Bureau Veritas Sa · EURONEXT:BVI
Bureau Veritas Sa — H1 2019 Earnings Presentation
56 slides from Bureau Veritas Sa's earnings presentation, 2019
Slide 1: H1 2019 Results
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Slide 2: Disclaimer
Disclaimer This presentation contains statements related to our future business and financial performance and future events or developments involving Bureau Veritas that may constitute forward-looking statements. These statements are based on current plans and forecasts of Bureau Veritas’ management
Slide 3: Agenda
Agenda HIGHLIGHTS FINANCIAL REVIEW BUSINESS REVIEW OUTLOOK Q&A APPENDIX
Slide 4: Highlights
BUREAU VERITAS HIGHLIGHTS
Slide 5: H1 2019 financial highlights
H1 2019 financial highlights • Organic revenue growth of +4.0% (Q2 at +4.0%) GROUP REVENUE €2.5bn • Growth Initiatives up 5.1% organically and Base Business up 3.4% organically • External growth of +1.3% (Q2 at +0.8%) with 4 transactions completed +5.3% at cc • Positive currency impact of 0.6% (with
Slide 6: Financial Review
FINANCIAL REVIEW
Slide 7: H1 2019 revenue growth
H1 2019 revenue growth REVENUE EVOLUTION VARIATION ANALYSIS +5.3% at constant currency +4.0% +1.3% +0.6% 2,476.6 2,338.3 H1 2018 Organic 1 Scope Currency H1 2019 (1) Organic growth represents the percentage of revenue growth (presented at Group level and for each activity) based on constant scope of
Slide 8: H1 2019 revenue growth by business
H1 2019 revenue growth by business % of @ constant revenue currency 23% Agri-Food & Commodities 7.9% 1.1% +9.0% 27% Buildings & Infrastructure 3.1% 4.0% +7.1% 7% Marine & Offshore 5.4% 0.4% +5.8% 22% Industry (0.1)% 4.8% +4.7% 14% Consumer Products 2.2% +2.2% 7% Certification (4.1)% (4.1)% 100% Tota
Slide 9: Q2 2019 revenue growth by business
Q2 2019 revenue growth by business % of @ constant revenue currency 23% Agri-Food & Commodities 8.0% 1.0% +9.0% 7% Marine & Offshore 7.6% 0.5% +8.1% 21% Industry (0.1)% 5.8% +5.7% 26% Buildings & Infrastructure 3.2% 2.3% +5.5% 15% Consumer Products 0.8% +0.8% 8% Certification (5.9)% (5.9)% 100% Tota
Slide 10: H1 2019 acquisitions adding c.€45m of revenue
H1 2019 acquisitions adding c.€45m of revenue1 BUILDINGS & INFRASTRUCTURE AGRI-FOOD DISPOSAL JANUARY HSE CONSULTING BUSINESS JANUARY €4m (additional revenue) IN NORTH AMERICA €23m • Food testing joint venture created with • Consulting business unit providing health, AsureQuality in Singapore providi
Slide 11: H1 2019 key financial metrics
H1 2019 key financial metrics FINANCIAL HIGHLIGHTS H1 2019 H1 2019 Change AFTER BEFORE Change y/y at IN EUR MILLIONS H1 2018 APPLYING APPLYING y/y1 constant IFRS 16 IFRS 16 currency1 Revenue 2,476.6 2,476.6 2,338.3 +5.9% +5.3% Adjusted operating profit2 380.5 375.5 348.1 +7.9% +6.9% Adjusted operati
Slide 12: Adjusted operating margin
Adjusted operating margin GROUP MARGIN EVOLUTION MARGIN BY BUSINESS H1 2019 before Change Organic H1 2018 applying y/y (bp) y/y (bp) IFRS 16 5bps 5bps Marine & Offshore 21.1% 21.3% (20) (25) +20bps Agri-Food & Commodities 13.5% 11.2% +230 +195 15.2% Industry 10.9% 11.5% (60) (75) 15.1% 14.9% Buildin
Slide 13: From adjusted operating profit to operating profit
