Bureau Veritas Sa · EURONEXT:BVI

Bureau Veritas Sa — FY2016 Earnings Presentation

57 slides from Bureau Veritas Sa's earnings presentation, Feb 24, 2017

  1. Slide 1: FY 2016 Results

    2016 © Bureau Veritas FY 2016 Results February 24, 2017

  2. Slide 2: Agenda / FY 2016 Results

    Agenda / FY 2016 Results  Highlights  Financial Review  Business Review  Outlook  Q&A  Appendix © Bureau Veritas

  3. Slide 3: Highlights

    Highlights b BUREAU. VERITAS © Bureau Veritas

  4. Slide 4: 2016 Highlights

    2016 Highlights  Group full-year revenue at €4.55 bn, up 1.4% y/y at constant currency  Slight negative organic growth of (0.6)%, in line with recent guidance  Improving trend in Q4 at (0.3)%  Growth Initiatives contributing 1.7pts to organic growth  China now #1 country of BV: 16% of Group rev

  5. Slide 5: Organic growth: improving trends in Q4 2016

    Improving trends in Q4 2016 Certification Construction Consumer Products 5.8% 6.0% 5% 4.9% GSIT 3.2% Organic growth 1.8% Commodities 0% 0.2% IVS Size of bubbles indicates size of M&O business -5.0% Positive organic growth Stable / Negative organic growth -10% Industry -10.3% © Bureau Veritas  6 out

  6. Slide 6: Strengthening of BV's transformation journey

    Strengthening of BV’s transformation journey New Focus on five 2020 strategy organization Growth confirmed and reporting Initiatives  A more compact  Re-assessment of Growth  Mid-term ambition intact Executive Committee Initiatives  Timing delayed by one  A more agile Group year overall due to

  7. Slide 7: Financial Review

    Financial Review © Bureau Veritas

  8. Slide 8: FY 2016 Revenue Growth

    FY 2016 Revenue Growth (in € millions) +2.0% 4,634.8 4,549.2 (0.6)% (3.2)% FY 2015 Organic* Acquisitions Currencies FY 2016 © Bureau Veritas *Organic growth is the increase in revenue versus last year, at constant currency and scope (i.e. acquisitions excluded) FY 2016 Results February 24, 2017 8

  9. Slide 9: Acquisitions in 2016 & YTD

    11 Acquisitions in 2016 & YTD 2016 Growth Initiative 2017 HCD UK €10m Feb. Building SPM * China €50m Feb. Chongqing Liansheng China €30m March & Infrastructure Summit USA €13m June OPEX O&G/Power/Chem. DTS Australia €35m April Agri-Food KMA Brazil €13m Dec. VEO China €8.5m May Automotive TMC UK €8.5

  10. Slide 10: FY 2016 revenue growth by business

    FY 2016 revenue growth by business % @ constant revenue currencies 8% Certification 5.7% 6.0% +6.1% 14% Consumer Products 3.8% 2.7% +6.5% 2/3rd of businesses 13% IVS XX% organically X% 3.5% +3.5% growing 18% Commodities XX% 2.0% 2.8% +4.8% 13% Construction XX% 1.0% 7.5% +8.5% 9% M&O (2.2)% 1.6% (0.6

  11. Slide 11: FY 2016: overview of BV 2020 Growth Initiatives

    FY 2016: overview of BV 2020 Growth Initiatives (in € millions) V2 95 (150) (70) 80* (20) (20) 4,635 Businesses facing a down Growth initiatives cycle (1.9)pts +1.7pts* organic 4,549 FY 2015 O&G capex M&M Base business Growth Acquisitions Currency FY 2016 © Bureau Veritas upstream, Initiatives GSIT

  12. Slide 12: FY 2016 key financial metrics

    FY 2016 key financial metrics y/y at constant FY 2016 FY 2015 y/y currency Revenue 4,549.2 4,634.8 -1.8% +1.4% Adjusted operating margin down 25 bp Adjusted operating profit * 734.9 775.2 (5.2)% (0.7)% organically, flat Adjusted operating margin * 16.2% 16.7% (55)bp (35)bp excluding GSIT Operating p

  13. Slide 13: Adjusted operating margin

    Adjusted operating margin ADJUSTED OPERATING MARGIN BY BUSINESS ADJUSTED OPERATING MARGIN EVOLUTION Y/Y Organic FY 2016 y/y (bp) group impact (bp) Commodities 12.1% +70 +10 -25 bps Construction 16.0% +60 +10 -10 bps -20 bps Certification 17.1% - +5 16.7% 16.5% 16.2% IVS 13.8% - - Marine & Offshore 2

