 8: H1 2016 key financial metrics
H1 2016 key financial metrics (in € millions) Constant H1 2016 H1 2015 y/y currency Revenue 2, 221.4 2,318.7 -4.2% +0.7% Adjusted operating profit * 350.5 370.3 -5.3% +0.5% Adjusted operating margin * 15.8% 16.0% -20bp ~0bp Operating profit 303.5 335.6 -9.5% -4.5% Adjusted net profit 193.9 200.3 -3.
Slide 9: H1 2016 revenue growth
H1 2016 revenue growth (in € millions) +0.7% at constant currency 2,318.7 2,221.4 -0.6% +1.3% -4.9% H1 2015 Organic Acquisitions Currency impact H1 2016 9 July 28, 2016 / H1 2016 results / © Copyright Bureau Veritas
Slide 10: H1 2016 Revenue growth by business
H1 2016 Revenue growth by business % Constant revenue currency 8% Certification +5.4% +5.4% 14% IVS +5.2% +5.2% 75% of 9% Marine & Offshore XX% X% +3.0 % +1.3% +4.3% businesses 15% growing Consumer Products XX% +2.3% +2.4% +4.7% organically 18% Commodities XX% +1.3% +0.8% +2.1% 13% Construction +0.4
Slide 11: H1 2016: BV 2020 Growth Initiatives gaining traction
H1 2016: BV 2020 Growth Initiatives gaining traction Activities under the 8 Growth Initiatives (in € millions) +30 -114 2,319 -65 +51 2,221 -2.8pts +2.2pts O&G M&M Capex Upst. GSIT ROB* -0.5pts -0.3pts -0.5pts -1.5pts H1 2015 Organic Acquisitions Currency H1 2016 impact * ROB: Rest of business 11 Ju
Slide 12: Growth by geography
Growth by geography Revenue growth Constant Revenue Organic currency Europe 754.0 +3.6% +4.5% 24% 34% Middle East, Africa, 261.5 +0.6% +0.6% Eastern Europe Asia Pacific 675.4 +1.9% +4.9% Americas 530.5 -8.7% -8.0% 30% 12% Total 2,221.4 -0.6% +0.7% • Europe strong • Americas exposed to challenging co
Slide 13: Adjusted operating margin
Adjusted operating margin Drivers H1 2016 y/y Operational Currency O&G margin (bp) drivers* impact Commodities 12.4% +90 + = - IVS 11.7% +90 + = Certification 16.9% +30 + NA - Marine & Offshore 26.8% (30) + -- -- Construction 13.4% (70) + = Consumer Products 24.2% (70) = NA - Industry 13.2% (80) + -
Slide 14: Other operating expenses
Other operating expenses (in € millions) H1 2016 H1 2015 y/y Adjusted operating profit 350.5 370.3 -19.8 Amortization of intangibles (32.0) (34.3) +2.3 Restructuring (11.5) - -11.5 Acquisitions and disposals (3.5) (0.4) -3.1 Goodwill impairment - - - Operating profit 303.5 335.6 -32.1 €11.5m of rest
Slide 15: Net financial expenses
Net financial expenses (in € millions) H1 2016 H1 2015 y/y Net financial charges (42.3) (39.3) -3.0 Foreign exchange gain/loss 1.3 (3.7) +5.0 Interest charge on pension plans (1.5) (2.1) +0.6 Other financial expenses (0.9) (2.5) +1.6 Net financial expenses (43.4) (47.6) +4.2 Increase in net financia
Slide 16: Tax / tax rate
Tax / tax rate (in € millions) H1 2016 H1 2015 y/y y/y changes Profit before Tax 260.5 288.3 -9.6% Tax losses without Tax 93.6 106.1 -11.7% (130) differed tax assets ETR 35.9% 36.8% -90bp (60) Lower corporate tax rates in France Lower rate on other operating (130) (100) expenses +30 FX Adjusted ETR
Slide 17: Cash flow statement
Cash flow statement (in € millions) June 2016 June 2015 y/y Profit before income tax 260.5 288.3 -27.8 Elimination of financing and investing activities 51.1 34.5 +16.6 Provisions and other non-cash items 6.2 14.7 -8.5 Depreciation, amortization and impairment 90.8 95.0 -4.2 Change of payment timing
Slide 18: Financial structure
Financial structure Adjusted net debt Net debt / EBITDA ratio* 2.48 2.44 235 19 28 2,184 2.16 2.31 2.02 139 1,863 44 Bank covenant at 3.25x Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 *Adjusted net financial debt / EBITDA (earnings before interest, tax, depreciation, amortization and provisions) adjusted for
Slide 19: Business review
Business review July 28, 2016 / H1 2016 results / © Copyright Bureau Veritas
Slide 20: Marine & Offshore
Marine & Offshore Positive growth, margin protection Key financials H1 2016 Highlights ● In-Service (58% of revenue) 202.2 203.7 - Fleet up 4.9% in GT Revenue +0.7% +3.0% - Risk assessment decline (Offshore) (€ m) organic growth ● New construction (42% of revenue) - Decline in new builds offset by E
Slide 21: Commodities
Commodities Improving margins in a low growth environment Key financials H1 2016 Highlights ● O&P outperforming market growth 417.7 399.4 ● M&M: Stabilization in upstream despite pricing Revenue -4.4% +1.3% (€ m) organic pressure / Minerals trade strong in non- Coal growth ● Agri-Food performing str