From adjusted operating profit to operating profit ADJUSTMENT ITEMS H1 2019 H1 2019 AFTER BEFORE Change IN EUR MILLIONS H1 2018 APPLYING APPLYING y/y1 IFRS 16 IFRS 16 Adjusted operating profit 380.5 375.5 348.1 +7.9% Amortization of intangibles (38.5) (38.5) (35.8) +7.5% Actions taken mainly in Indu
Slide 14: Net financial expenses
Net financial expenses IMPROVING FINANCIAL RESULT H1 2019 H1 2019 AFTER BEFORE Change IN EUR MILLIONS H1 2018 APPLYING APPLYING y/y1 IFRS 16 IFRS 16 Increase in average Net financial charges (50.2) (42.2) (40.9) +3.2% indebtedness Foreign exchange gain/loss (4.8) (4.3) (2.0) Interest charge on pensi
Slide 15: Tax / Tax rate
Tax / Tax rate ADJUSTED EFFECTIVE TAX RATE NORMALIZING IN H1 2019 H1 2019 H1 2019 AFTER BEFORE Change IN EUR MILLIONS H1 2018 APPLYING APPLYING y/y1 IFRS 16 IFRS 16 Decrease mainly Profit before Tax 274.3 277.8 246.5 +31.3 explained by the new Tax (89.3) (90.3) (84.4) (5.9) rules for the tax deducti
Slide 16: Cash flow statement
Cash flow statement STRONG CASH IMPROVEMENT H1 2019 H1 2019 AFTER BEFORE Change IN EUR MILLIONS H1 2018 APPLYING APPLYING y/y1 IFRS 16 IFRS 16 Profit before income tax 274.3 277.8 246.6 +12.7% Elimination of financing and investing Strong increase in the free cash activities 67.2 57.5 44.0 +30.7% fl
Slide 17: Improving working capital requirement ratio
Improving working capital requirement ratio WORKING CAPITAL REQUIREMENT / REVENUE RATIO MOVE FOR CASH CONTINUING TO BE DEPLOYED Operations and Finance cash champions network 13.0% • Global network of 140 “cash champions” across the Group within all June 30 12.2% 12.4% functions, not exclusively fina
Slide 18: Solid financial structure
Solid financial structure ADJUSTED NET DEBT EVOLUTION SUCCESSFUL DIVIDEND PAYMENT IN SHARES IN EUR MILLIONS • Opted for by 78.47% of shareholders (66.45% excluding Wendel) • EUR 192m of cash savings thanks to payment in shares Dec. 31, Share Jun. 30, • Creation of 9,943,269 new ordinary shares, repr
Slide 19: Business Review
BUSINESS REVIEW Unless specified otherwise, the information presented and discussed in this section consists of financial data before the restatements resulting from the application of IFRS 16 in the half-year consolidated financial statements.
Slide 20: Marine & Offshore
Marine & Offshore (7% of revenue, 10% of profit) KEY FINANCIALS1 H1 2019 HIGHLIGHTS KEY FIGURES • New Construction: high single-digit growth, driven IN EUR MILLIONS H1 2019 H1 2018 Var. New orders Order book In-Service fleet by new equipment certification services and the Revenue 180.9 170.4 +6.2% r
Slide 21: Agri-Food & Commodities
Agri-Food & Commodities (23% of revenue, 21% of profit) KEY FINANCIALS1 H1 2019 HIGHLIGHTS 2020 STRATEGIC INITIATIVES • O&P (+1.4%): high single-digit growth in Europe, and broadly stable growth in North America (price IN EUR MILLIONS H1 2019 H1 2018 Var. pressure in traditional cargo inspection bus
Slide 22: Industry
Industry (22% of revenue, 15% of profit) KEY FINANCIALS1 H1 2019 HIGHLIGHTS 2020 STRATEGIC INITIATIVES • Oil & Gas Capex grew by 7.8% in H1, IN EUR MILLIONS H1 2019 H1 2018 Var. accelerating (Q2 at +11%) following the positive Revenue 534.4 515.2 +3.7% trend observed since H2 2018 +16.8% OPEX P&U* O
Slide 23: Buildings & Infrastructure
