Bureau Veritas Sa · EURONEXT:BVI
Bureau Veritas Sa — FY2017 Earnings Presentation
55 slides from Bureau Veritas Sa's earnings presentation, Mar 1, 2018
Slide 1: FY 2017 results
2017 FY 2017 results March 1, 2018
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: FY 2017 results agenda
FY 2017 results agenda ► Highlights ► Financial Review ► Business Review ► Digital@BV ► Outlook ► Q&A ► Appendix
Slide 4: Highlights
7 FHighlights
Slide 5: Bureau Veritas delivers on its 2017 guidance
Bureau Veritas delivers on its 2017 guidance 2017 guidance1 Achievements ✔ ► Full-year organic revenue growth expected to be slightly positive, with +2.2% organic growth acceleration in the second half confirmed +3.0% organic growth in H2 ► Full-year adjusted operating margin at around 16% 15.9% ✔ ►
Slide 6: 2017 highlights
2017 highlights ► Organic revenue growth +2.2% – acceleration in H2 ► Growth Initiatives up 6.9% y/y and Base Business stable y/y Group €4.69 bn ► External growth +2.5% with 9 acquisitions completed Revenue ► Negative currency impact of -1.5% in 2017 of which -5.2% in Q4 +3.1% ► Margin at a solid 15
Slide 7: 9 Acquisitions in 2017, adding c.€150m of revenue
9 Acquisitions in 2017, adding c.€150m of revenue1 All acquisitions supporting BV strategic Growth Initiatives Buildings & Infrastructure Buildings & Infrastructure SmartWorld Feb. June Jan. €50m €4m €9.5m Mandatory supervision of Construction code compliance review E&E testing & certification const
Slide 8: 2018 YTD acquisitions, adding c.€75m of revenue
2018 YTD acquisitions, adding c.€75m of revenue1 Buildings & Infrastructure Opex Oil & Gas, Power, Chem. February January €4m c.€70m Oil Conditioning Monitoring Technical Assessment and Project Management Assistance services (1) Annualized revenue FY 2017 Results - March 1, 2018 8
Slide 9: Focus on EMG acquisition
Focus on EMG acquisition EMG at a glance Strategic rationale for BV in the US ► Provider of technical assessment and project ► Add a new expertise with sizeable platform for Technical management services in the United States (39 states) Assessment and Project Management Assistance ► 2017 revenue of
Slide 10: Financial Review
Financial Review
Slide 11: FY 2017 Revenue Growth
FY 2017 Revenue Growth (in € millions) +2.5% (1.6%) 4,689.4 +2.2% 4,549.1 FY 2016 Organic 1 Acquisitions Currencies FY 2017 (1) Organic growth is the increase in revenue versus last year, at constant currency and scope (i.e. acquisitions excluded) FY 2017 Results - March 1, 2018 11
Slide 12: Q4 2017 Revenue Growth
Q4 2017 Revenue Growth (in € millions) +3.8% +1.8% (5.2%) 1,191.4 1,196.6 Q4 2016 Organic 1 Acquisitions Currencies Q4 2017 (1) Organic growth is the increase in revenue versus last year, at constant currency and scope (i.e. acquisitions excluded) FY 2017 Results - March 1, 2018 12
Slide 13: FY 2017 revenue growth by business
FY 2017 revenue growth by business % @ constant revenue currency 8% Certification 6.1% 0.1% +6.2% >2/3 of 24% Buildings & Infrastructure portfolio 5.1% 5.1% +10.2% growing organically 14% Consumer Products at 4.2% 4.7% 1.9% +6.6% on average 23% Agri-Food & Commodities 2.4% 5.6% +8.0% 23% Industry1 (
Slide 14: Q4 2017 revenue growth by business
Q4 2017 revenue growth by business % @ constant revenue currency 26% Buildings & Infrastructure 8.0% 6.1% +14.1% >2/3 of 8% Certification portfolio 6.8% 0.0% +6.8% growing organically 14% Consumer Products at 6.2% 4.9% 1.6% +6.5% on average 22% Agri-Food & Commodities 4.9% 2.2% +7.1% 23% Industry1 (