Slide 22: Industry
Industry Drag from Oil & Gas capex – O&G pressure on margins Key financials H1 2016 Highlights 542.1 ● Persistent challenging markets in O&G (c45% of the 448.7 business) Revenue -9.8% -17.2% organic - Latam, North America & Australia: double-digit (€ m) growth decline - Middle-East more resilient H1
Slide 23: In-Service Inspection & Verification
In-Service Inspection & Verification Sustained growth across geographies Key financials H1 2016 Highlights 287.2 293.3 ● Sustained good growth in Europe (70% of revenue) +5.2% - Spain back to growth Revenue +2.1% (€ m) organic - France on good commercial activity growth - UK (double digit) ● Strong
Slide 24: Construction
Construction Broadly stable growth – country mix effect on margins Key financials H1 2016 Highlights 271.6 283.2 ● France growth still led by OPEX-related services +0.4% ● Europe: improving trends overall Revenue +4.3% organic ● China: revenue decline owing to O&G headwinds (€ m) growth ● Brazil sta
Slide 25: Certification
Certification Solid growth led by global contracts and sector schemes Key financials H1 2016 Highlights ● Mixed growth in Europe 170.8 172.5 -ISO transition in ramp-up phase Revenue +1.0% +5.4% -Solid growth in Italy, Germany, E. Europe (€ m) organic ● RoW very dynamic growth -Commercial initiatives
Slide 26: Consumer Products
Consumer Products Good underlying growth trend Key financials H1 2016 Highlights ● Growth supported by all categories, except Hardlines 295.0 300.3 ● Growth led by Asia and Europe (Germany) Revenue +1.8% +2.3% organic ● Strong growth in Automotive, good in Softlines (€ m) growth ● VEO -Auto, China-
Slide 27: Government Services & International Trade
Government Services & International Trade Unfavorable contract phasing impact growth and margin Key financials H1 2016 Highlights 132.1 120.3 ● Government contracts lower volumes -4.2% -End of Ghana PSI Revenue -8.9% organic -Lower activity with mining companies (€ m) growth -Slow Single Windows ram
Slide 28: No material impact from Brexit for foreseeable future
No material impact from Brexit for foreseeable future The UK: ~4% of Group revenue (cEUR180m) Balanced portfolio of clients and sectors Mainly IVS (opex) and Commodities Strong commercial momentum Customer wins, banking, infrastructures, aerospace Revenue split as of June 30, 2016 Strong start
Slide 29: Outlook
Outlook July 28, 2016 / H1 2016 results / © Copyright Bureau Veritas
Slide 30: Outlook 2016
Outlook 2016 As expected, after a slow start in H1 16, the Group still anticipates a progressive acceleration of organic growth in H2 leading to the low end of the 1 to 3% guidance for the FY16 The Group confirms high adjusted operating margin holding at the 16.5%-17.0% range The Group still e
Slide 31: BV 2020 strategic update
BV 2020 strategic update July 28, 2016 / H1 2016 results / © Copyright Bureau Veritas
Slide 32: Recap of BV 2020 ambition / Growth initiatives
Recap of BV 2020 ambition / 8 Growth initiatives* Revenues Organic growth targeted at 5-7% by 2020 target by 2020 Building EUR Opex EUR Adjacent EUR Agri-Food EUR 540m 500m 400m 180m & Infrastructure O&G/Power/Chem. Retail/Mining Acquisitions in China (Chongqing), the UK Packaged offers New services
Slide 33: Update on the progress of the Growth Initiatives
Update on the progress of the 8 Growth Initiatives « 8 Growth Added 2.2pts to Group organic growth (EUR51m) Initiatives » 8 Initiatives 2 Countries Certification Adj. segments (O&G, P&U, Chemicals) Smartworld Automotive Agri-Food Offshore Large accounts Marine& (Retail, Mining) China OPEX B&I US Org
Slide 34: Marketing & Sales organization in place
Marketing & Sales organization in place Global CIF* Consumer Market GSIT M&O EMEA Americas APAC Products Leaders Global Market leaders recruited in key markets: 80%+ completed Market Leaders in place Market Leaders to be recruited Partial regional coverage Not applicable * CIF: Commodities, Indust
Slide 35: Update on selected business wins
Update on selected business wins Size of BV’s Name Market Contract Length Scope of work (EURm) Initiatives Integral services for gas distribution network, Gas Co. Oil & Gas 45.0 5 years statutory technical inspection Opex Project preparation (China) and supervision China EPC contractor EPC 6.6 2 yea
Slide 36: Case study: major Gas co.