Buildings & Infrastructure (27% of revenue, 24% of profit) KEY FINANCIALS1 H1 2019 HIGHLIGHTS 2020 STRATEGIC INITIATIVES Construction-related activities (43% of IN EUR MILLIONS H1 2019 H1 2018 Var. divisional revenue) mid-single-digit growth China* Revenue 664.7 613.9 +8.3% • Spread across most geog
Slide 24: Certification
Certification (7% of revenue, 8% of profit) KEY FINANCIALS1 H1 2019 HIGHLIGHTS 2020 STRATEGIC INITIATIVES • Mixed performances by region and service IN EUR MILLIONS H1 2019 H1 2018 Var. category as expected attributed to the end of the Revenue 182.6 190.5 (4.1)% 3-year standards revision period Port
Slide 25: Consumer Products
Consumer Products (14% of revenue, 22% of profit) KEY FINANCIALS1 H1 2019 HIGHLIGHTS 2020 STRATEGIC INITIATIVES • E&E: low single-digit growth primarily driven by IN EUR MILLIONS H1 2019 H1 2018 Var. Mobile testing; temporary slowdown on new SmartWorld Revenue 339.7 324.2 +4.8% products development
Slide 26: Consumer Products: a global business with multiple growth engines
Consumer Products: a global business with multiple growth engines H1 2019 ORGANIC REVENUE GROWTH STABLE + 3% Assuming current market REST OF conditions, c.5% of Consumer NORTH EAST ASIA THE WORLD Products business within the scope of tariffs increases (i.e. 0.7% of Group revenue) +12% + 6% LATIN AME
Slide 27: Outlook
OUTLOOK
Slide 28: 2019 Outlook Confirmed
2019 Outlook Confirmed Solid organic Continued adjusted Sustained strong revenue growth operating margin cash flow improvement at generation constant currency H1 2019 RESULTS 28
Slide 29: Conclusion
Conclusion A transformed growth profile and cyclical resilience Full benefits of diversification Improved cashflow generation and a deleveraged balance sheet H1 2019 RESULTS 29
Slide 30: Q&A
Q&A
Slide 31: 2019 Financial Calendar & Contacts
2019 Financial Calendar & Contacts 2019 AGENDA INVESTOR RELATIONS DEPARTMENT • UBS, Support & Business Services Conference, London – September 11, 2019 BUREAU VERITAS HEAD OFFICE – 40/52 BOULEVARD DU PARC 92200 NEUILLY-SUR-SEINE, FRANCE • KeplerCheuvreux, Autumn Conference, Paris – September 13, 201
Slide 32: Appendix
Te28 BUREAU VERITAS APPENDIX
Slide 33: Marine market perspective
Marine market perspective WORLDWIDE NEW SHIP ORDERS BUREAU VERITAS NEW SHIP ORDER BOOK IN MGT IN NUMBER OF SHIPS, FOR SHIPS ABOVE 5,000 GT 120 Bulk 100 Tanker Gas 80 20-year average Offshore 60 Passenger 40 Other 20 • Very diversified order book with expanding shares for Bulk, 0 LNG vessels, Tankers
Slide 34: H1 2019 revenue by business
H1 2019 revenue by business REVENUE AND YEAR-ON-YEAR REVENUE GROWTH BREAKDOWN OF REVENUE H1 2019 IN EUR MILLIONS €m Organic Scope Currency Marine & Offshore 180.9 +5.4% +0.4% +0.4% Marine & Offshore 14% 7% Agri-Food & Commodities Agri-Food & Commodities 574.3 +7.9% +1.1% +0.6% 7% 23% Industry Indust
Slide 35: Q2 2019 revenue growth
Q2 2019 revenue growth REVENUE EVOLUTION +4.8% at constant currency +4.0% +0.8% +0.3% 1,301.6 1,238.0 Q2 2018 Organic 1 Scope Currency Q2 2019 (1) Organic growth represents the percentage of revenue growth (presented at Group level and for each activity) based on constant scope of consolidation (i.e
Slide 36: Q2 2019 revenue by business
Q2 2019 revenue by business REVENUE AND YEAR-ON-YEAR REVENUE GROWTH BREAKDOWN OF REVENUE Q2 2019 IN EUR MILLIONS €m Organic Scope Currency Marine & Offshore 93.6 +7.6% +0.5% (0.2)% Marine & Offshore 7% 15% Agri-Food & Commodities Agri-Food & Commodities 299.4 +8.0% +1.0% +0.4% 8% 23% Industry Indust
