Bureau Veritas Sa · EURONEXT:BVI

Bureau Veritas Sa — H1 2015 Earnings Presentation

50 slides from Bureau Veritas Sa's earnings presentation, Sep 1, 2015

  1. Slide 1: 2015 Half-Year Results

    2015 HALF-YEAR RESULTS September 1, 2015 © Copyright Bureau Veritas / September 1, 2015 / p 1

  2. 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 de

  3. Slide 3: Agenda

    Agenda HIGHLIGHTS Financial review Business review 2015 Outlook Q&A Appendix © Copyright Bureau Veritas / September 1, 2015 / p 3

  4. Slide 4: Performing in a challenging environment

    Performing in a challenging environment Performance drivers Market challenges Portfolio diversification O&G price Europe rebound Minerals weakness Marine over performance Political instability Commercial initiatives © Copyright Bureau Veritas / September 1, 2015 / p 4

  5. Slide 5: H1 2015: a strong performance

    H1 2015: a strong performance EUR H1 2015 VLY Revenue 2.32 bn +17.9% Adjusted operating margin 16.0% +20 bps Adjusted EPS 0.46 +12.2% Operating cash flow 216m +22.9% Strong revenue growth  9.0% at constant currencies  8.9% positive FX impact 16% adjusted operating margin  Initiatives and currenci

  6. Slide 6: A balanced portfolio of businesses

    A balanced portfolio of businesses Revenue Adjusted operating profit Consumer GSIT Consumer GSIT products Marine & Marine & products Offshore Offshore 14% 6% 5% 9% 21% 15% Commodities 17% Industry Commodities Industry 23% 12% 20% 7% Certification Certification 8% 12% 12% 11% 8% Construction IVS Cons

  7. Slide 7: EMEA drives growth

    EMEA drives growth 66,500 employees H1 2015 14,500 Organic % Group Growth Europe 31% +5.3% Middle East, Africa, 12% +5.4% Eastern Europe Asia Pacific 29% +2.9% 18,600 Americas 28% +1.4% 24,400 9,000 Total Group 100% +3.6%  Europe improving, exception of Construction in France  Americas slowdown: O

  8. Slide 8: Impact of lower oil price environment

    Impact of lower oil price environment Increased demand Overcapacity remains • European and US oil demand growth • US production overcapacity • High utilization rates and margins for refiners • End of Iran sanctions Main impact on BV in H1 2015 Industry, IVS Commodities  Project delays in the  Favo

  9. Slide 9: Continuous expansion in China

    Continuous expansion in China ~15% of Group 12,000+ 100 locations Revenue employees  4 acquisitions YTD, strategically positioned to benefit from structural growth drivers • Revenue of c. EUR 65m • 1,500+ employees  Slowdown of Chinese economy mitigated by: • Liberalization of TIC services • Stren

  10. Slide 10: Group Key Accounts: early benefits

    Group Key Accounts: early benefits Setting up an operational framework A targeted approach GROUP Strategic Account ACCOUNTS Markets accounts Managers 170+ OPERATING Key Accounts GROUP KEY ACCOUNTS Cross- Define sell and Structure value- select added services LOCAL 200+ KEY ACCOUNTS  First benefits

  11. Slide 11: Agenda: Financial Review

    Agenda Highlights FINANCIAL REVIEW Business review 2015 Outlook Growth acceleration Q&A Appendix © Copyright Bureau Veritas / September 1, 2015 / p 11

  12. Slide 12: Income statement

    Income statement @ constant (in EUR millions) H1 2015 H1 2014 VLY currencies Revenue 2,318.7 1,967.4 +17.9% +9.0% Adjusted operating profit 370.3 310.0 +19.5% +7.1% Adjusted operating margin 16.0% 15.8% +20 bp (30) bp Other operating expenses (34.7) (31.5) Share of profit of associates 0.3 - Operati

  13. Slide 13: Strong revenue growth

    Strong revenue growth (in EUR millions) +9.0% +8.9% 2,318.7 +5.4% 1,967.4 +3.6% H1 2014 Organic Acquisitions Currencies H1 2015 Q2 2015 +3.0% +4.6% +9.1%  Marine performance, Europe recovery vs O&G drag  Acquisition contribution  FX tailwind © Copyright Bureau Veritas / September 1, 2015 / p 13

  14. Slide 14: Resilient organic growth

    Resilient organic growth % Group H1’15 Q1’15 Q2’15 revenue Marine & Offshore 9% +11.7% +13.7% +9.9% Commodities 17% +5.5% +6.3% +4.9% Certification 7% +4.4% +4.5% +4.4% Industry 23% +3.6% +4.6% +2.6% Consumer products 14% +3.4% +5.1% +2.1% IVS 12% +1.8% +1.1% +2.5% Construction 12% +1.0% +0.5% +1.4%