Case study: major Gas co. Increasing share of wallet with existing client 2020 Market Current scope/ opportunity Pending Type of services Opportunities • Integral Technical Services MTBT • Readings and distribution of documents ~X5 • Meter reading Countries: Americas 2016 Wins ~x3 Type of services
Slide 37: Case study: leading EPC contractor / China
Case study: leading EPC contractor / China Accompanying clients in overseas opportunity 2020 Market Scope Initial project preparation in China Construction supervision for convertor stations & auxiliary projects and transmission lines in Pakistan (length 450Km) 6.6m€ for 2 years+ duration
Slide 38: Case study: BHP
Case study: BHP Mining adjacent OPEX services 2020 Market Scope/ opportunity Metals & Minerals Testing Exploration QA/QC Industrial Services for Capex Projects Construction New business win Estimated revenue >4.5m€ over 3 years Scope Technical Inspection & Quality Control Production NDT Serv
Slide 39: Conclusion
Conclusion July 28, 2016 / H1 2016 results / © Copyright Bureau Veritas
Slide 40: 2016: a year of transformation
2016: a year of transformation 1 Improving momentum in H2 Transform the Group to execute the 2020 strategic plan 2 • Marketing and Sales organization in place • Addressing new growth opportunities / diversification Long-term opportunity intact 3 TIC market potential reaffirmed High commitment to
Slide 41: Appendix
Appendix July 28, 2016 / H1 2016 results / © Copyright Bureau Veritas
Slide 42: Pro-forma Food reallocation
Pro-forma Food reallocation Adjusted operating profit Revenue (€m) (€m) Q3 2015 Q4 2015 H2 2015 FY 2015 H2 2015 FY 2015 FY Margin Marine & Offshore 101.6 101.5 203.1 405.3 52.4 107.1 26.4% Industry 255.0 249.6 504.6 1046.7 73.5 149.4 14.3% IVS 145.9 165.4 311.2 598.4 51.8 82.8 13.8% Construction 140
Slide 43: Revenue by main currency
Revenue by main currency H1 2016 revenue by functional currency H1 2016 vs H1 2015 at average rates OTHER 13% 0.0% USD (and pegged) CNY -4.9% TRY 1% GBP -6.0% COP 1% ARS 1% Euro 30% TWD 2% CAD -7.2% INR 2% AUD -6.3% KRW 2% BRL -19.8% JPY 2% CLP -9.8% SGD 2% SGD -2.2% JPY 7.9% CLP 3% KRW -6.9% BRL 3%
Slide 44: Portfolio of businesses
Portfolio of businesses Revenue Adjusted operating profit GSIT GSIT 5% 4% 14% 9% Marine Marine 21% 15% Industry Industry 18% 20% IVS IVS Construction 14% 17% Construction 8% Certification Certification 13% 8% 10% 13% Commodities Commodities 11% Consumer Products Consumer Products 44 July 28, 2016 /
Slide 45: Geographical footprint
Geographical footprint 34% Europe 15,000 % of H1 2016 Group revenue 380 67,400 employees 30% 1,400 offices & labs Asia Pacific 25,800 400 24% 12% Americas Middle East Africa, Eastern Europe 17,700 8,900 330 290 45 July 28, 2016 / H1 2016 results / © Copyright Bureau Veritas
Slide 46: The Marine model
The Marine model Cyclicality of new ship orders (market) BV’s strong resilience through the cycle 500 New construction revenue 160.0 (GRTm) (€ m) 450 In-service revenue (% of Marine revenue) 140.0 Adjusted EBITA 400 120.0 350 100.0 300 250 80.0 200 60.0 150 40.0 100 20.0 50 48% 43% 43% 47% 46% 51% 5
Slide 47: Case study: Disney
Case study: Disney Increasing share of wallet with existing client 2020 Market Scope/ opportunity Currently providing: Testing / product integrity services Estimated revenue of c80m€ over 5 years Construction management services for the new Shanghai resort Estimated revenue 3m€ over 1 year Op
Slide 48: Case study: US top fashion retailer
Case study: US top fashion retailer Succesful key account management strategy 2020 Market Scope All testing and inspections services (exclusive) Estimated revenue >3.0m€ in 2017 Won in May 2016 Key success factors Key account management: relationships with executive level management relatio
Slide 49: Case study: Copersucar