Slide 37: Organic growth driven by both Base Business & Growth Initiatives
Organic growth driven by both Base Business & Growth Initiatives ORGANIC REVENUE FOR THE BASE BUSINESS H1 2019 PERFORMANCE 3.7% 2.1% 3.4% 1.3% 63% Base Business grew 3.4% organically in H1 2019 • Base Business is speeding up organically at (1.1)% +4.2% in Q2 benefiting from Oil & Gas Capex (2.2)% an
Slide 38: Adjusted Operating Profit by business before applying IFRS 16
Adjusted Operating Profit by business before applying IFRS 16 Adjusted operating profit (€m) Adjusted operating margin (%) H1 2019 H1 2019 BEFORE Change BEFORE Change IN EUR MILLIONS APPLYING H1 2018 APPLYING H1 2018 (%) (bp) IFRS 16 IFRS 16 Marine & Offshore 38.2 36.3 +5.2% 21.1% 21.3% (20) Agri-Fo
Slide 39: Adjusted Operating Profit by business after applying IFRS 16
Adjusted Operating Profit by business after applying IFRS 16 Adjusted operating profit (€m) Adjusted operating margin (%) H1 2019 H1 2019 AFTER Change AFTER Change IN EUR MILLIONS APPLYING H1 2018 APPLYING H1 2018 (%) (bp) IFRS 16 IFRS 16 Marine & Offshore 38.4 36.3 +5.8% 21.2% 21.3% (10) Agri-Food
Slide 40: Consolidated income statement
Consolidated income statement H1 2019 H1 2019 FIRST TIME AFTER BEFORE IN EUR MILLIONS APPLICATION H1 2018 APPLYING APPLYING OF IFRS 16 IFRS 16 IFRS 16 Revenue 2,476.6 2,476.6 2,338.3 Purchase and external charges (690.6) 42.1 (732.7) (689.8) Personnel costs (1,294.6) (1,294.6) (1,243.9) Taxes other
Slide 41: Consolidated statement of financial position
Consolidated statement of financial position JUNE 2019 JUNE 2019 FIRST TIME AFTER BEFORE IN EUR MILLIONS APPLICATION DEC. 2018 APPLYING APPLYING OF IFRS 16 IFRS 16 IFRS 16 Goodwill 2,056.6 2,056.6 2,011.6 Intangible assets 644.3 644.3 634.6 Right-of-use assets 301.5 301.5 - - Property, plant and equ
Slide 42: Consolidated statement of cash flow (1/2)
Consolidated statement of cash flow (1/2) H1 2019 H1 2019 FIRST TIME AFTER BEFORE IN EUR MILLIONS APPLICATION H1 2018 APPLYING APPLYING OF IFRS 16 IFRS 16 IFRS 16 Profit before income tax 274.3 (3.5) 277.8 246.6 Elimination of cash flows from financing and investing 67.2 9.7 57.5 44.0 activities Pro
Slide 43: Consolidated statement of cash flow (2/2)
Consolidated statement of cash flow (2/2) H1 2019 H1 2019 FIRST TIME AFTER BEFORE IN EUR MILLIONS APPLICATION H1 2018 APPLYING APPLYING OF IFRS 16 IFRS 16 IFRS 16 Capital increase 0.7 0.7 2.6 Purchases / sale of treasury shares 2.8 2.8 (26.7) Dividends paid (69.3) (69.3) (254.8) Net increase (decrea
Slide 44: Adjusted net financial debt
Adjusted net financial debt H1 2019 H1 2019 IN EUR MILLIONS AFTER APPLYING BEFORE APPLYING DEC. 2018 IFRS 16 IFRS 16 Non-current borrowings and debt (2,691.6) (2,691.6) (2,655.7) Current borrowings and debt (224.0) (224.0) (487.3) Bank overdrafts (10.9) (10.9) (11.7) Gross financial debt (2,926.5) (
Slide 45: Earnings per share
Earnings per share H1 2019 H1 2019 IN EUR MILLIONS AFTER APPLYING BEFORE APPLYING H1 2018 IFRS 16 IFRS 16 Basic EPS 0.39 0.40 0.34 Basic adjusted EPS 0.47 0.48 0.44 Weighted average number of shares 437,222 437,222 435,411 Diluted EPS 0.39 0.39 0.34 Diluted adjusted EPS 0.47 0.47 0.43 Weighted avera