  14. Slide 14: Non-recurring items

    Non-recurring items (in € millions) FY 2016 FY 2015 y/y FY 2016 includes €9.6m of accelerated amortization of Adjusted operating profit 734.9 775.2 -40.3 Customer relationships in the Americas Amortization of intangibles (79.5) (86.7) +7.2 Restructuring (42.6) (20.8) -21.8 Higher restructuring prima

  15. Slide 15: Net financial expenses

    Net financial expenses (in € millions) FY 2016 FY 2015 y/y Increase of financial charges due to average net debt increase on the anticipated refinancing Net financial charges (89.9) (80.0) -9.9 of May 2017 bond Foreign exchange gain/loss +8.7 (3.6) +12.3 FX gains linked to FX Interest charge on pens

  16. Slide 16: Tax / Tax rate

    Tax / Tax rate (in € millions) FY 2016 FY 2015 y/y Profit before Tax 524.0 488.4 +35.6 Tax (188.9) (220.7) +31.8 ETR 36.0% 45.2% -920 bp Less impact from one-off items (tax-related) Adjusted ETR 34.6% 37.0% -240 bp © Bureau Veritas Effective tax rate (ETR) = Income tax expense / Profit before income

  17. Slide 17: Cash flow statement

    Cash flow statement (in € millions) FY 2016 FY 2015 y/y Profit before income tax 524.0 488.4 +35.6 Mainly impacted by more Elimination of financing and investing activities 61.1 60.6 +0.5 difficult cash collection Provisions and other non-cash items 57.9 46.9 +11.0 for activities in downturn and cha

  18. Slide 18: Financial structure

    Financial structure ADJUSTED NET DEBT NET DEBT / EBITDA RATIO* 41.8 5.4 1996.4 255.1 1,862.7 362.5 204.7 2.20 2.16 2.02 Bank covenant at 3.25x Dec. 2015 FCF Acquis. Dividends Stock Other Dec.2016 Dec-14 Dec-15 Dec-16 options buybacks © Bureau Veritas  Sound financial structure with adj. ND/EBITDA a

  19. Slide 19: Business Review

    Business Review © Bureau Veritas

  20. Slide 20: Marine & Offshore (9% of revenue, 14% of profit)

    Marine & Offshore (9% of revenue, 14% of profit) KEY FINANCIALS 2016 HIGHLIGHTS 2017 MARKET / BV OUTLOOK  New construction down cycle  New construction under pressure FY 2016 FY 2015 Var.  New orders down c.70% y/y  Core In-Service: Fleet up YTD in GT vs. Revenue 391.9 405.3 (3.3)%  Most impact

  21. Slide 21: Marine & Offshore: market downturn

    Marine & Offshore: market downturn BV’S OVERALL STRONG RESILIENCE BV MARINE BUSINESS RECENTLY HIT BY THE THROUGH THE CYCLE DOWNTURN IN SHIPPING 500 (€ m) In-service revenue 180 (mGT) 40% 450 New ship orders (GT, market) lhs New construction revenue 160 400 BV Marine OG Adjusted EBITA BV New construc

  22. Slide 22: IVS (13% of revenue, 11% of profit)

    IVS (13% of revenue, 11% of profit) KEY FINANCIALS 2016 HIGHLIGHTS 2017 MARKET / BV OUTLOOK FY 2016 FY 2015 Var.  Robust growth Revenue 602.5 598.4 0.7%  Low single-digit growth in Western  Sustain solid growth trends expected Organic 3.5% Europe o/w France (weak Q4 on comps) on: AOP 82.9 82.7 0.

  23. Slide 23: Construction (13% of revenue, 13% of profit)

    Construction (13% of revenue, 13% of profit) KEY FINANCIALS 2016 HIGHLIGHTS 2017 MARKET / BV OUTLOOK  France pickup delayed  France recovery: Capex / first impact FY 2016 FY 2015 Var.  Capex slightly up from the Grand Paris project Revenue 592.8 552.2 7.4%  Opex down double-digit on challenging

  24. Slide 24: Industry (20% of revenue, 16% of profit)

    Industry (20% of revenue, 16% of profit) KEY FINANCIALS 2016 HIGHLIGHTS 2017 MARKET / BV OUTLOOK  Oil & Gas Capex decline: -20% FY 2016 FY 2015 Var.  Americas, Australia: strong double-  Oil & Gas Capex: NOC / Majors not Revenue (13.9)% digit capex-related decline resuming / tail end of large con