Case study: Copersucar Successful diversification in Agri-Food 2020 Market Scope Quality / quantity control at clients’ port warehouses and storage Sugar, soya and corn Estimated revenue >5.0m€ for 3 years Won in H1 2016 Key success factors BV’s expertise in the commodities market and large
Slide 50: Revenue by business
Revenue by business Q2 2016 H1 2016 Cur. Cur. €m Organic Scope €m Organic Scope impact impact Marine & Offshore 106.0 4.8% 2.2% -4.4% 203.7 3.0% 1.3% -3.6% Industry 226.8 -11.4% 0.1% -7.6% 448.7 -9.8% 0.1% -7.5% IVS 148.9 5.4% 0.0% -3.8% 293.3 5.2% 0.0% -3.1% Construction 150.0 0.1% 9.5% -3.2% 283.2
Slide 51: Adjusted operating profit by business
Adjusted operating profit by business Adjusted operating profit (€m) Adjusted operating margin (%) H1 2016 H1 2015 Var. (%) H1 2016 H1 2015 Var. (bp) Marine & Offshore 54.5 54.7 -0.4% 26.8% 27.1% -30 Industry 59.2 75.9 -22.0% 13.2% 14.0% -80 IVS 34.2 31.0 10.3% 11.7% 10.8% +90 Construction 37.9 38.4
Slide 52: Consolidated income statement
Consolidated income statement H1 2016 H1 2015 Revenue 2,221.4 2,318.7 Purchase and external charges (640.3) (652.6) Personnel costs (1,162.4) (1,209.7) Taxes other than on income (24.7) (24.0) Net (additions to)/reversals of provisions (12.5) (7.6) Depreciation and amortization (92.0) (96.8) Other o
Slide 53: Adjusted net profit
Adjusted net profit H1 2016 H1 2015 Attributable net profit 159.6 175.1 Other operating expenses 47.0 34.7 Tax effect on other operating expenses (12.7) (9.5) Attributable adjusted net profit 193.9 200.3 Effective tax rate (ETR) 35.9% 36.8% Adjusted ETR 34.6% 35.8% 53 July 28, 2016 / H1 2016 results
Slide 54: Consolidated comprehensive income
Consolidated comprehensive income H1 2016 H1 2015 159.6 182.2 Net profit Currency translation differences (1.0) 97.8 Cash-flow hedges (0.4) (27.7) Income tax on items reclassified to profit or loss 0.2 (0.3) Total of other comprehensive income reclassified to profit or loss 158.4 69.8 Actuarial gain
Slide 55: Consolidated balance sheet
Consolidated Goodwill balance sheet June 2016 1,883.4 Dec. 2015 1,800.4 Intangible assets 684.6 629.4 Property, plant and equipment 497.0 497.9 Other non-current assets 233.1 218.6 Total non-current assets 3,298.1 3,146.3 Trade and other receivables 1,496.4 1,374.2 Other current assets 118.3 107.2 C
Slide 56: Statement of change in equity
Statement of change in equity Attributable to Currency Share Share Other Total Shareholders translation Minority capital premium reserves equity of the reserves interests Company December 31, 2015 53.0 43.9 (70.3) 1,098.3 1,124.9 1,095.3 29.6 Capital increase - - - - - - - Capital reduction - - - -
Slide 57: Cash flow statement
H1 2016 H1 2015 Cash flow statement Profit before income tax Elimination of cash flows from financing and 260.5 288.3 investing activities 51.1 34.5 Provisions and other non-cash items 6.2 14.7 Depreciation, amortization and impairment 90.8 95.0 Movements in working capital attributable to operation
Slide 58: Adjusted net financial debt
Adjusted net financial debt June 2016 Dec. 2015 Non-current borrowing and debt 1 761.1 2,311.0 Current borrowing and debt 615.0 66.8 O/w 2012 Bond emission 500.0 Bank overdrafts 15.1 12.1 Gross financial debt 2 391.2 2,389.9 Total cash and cash equivalents 212.7 522.9 Net financial debt 2 178.5 1,86
Slide 59: Earnings per share
Earnings per share H1 2016 H1 2015 Basic EPS 0.37 0.40 Basic adjusted EPS 0.44 0.46 Weighted average number of shares 437,112,819 437,529,823 Diluted EPS 0.36 0.40 Diluted adjusted EPS 0.44 0.45 Weighted average number of shares for diluted earnings 440,886,882 442,971,586 59 July 28, 2016 / H1 2016
Slide 60: Ownership at June 30, 2016
Ownership at June 30, 2016 1.2% Treasury shares 40.1% Wendel 56.8% Managers and employees 1.9% Free float 60 July 28, 2016 / H1 2016 results / © Copyright Bureau Veritas