Slide 46: Portfolio of business
Portfolio of business REVENUE BY BUSINESS ADJUSTED OPERATING PROFIT1 Marine & Offshore Marine & Offshore 14% 7% 10% 22% Agri-Food & Commodities Agri-Food & Commodities 7% 23% Industry 21% Industry H1 2019 8% H1 2019 Buildings & Infrastructure Buildings & Infrastructure 27% Certification Certificatio
Slide 47: Revenue is growing in all geographies
Revenue is growing in all geographies REVENUE BY GEOGRAPHIC AREA REVENUE GROWTH BY NATURE Organic growth 7.8% Acquisition growth Americas Asia 26% Pacific 2.2% 31% 5.4% 5.4% 0.9% 3.5% Africa, 5.6% 1.4% 5.5% Middle 4.5% East 9% Europe 2.1% 34% (0.2)% Americas Europe Africa, Asia Pacific Middle-East H
Slide 48: Forex impact in H1 2019
Forex impact in H1 2019 REVENUE CURRENCY EXPOSURE CURRENCY CHANGE Y/Y OTHER 11.8% USD (and pegged) +7.1% XOF 0.9% RUB 0.9% CNY +0.5% PEN 0.9% EUR 27.8% GBP +0.7% COP 1.3% AUD (2.0)% TWD 1.4% KRW 1.4% CAD +2.6% SGD 1.5% BRL (4.6)% INR 1.7% CLP (3.0)% JPY 2.1% JPY +5.9% CLP 2.5% H1 2019 INR +0.5% SGD
Slide 49: H1 2019 restructuring: EUR 12.1 million
H1 2019 restructuring: EUR 12.1 million BY BUSINESS BY GEOGRAPHY 10% 4% Marine & Offshore 28% Europe Agri-Food & Commodities 42% 26% Africa, Middle East Industry 54% Asia Pacific Buildings & Infrastructure Americas Other 32% 2% 2% H1 2019 RESULTS 49
Slide 50: Oil & Gas exposure
Oil & Gas exposure <20% of 2018 Group revenue MARKET BV BUSINESS % OF 2018 REVENUE MAIN DRIVER CAPEX Industry, <4% • National Oil Companies / Majors Capex / infrastructure projects Buildings & and construction activity c.10% Infrastructure OPEX Industry, 6% • National Oil Companies / Majors Opex / i
Slide 51: Ownership at June 30, 2019
Ownership at June 30, 2019 STABLE SHAREHOLDING STRUCTURE 1.2% 35.6% Wendel Managers & Employees 61.8% Free Float Treasury shares 1.4% H1 2019 RESULTS 51
Slide 52: Glossary
Glossary Operating Profit (AOP) excludes amortization of acquisition intangibles, goodwill IoT: Internet of Things impairment, restructuring, acquisition and disposal-related items (adjustment items) IMO: International Maritime Organization ASR: Accident Severity Rate LNG: Liquefied Natural Gas Adju
Slide 53: Well diversified sources of financing with a balanced maturity profile
Well diversified sources of financing with a balanced maturity profile DEBT MATURITY PROFILE AS OF JUN. 30, 2019 DEBT BREAKDOWN Bond 1% USPP 2% 4% 88 Schuldschein 7% Other China Loan Bond USPP Fixed rate 32% Schuldschein China Loan 58% Floating rate 38 Other 500 500 500 42 98 96% 184 102 200 176 176
Slide 54: Reaffirmed 2020 Ambition
Reaffirmed 2020 Ambition Add €1.5bn Above 17% Continuous high of incremental adjusted operating Free Cash Flow revenue1 margin1 generation Half organic Half acquisition 5-7% organic growth by 2020 (1) At 2015 plan’s initial exchange rates (as presented during October 2015 Investor Days) H1 2019 RESU
Slide 55: 2020 non-financial Ambition
2020 non-financial Ambition Health & Safety Inclusion Environment2 Safety is an “absolute” Achieve 25% female • Reduce CO2 emissions Ambition is clear: 0 accident representation in the by 10% per FTE Group’s executive • Increase the use of Reduce by 50% accidents rates management team renewable ener
Slide 56: BUREAU
BUREAU PVERITAS | VERITAS