  15. Slide 15: Acquisitions since Jan. 2015

    #6 Acquisitions since Jan. 2015 DATE DESCRIPTION FOOTPRINT SHANDONG CHENGXIN Jan. 15 Construction, power China NINGBO HENXIN Jan. 15 Industry, NDT China CTS Jan. 15 Consumer products, E&E, Toys & Hardlines China NORTH ISLAND LAB. Jan. 15 Consumer products, IVS Canada SHANGHAI XIETONG Jul. 15 Constru

  16. Slide 16: Profitability improvement

    Profitability improvement +50 bp 16.0% 15.8% +10 bp (40 bp) H1 2014 O&G impact Rest of business Currencies H1 2015  Operational excellence initiatives  Currencies more than offset Oil&Gas impact © Copyright Bureau Veritas / September 1, 2015 / p 16

  17. Slide 17: Profitability by business

    Profitability by business Adjusted operating margin H1’15 VLY (bp) Key drivers Marine & Offshore 27.1% +40 Equipment testing in Asia, FX Consumer products 23.8% +90 Lean, FX Certification 16.8% +20 FX GSIT 15.4% (80) Contract ramp-up Construction 14.1% +110 Portfolio mix Industry 14.0% (90) Oil&Gas

  18. Slide 18: Other operating expenses

    Other operating expenses (in EUR millions) H1 2015 H1 2014 VLY Amortization of acquisition intangibles (34.3) (30.2) (4.1) Restructuring & disposals (0.1) 0.3 (0.4) Acquisition related costs (0.3) (0.1) (0.2) Goodwill impairment - (1.5) +1.5 Total other operating expenses (34.7) (31.5) (3.2)  No ex

  19. Slide 19: Effective tax rate (ETR)

    Effective tax rate (ETR) ETR VLY (bp) Adjusted ETR H1 2014 31.6% Variation in basis points (bp): Withholding taxes +110 Tax on dividends distributions (mainly France) +160 Non deductible interest +20 Other +130 Adjusted ETR H1 2015 35.8% +420 Lower tax rate on other operating expenses +100 ETR H1 20

  20. Slide 20: Summary cash flow statement

    Summary cash flow statement (in EUR millions) H1 2015 H1 2014 VLY Profit before income tax 288.3 238.0 +50.3 Elimination of financing and investing activities 34.5 37.7 Provisions and other non-cash items 14.7 11.3 Depreciation, amortization and impairment 95.0 86.2 Movements in working capital (109

  21. Slide 21: Adjusted financial debt

    Adjusted financial debt (in EUR millions) 214.4 18.8 6.4 2,110.6 1,879.9 64.7 (73.6) Dec. 2014 Free cash-flow Acquisitions Dividends Stock Other Jun. 2015 options/buybacks Adjusted net financial debt as defined for the Group’s covenants calculation  Less acquisition spend in H1 2015 © Copyright Bur

  22. Slide 22: Sustained leverage ratio

    Sustained leverage ratio 2.48 2.31 2.16 1.93 1.83 1.59 1.71 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Leverage ratio = Adjusted net financial debt / EBITDA (earnings before interest, tax, depreciation, amortization and provisions) adjusted for all units acquired over the past 12 months, as de

  23. Slide 23: Summary financial position

    Summary financial position (in EUR millions) Jun. 2015 Jun. 2014 Goodwill 1,926.0 1,663.1 Net fixed assets 1,192.7 1,051.0 Working capital (WC) 555.0 453.8 Capital employed 3,673.7 3,167.9 Equity 1,182.9 937.5 Adjusted net financial debt 2,110.6 1,985.5 Other 380.2 244.9 Capital resources 3,673.7 3,

  24. Slide 24: Agenda: Business Review

    Agenda Highlights Financial review BUSINESS REVIEW 2015 Outlook Q&A Appendix © Copyright Bureau Veritas / September 1, 2015 / p 24

  25. Slide 25: Marine & Offshore

    Marine & Offshore New construction and in-service drive excellent performance Key financials H1 2015 Highlights Revenue (EUR m) +15.0% 7.7%  In-service (59% of revenue) +11.7% • Fleet up 8.2% in GT/ special surveys 202  New construction (41%) 150 • Q2 new orders catch up H1 2014 Organic Acquis. FX

  26. Slide 26: Industry

    Industry Good activity outside of O&G end market Key financials H1 2015 Highlights Revenue (EUR m) +9.2%  Europe sustained growth +3.6% +3.2% • Power/ Nuclear in France • Commercial initiatives FY 13 FY 14 534  Oil price impact materializing in 461 Q2 in the Americas and Pacific H1 2014 Organic Ac

  27. Slide 27: In-Service Inspection & Verification

    In-Service Inspection & Verification Europe recovery, O&G impact in North America Key financials H1 2015 Highlights Revenue (EUR m) +4.7% +1.8% +1.7%  Recovery in Europe  Commercial initiatives in the US 287 266  New products in Japan H1 2014 Organic Acquis. FX H1 2015  Oil & Gas Canada drag 11.