  25. Slide 25: Industry: drag from O&G capex but reaching a low point

    Industry: drag from O&G capex but reaching a low point BV PEAK TO 2016 REVENUE FROM CAPEX OIL MAJORS VS BV TOP 25 CLIENTS IN OIL & GAS BV POWER & UTILITIES + O&G: INDUSTRY ORGANIC GROWTH (BY TYPE OF CLIENTS) FOCUS ON OPEX 20% 15% CAPEX OPEX 15% 10% Major Oil 10% 5% IOC Co 2015 5% 0% NOC Latam 47% 0%

  26. Slide 26: Certification (8% of revenue, 8% of profit)

    Certification (8% of revenue, 8% of profit) KEY FINANCIALS 2016 HIGHLIGHTS 2017 MARKET / BV OUTLOOK  Solid growth across the board FY 2016 FY 2015 Var.  Mixed trends in Europe  Sustained robust growth forecasted Revenue 2.6% 353.5 344.6 Organic 6.0%  Solid growth in Americas, Asia & ME  Growth

  27. Slide 27: Consumer Products (14% of revenue, 21% of profit)

    Consumer Products (14% of revenue, 21% of profit) KEY FINANCIALS 2016 HIGHLIGHTS 2017 MARKET / BV OUTLOOK FY 2016 FY 2015 Var.  Improving trends through the year with  Robust growth expected H2 growing mid-single digit, impact of 2 Revenue 4.4% key accounts annualized Organic 629.9 603.2 3.8%  Ch

  28. Slide 28: GSIT (5% of revenue, 3% of profit)

    GSIT (5% of revenue, 3% of profit) KEY FINANCIALS 2016 HIGHLIGHTS 2017 MARKET / BV OUTLOOK FY 2016 FY 2015 Var.  Uncertain geopolitical environment  Government contracts reduction (-11%) Revenue (5.1)%  Commodities price impacted 244.8 257.9 volume/mix  Western Africa commodities price more Orga

  29. Slide 29: Commodities (18% of revenue, 14% of profit)

    Commodities (18% of revenue, 14% of profit) KEY FINANCIALS 2016 HIGHLIGHTS 2017 MARKET / BV OUTLOOK  O&P market outperformance (+3.1%)* FY 2016 FY 2015 Var.  M&M upstream recovery starting H2  Growth across the board Revenue 0.8% (+3.7%) 833.1 826.5 Organic 2.0%  M&M recovery supported by  M&M

  30. Slide 30: Commodities: back to healthier dynamics

    Commodities: back to healthier dynamics BV M&M UPSTREAM VS MINING AGRI-FOOD: BV GROWING O&P GLOBAL TRADE MAJORS CAPEX EXPOSURE TO A GROWING MARKET PLATFORM 100 50% 25% 200 400 175 20% 75 25% 150 300 15% 125 4.8% 50 BV 0% 100 200 7.3% 10% 7.3% 75 14.3% 25 -25% 50 100 14.1% 5% 25 0 -50% 0% 0 0 2012 20

  31. Slide 31: Outlook

    Outlook BUREAU VERITAS © Bureau Veritas

  32. Slide 32: 2017 Outlook

    2017 Outlook  Full-year organic revenue growth expected to be slightly positive, accelerating in second-half  Full-year adjusted operating margin c.16%  Full-year cash flow generation to improve from FY 2016 © Bureau Veritas FY 2016 Results February 24, 2017 32

  33. Slide 33: Strengthening of BV's transformation

    Strengthening of BV’s transformation New streamlined organization  Leaner Executive Committee with 9 Members to support BV’s 2020 strategic plan  Nomination of a Senior EVP to drive the implementation of BV’s transformation plan CEO Group Fonctions © Bureau Veritas Business Operations FY 2016 Resu

  34. Slide 34: Focus on 5 Growth Initiatives

    Strengthening of BV’s transformation Global transformation focused on 5 growth initiatives Growth Initiative Ambition  Full reassessment of the Growth Initiatives (Incremental revenue by 2020)  After a year through the strategic plan Building &  Based on a more in depth review with market €350 –