Slide 15: Growth now supported by Base Business & Growth Initiatives
Growth now supported by Base Business & Growth Initiatives Base Business 2017 performance 3% 2.6% 2% 1% 0.0% ► Improving Base Business 0% Two-thirds -1.1% (+0.1% in FY17) -1% -2% -2.2% ♦ Improvement through the year -3% -3.7% ♦ Q4 up 2.6% organically -4% ♦ M&O and O&G Capex remained a drag H1 16 H2
Slide 16: Growth Initiatives delivered strong growth
5 Growth Initiatives delivered strong growth Growth Initiatives 2020 Ambition1 FY 2017 Revenue Performance Buildings & €350 – 400m B&I +4.9% 2 Infrastructure Opex €300 – 350m Opex +5.7% 2 Oil & Gas, Power, Chem. Agri-Food +6.7% 2 Agri-Food €250 – 300m Total organic Automotive +17.4% 2 growth Automot
Slide 17: FY 2017 key financial metrics
FY 2017 key financial metrics (in € millions) y/y at constant FY 2017 FY 2016 y/y currency Revenue 4,689.4 4,549.2 +3.1% +4.7% Adjusted operating profit1 745.5 734.9 +1.4% +4.0% Adjusted operating margin1 15.9% 16.2% (25)bp (15)bp Operating profit 606.3 609.7 (0.6)% +3.4% Adjusted net profit 416.1 4
Slide 18: Adjusted operating margin
Adjusted operating margin ADJUSTED OPERATING MARGIN ADJUSTED OPERATING MARGIN EVOLUTION Y/Y BY BUSINESS Change Organic1 FY 2017 (5)bp y/y (bp) y/y (bp) (9)bp (12)bp Marine & Offshore 22.0% (330) (260) Agri-Food & 12.6% +90 +120 Commodities 16.2% 16.1% 15.9% Industry 12.1% (100) (115) Buildings & 15.
Slide 19: Operating profit adjustment from non-recurring items
Operating profit adjustment from non-recurring items (in € millions) FY 2017 FY 2016 y/y Adjusted operating profit 745.5 734.9 +10.6 Actions taken mainly in, Amortization of intangibles (77.1) (79.5) +2.4 Marine & Offshore, Government Services, Restructuring (57.1) (42.6) (14.5) Industry and commodi
Slide 20: Net financial expenses
Net financial expenses (in € millions) FY 2017 FY 2016 y/y Decrease of financial charges due to lower average cost of debt (3.1% vs. 3.4%) partially offset by Net financial charges (86.8) (89.9) +3.1 average net debt increase Foreign exchange gain/loss (12.1) +8.7 (20.8) Foreign exchange losses Inte
Slide 21: Tax / Tax rate
Tax / Tax rate (in € millions) FY 2017 FY 2016 y/y Combination of exceptional items, including the refund in Profit before Tax 503.2 524.0 (20.8) 2017 of the 3% dividend contribution Tax (164.8) (188.9) +24.1 Group's deferred taxes ETR1 32.8% 36.0% (320)bp were also revalued as a result of the decli
Slide 22: Cash flow statement
Cash flow statement (in € millions) FY 2017 FY 2016 y/y Profit before income tax 503.2 524.0 (20.8) Elimination of financing and investing activities 103.8 61.1 +42.7 Impacted by the revenue Provisions and other non-cash items (0.3) 57.9 (58.2) growth acceleration in Depreciation, amortization and i
Slide 23: Financial structure
Financial structure ADJUSTED NET DEBT NET DEBT / EBITDA RATIO1 (in € millions) 295.4 33.4 2,094.4 18.5 1,996.4 68.4 168.7 2.37 2.16 2.20 349.6 2.02 Bank covenant at 3.25x Dec-2016 FCF Acquis. Dividends Stock Foreign Other Dec-2017 Dec-2014 Dec-2015 Dec-2016 Dec-2017 options Exchange buybacks ► Sound
Slide 24: Business Review
Business Review
Slide 25: Marine & Offshore (8% of revenue, 11% of profit)