  28. Slide 28: Construction

    Construction Improved country mix, France slightly down Key financials H1 2015 Highlights Revenue (EUR m) +20.1% +7.3%  Europe/France still down +1.0%  Growth in the Middle-East (Riyadh) 274 214  China # 2 country  Latin America expansion H1 2014 Organic Acquis. FX H1 2015 13.0% Margin 14.1%  M

  29. Slide 29: Certification

    Certification Commercial success and Europe drive growth Key financials H1 2015 Highlights Revenue (EUR m) +4.4% +4.6%  Good performance of QHSE  Development in Supply-chain (Automotive, Aerospace) 175 160  Growing Supplier audits and Training H1 2014 Organic FX H1 2015  Recovery in Europe, Amer

  30. Slide 30: Commodities

    Commodities Good performance driven by trade, margin improvement Key financials H1 2015 Highlights Revenue  Oil & Petrochemicals (O&P) (EUR m) +9.5% +5.5% +4.0% • Trade (+) / Oil sands (-)  Metals & Minerals (M&M) 391 329 FY 13 FY 14 • Trade (+) / Upstream weakness  Agri: good 2014 harvest H1 201

  31. Slide 31: Consumer Products

    Consumer Products E&E program delays, improved lab productivity Key financials H1 2015 Highlights Revenue +18.4% (EUR m)  Softlines growth: US key accounts +3.4% +1.3%  Toys & Hardlines under pressure 322 262 FY 13 FY 14  E&E: delays in new product launches  China expansion/ CTS acquisition H1 2

  32. Slide 32: Government Services & International Trade

    Government Services & International Trade Iraq volume reduction, delays in some new contracts Key financials H1 2015 Highlights Revenue (EUR m) (2.9)% +4.2%  Strong performance in Saudi +3.5% Arabia and DRC 132  Volume reduction in Iraq 126  Some contract launch delayed H1 2014 Organic Acquis. FX

  33. Slide 33: Agenda: 2015 Outlook

    Agenda Highlights Financial review Business review 2015 OUTLOOK Q&A Appendix © Copyright Bureau Veritas / September 1, 2015 / p 33

  34. Slide 34: 2015 Outlook

    2015 Outlook  Taking into account the global economic slowdown and the more pronounced drop in oil prices, the growth in the second half of 2015 should be less dynamic than in the first half.  For the full year 2015, Bureau Veritas expects a slight improvement in organic growth over 2014.  The op

  35. Slide 35: Investor Days 2015

    INVESTOR DAYS 2015 October 6 & 7, 2015 - LONDON Day sessions Gala dinner Tuesday 6 October Wednesday 7 October Tuesday 6 October 10.00 am to 5.00 pm 9.00 am to 12.00 pm Start at 7.00 pm

  36. Slide 36: Agenda

    Agenda Highlights Business review Financial review 2015 Outlook Q&A Appendix © Copyright Bureau Veritas / September 1, 2015 / p 36

  37. Slide 37: Appendix

    Agenda Highlights Business review Financial review 2015 Outlook Q&A APPENDIX © Copyright Bureau Veritas / September 1, 2015 / p 37

  38. Slide 38: Revenue by business

    Revenue by business Q2 2015 H1 2015 EURm Organic Scope FX EURm Organic Scope FX Marine & Offshore 103.3 9.9% 15.2% 7.3% 202.2 11.7% 15.0% 7.7% Industry 275.5 2.6% 2.8% 9.1% 534.3 3.6% 3.2% 9.2% IVS 146.7 2.5% 0.2% 5.2% 287.5 1.8% 1.7% 4.7% Construction 142.3 1.4% 22.1% 7.9% 274.3 1.0% 20.1% 7.3% Cer

  39. Slide 39: Adjusted operating profit by business

    Adjusted operating profit by business (in EUR millions) Adjusted operating profit Adjusted operating margin H1 2015 H1 2014 Var. H1 2015 H1 2014 Var. Marine & Offshore 54.7 40.2 +36.1% 27.1% 26.7% +40 bp Industry 74.6 68.5 +8.9% 14.0% 14.9% (90) bp IVS 31.0 30.3 +2.3% 10.8% 11.4% (60) bp Constructio