  35. Slide 35: New segment profit reporting in FY 2017

    New segment profit reporting in FY 2017 Alignment of segment profit reporting with organization / strategic plan  From 8 to 6 business % group 2016 Business % group AOP AOP margin revenue Marine & Offshore Marine & Offshore 9% 14% 25.3% Industry Agri, Food & Commodities 22% 16% 11.6% IVS Constructi

  36. Slide 36: Mid-term ambition

    Mid-term ambition Mid-term ambition intact with timing delayed by one year overall MARKET POTENTIAL CONFIRMED  The Group’s ambition remains:  Enhancing its growth profile, resilience and profitability in the medium to long term  A focus on 2 countries: USA and China  4 BV levers  Confirmed retu

  37. Slide 37: Conclusion

    Conclusion 2017: slightly positive organic revenue growth expected  Stabilization in the commodities divisions 1  Ramp-up of the Growth Initiatives  Acceleration in the second-half Strengthening the Group transformation to execute BV 2020 plan 2  New management organization and reporting  Focus

  38. Slide 38: Q&A

    Q&A © Bureau Veritas

  39. Slide 39: Appendix

    Appendix b BUREAU. VERITAS © Bureau Veritas

  40. Slide 40: Ambition on the 5 Growth Initiatives

    Ambition on the 5 Growth Initiatives Growth Initiative Description Ambition (Incremental revenue by 2020) Building & Leverage leading global position in sizeable and €350 – 400m Infrastructure growing markets Opex Build recurring business models in fragmented €300 – 350m Oil & Gas, Power, Chem. mark

  41. Slide 41: Digital@BV – a business ambition

    Digital@BV – a business ambition 4 AXIS TO CAPTURE THE FULL BV AMBITIONS IN DIGITAL 3 KPIs MONITORED FOR SUCCESS Digital is one of the 4 NEW BUSINESS (additional OP) levers of BV 2020 MARKET DIFFERENTIATOR (win rate) Strategic Plan… CLIENT RETENTION (attrition) Order BV’s services through eCommerce

  42. Slide 42: Q4 2016 revenue Growth

    Q4 2016 revenue Growth (in € millions) +2.6% 1,191.4 1,173.1 (0.7)% (0.3)% Q4 2015 Organic* Acquisitions Currencies Q4 2016 © Bureau Veritas *Organic growth is the increase in revenue versus last year, at constant currency and scope (i.e. acquisitions excluded) FY 2016 Results February 24, 2017 42

  43. Slide 43: Q4 2016 Revenue Growth by Business

    Q4 2016 Revenue Growth by Business % @ constant revenue currencies 14% Consumer Products 6.0% 3.1% +9.1% 9% Certification 5.8% 0.1% +5.9% 13% Construction XX% X% 4.9% 7.7% +12.6% 5% GSIT XX% 3.2% +3.2% 18% Commodities XX% 1.8% 4.9% +6.7% 14% IVS 0.2% 1.2% +0.2% 8% Marine & Offshore (5.0)% 1.7% (3.3)

  44. Slide 44: Revenue by business

    Revenue by business Q4 2016 FY 2016 €m Organic Scope FX €m Organic Scope FX Marine & Offshore 96.1 (5.0)% 1.7% (2.0)% 391.9 (2.2)% 1.6% (2.7)% Industry 226.2 (10.3)% 1.4% (0.5)% 900.7 (9.7)% 0.6% (4.8)% IVS 162.5 0.2% - (2.0)% 602.5 3.5% - (2.8)% Construction 159.6 4.9% 7.7% 1.1% 592.8 1.0% 7.5% (1.

  45. Slide 45: Adjusted operating profit by business

    Adjusted operating profit by business Adjusted operating profit (€m) Adjusted operating margin (%) FY 2016 FY 2015 Var. (%) FY 2016 FY 2015 Var. (bp) Marine & Offshore 99.2 107.1 (7.4)% 25.3% 26.4% (110) Industry 118.0 149.4 (21.0)% 13.1% 14.3% (120) IVS 82.9 82.7 0.2% 13.8% 13.8% - Construction 94.

  46. Slide 46: 2016 revenue by main currencies

    2016 revenue by main currencies 2016 REVENUE BY CURRENCY CURRENCY CHANGE Y/Y USD (and pegged) 0.2% CNY -5.2% OTHER 11% CAD -3.2% TRY 1% COP 1% GBP -11.4% ARS 1% EURO 29% AUD -0.7% INR 2% TWD 2% BRL -4.0% KRW 2% -2.9% CLP SGD 2% SGD -0.1% JPY 2% JPY 11.7% CLP 3% KRW -2.2% BRL 3% INR -4.3% AUD 4% TWD

  47. Slide 47: 2016 restructuring: €42.6m

    2016 restructuring: €42.6m BY BUSINESS LINE BY MARKET* Other Marine businesses 11% 9% O&G GSIT 22% 11% Commodities M&M 16% 11% Rest of Business Industry 67% 53% © Bureau Veritas *Excluding Head Office FY 2016 Results February 24, 2017 47

  48. Slide 48: Portfolio of businesses

    Portfolio of businesses REVENUE ADJUSTED OPERATING PROFIT Marine & Offshore Marine & Offshore 5% 9% Industry 3% Industry 14% 14% IVS 21% IVS 20% Construction 16% Construction 18% Certification Certification 14% 13% Commodities 11% Commodities 8% 8% 13% Consumer Products 13% Consumer Products © Burea

  49. Slide 49: FY 16 under the new reporting (6 businesses)

    FY 16 under the new reporting (6 businesses) In € millions Rev. 2016 o/w H1 16 o/w H2 16 2016 OG (%) AOP 2016 Adj. margin 2016 Agri, Food & Commodities 1,004.6 485.4 519.2 0.8% 117.1 11.7% Industry 1,126.8 549.2 577.7 (6.8)% 144.4 12.8% Building & Infrastructure 1,034.1 506.5 527.6 1.5% 158.0 15.3%

  50. Slide 50: Consolidated income statement

    Consolidated income statement FY 2016 FY 2015 Revenue 4,549.2 4,634.8 Purchase and external charges (1,340.3) (1,322.9) Personnel costs (2,349.9) (2,383.9) Taxes other than on income (44.8) (51.3) Net (additions to) / reversals of provisions (31.7) (25.5) Depreciation and amortization (202.4) (205.1

  51. Slide 51: Consolidated financial position

    Consolidated financial position FY 2016 FY 2015 Goodwill 1,977.6 1800.4 Intangible assets 686.8 629.4 Property, plant and equipment 518.6 497.9 Other non-current assets 218.4 218.6 Total non-current assets 3,401.4 3,146.3 Trade and other receivables 1,496.1 1374.2 Other current assets 103.6 107.2 Ca

  52. Slide 52: Cash flow statement

    Cash flow statement FY 2016 FY 2015 Profit before income tax 524.0 488.4 Elimination of cash flows from financing and investing activities 61.1 60.6 Provisions and other non-cash items 57.9 46.9 Depreciation, amortization and impairment 202.4 293.3 Movements in working capital attributable to operat

  53. Slide 53: Adjusted net financial debt

    Adjusted net financial debt FY 2016 FY 2015 Non-current borrowings and debt 2,492.9 2,311.0 Current borrowings and debt 583.5 66.8 Bank overdrafts 6.0 12.1 Gross financial debt 3,082.4 2,389.9 Total cash and cash equivalents 1,094.1 522.9 Net financial debt 1,988.3 1,867.0 Impact of currency hedging

  54. Slide 54: Earnings per share

    Earnings per share FY 2016 FY 2015 Basic EPS 0.73 0.58 Basic adjusted EPS 0.94 0.96 Weighted average number of shares 437,147,988 437,776,451 Diluted EPS 0.73 0.58 Diluted adjusted EPS 0.93 0.95 Weighted average number of shares for diluted earnings 440,143,701 443,217,857 © Bureau Veritas FY 2016 R

  55. Slide 55: Ownership at December 31, 2016

    Ownership at December 31, 2016 1.2% Treasury shares 40.7% Wendel 56.1% Managers and employees 2.0% Free float © Bureau Veritas FY 2016 Results February 24, 2017 55

  56. Slide 56: Upcoming events

    Upcoming events Q1 2017 trading update - April 27, 2017 H1 2017 results - July 28, 2017 Shareholders’ meeting - May 16, 2017 Q3 2017 trading update - October 25, 2017 Dividend payment date (estimated)- May 22, 2017 Investor Days - H2 2017 Investor Relations Information Bureau Veritas Head Office – 4

  57. Slide 57: Glossary

    Glossary Organic growth is the increase in revenue versus last year, at VSM: Value Stream Mapping constant currency and scope (i.e. acquisitions excluded) Adjusted Operating Profit (AOP) excludes amortization of GRT (Marine): Gross Register Ton acquisition intangibles, goodwill impairment, restructu

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