  40. Slide 40: Net financial expense

    Net financial expense (in EUR millions) H1 2015 H1 2014 VLY Net finance cost (39.3) (37.6) (1.7) Foreign exchange gain / (loss) (3.7) (0.2) (3.5) Interest charge on pension plans (2.1) (1.6) (0.5) Other financial expenses (2.5) (1.1) (1.4) Net financial expense (47.6) (40.5) (7.1) © Copyright Bureau

  41. Slide 41: Adjusted net profit

    Adjusted net profit (in EUR millions) H1 2015 H1 2014 Profit before income tax 288.3 238.0 Income tax expense (106.1) (77.1) Non controlling interests (7.1) (6.9) Attributable net profit 175.1 154.0 Other operating expenses 34.7 31.5 Tax effect on other operating expenses (9.5) (8.0) Attributable ad

  42. Slide 42: Consolidated income statement

    Consolidated income statement H1 2015 H1 2014 (in EUR millions) Revenue 2,318.7 1,967.4 Purchase and external charges (652.6) (553.1) Personnel costs (1,209.7) (1,030.4) Taxes other than on income (24.0) (27.4) Net (additions to)/reversals of provisions (7.6) 0.3 Depreciation and amortization (96.8)

  43. Slide 43: Consolidated comprehensive income

    Consolidated comprehensive income (in EUR millions) H1 2015 H1 2014 Net profit 182.2 160.9 Currency translation differences 97.8 21.4 Cash-flow hedges (27.7) 2.4 Income tax on items reclassified to profit or loss (0.3) (0.9) Total of other comprehensive income reclassified to profit or loss 69.8 22.

  44. Slide 44: Consolidated financial position

    Consolidated financial position (in EUR millions) H1 2015 Dec. 2014 Goodwill 1,926.0 1,814.2 Intangible assets 671.9 650.6 Property, plant and equipment 520.8 475.6 Other non-current assets 213.8 188.0 Total non-current assets 3,332.5 3,128.4 Trade and other receivables 1,462.2 1,325.0 Other current

  45. Slide 45: Statement of change in equity

    Statement of change in equity (in EUR millions) Attributable to Currency Share Share Other Total Shareholders translation Minority capital premium reserves equity of the reserves interests Company December 31, 2014 53.1 73.0 (53.4) 1,068.0 1,140.7 1,108.0 32.7 Capital reduction (0.1) (22.8) - - (22.

  46. Slide 46: Cash flow statement

    Cash flow statement (in EUR millions) H1 2015 H1 2014 Profit before income tax 288.3 238.0 Elimination of cash flows from financing and investing activities 34.5 37.7 Provisions and other non-cash items 14.7 11.3 Depreciation, amortization and impairment 95.0 86.2 Movements in working capital attrib

  47. Slide 47: Adjusted net financial debt

    Adjusted net financial debt (in EUR millions) Jun. 2015 Dec. 2014 Bank borrowings (non-current) 2,104.5 1,944.8 Bank borrowings (current) 175.0 144.1 Bank overdrafts 36.9 9.8 Gross financial debt 2,316.4 2,098.7 Total cash and cash equivalents 198.2 220.1 Net financial debt 2,118.2 1,878.6 Impact of

  48. Slide 48: Earnings per share

    Earnings per share (in EUR / share) H1 2015 H1 2014 Basic EPS 0.40 0.35 Basic adjusted EPS 0.46 0.41 Weighted average number of shares 437,529,823 437,061,389 Diluted EPS 0.40 0.35 Diluted adjusted EPS 0.45 0.40 weighted average number of shares for diluted earnings 442,971,586 444,411,792 © Copyrig

  49. Slide 49: Ownership as of June 30, 2015

    Ownership as of June 30, 2015 1.2% Treasury shares Wendel 40.0%* 56.9% Managers and employees 1.9% Free float * As of June 30, 2015, Wendel held 56.1% of the theoretical voting rights © Copyright Bureau Veritas / September 1, 2015 / p 49

  50. Slide 50: Revenue by main currency

    Revenue by main currency H1 2015 Revenue by functional H1 2015 vs H1 2014 variations @ currency average rates Other Euro 17% 28% COP COP (3.2)% 2% KRW KRW 17.2% 2% ARS 9.1% ARS 2% JPY 4.6% JPY CLP 9.3% 2% CLP CAD 9.1% 3% GBP 12.2% CAD 4% AUD 5.1% GBP BRL (4.8)% 4% AUD USD (and CNY 21.7% 4% BRL corre

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