Marine & Offshore (8% of revenue, 11% of profit) KEY FINANCIALS 2017 HIGHLIGHTS 2018 OUTLOOK ► New construction: double-digit decline ► Slightly negative organic growth (in € millions) FY 2017 FY 2016 Var. ♦ New construction expected to stabilize ► Core In-Service: slightly up (classed ► H1 negative
Slide 26: Marine market perspective
Marine market perspective New ship orders (In mGT) Worldwide trend in new orders 120 (2018 vs. 2017) 100 80 Trend 60 40 Dry Bulk 20 Containers Other Dry 0 Tankers 2012 2013 2014 2015 2016 2017 2018e Source: Clarksons (base case forecast) Gas (LNG carriers) Pax / Cruise ships World flee
Slide 27: Agri-Food & Commodities (23% of revenue, 18% of profit)
Agri-Food & Commodities (23% of revenue, 18% of profit) KEY FINANCIALS 2017 HIGHLIGHTS 2018 OUTLOOK ► Improving growth vs. 2017 ► O&P robust growth (+3.0%)*; very high (in € millions) FY 2017 FY 2016 Var. ♦ M&M recovery to carry on growth in China, good in Africa ♦ O&P market share gains, new Revenu
Slide 28: Industry (23% of revenue, 18% of profit)
Industry (23% of revenue, 18% of profit) KEY FINANCIALS 2017 HIGHLIGHTS 2018 OUTLOOK ► Oil & Gas Capex decline: -16% (in € millions) FY 2017 FY 2016 Var. ♦ Tail end of large contracts (Aust./Asia) ► Return to slight positive organic revenue growth: ► Price pressure in O&G Opex offset by Revenue (3.2
Slide 29: Industry: successful focus on Opex delivers diversification
Industry: successful focus on Opex delivers diversification BV POWER & UTILITIES + O&G: OIL MAJORS FOCUS ON OPEX CAPEX SPENDING GROWTH Capex Opex Majors Capex (2-year average) 15% 2015 10% 47% 5% 0% 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 53% (5%) +5pts (10%) 2016 (15%) (20%) 52% (25%) 48% ►
Slide 30: Buildings & Infrastructure (24% of revenue, 23% of profit)
Buildings & Infrastructure (24% of revenue, 23% of profit) KEY FINANCIALS 2017 HIGHLIGHTS 2018 OUTLOOK ► Sustained solid growth on both Capex ► Building In-service (40% of divisional (in € millions) FY 2017 FY 2016 Var. revenue): mid-single digit growth / benefit and Opex related services from recen
Slide 31: Certification (8% of revenue, 8% of profit)
Certification (8% of revenue, 8% of profit) KEY FINANCIALS 2017 HIGHLIGHTS 2018 OUTLOOK ► Solid growth across the board ► Sustained robust growth expected (in € millions) FY 2017 FY 2016 Var. ► Solid growth in Latin America, Eastern ♦ H1 solid, H2 lower (end of 2015 Europe & Asia standard transition
Slide 32: Consumer Products (14% of revenue, 22% of profit)
Consumer Products (14% of revenue, 22% of profit) KEY FINANCIALS 2017 HIGHLIGHTS 2018 OUTLOOK ► E&E: high single-digit growth led by Auto ► Sustained mid-single digit growth (in € millions) FY 2017 FY 2016 Var. & Mobile (Europe and US) expected Revenue +4.5% ► Hardlines: double-digit growth ; single
Slide 33: Digital@BV
Digital@BV
Slide 34: Digital: a key lever to achieve our 2020 ambition
Digital: a key lever to achieve our 2020 ambition DIGITAL NEW DIGITAL NEW TIC DIGITAL EFFICIENCY OPERATING MODELS SERVICES Conformity 4.0 One-stop- shop Boost Profitability Accelerate Growth Diversify in of existing TIC Services with alternative models new market segments Innovation program to incub
Slide 35: Recent partnerships in digital-related services
Recent partnerships in digital-related services Blockchain-based solution Strategic Partnership Global alliance powered by Worldline with Bourbon with Avitas Systems Bureau Veritas Digitalization of Next generation inspection services Food Traceability label Vessel Operations based on Artificial Int
Slide 36: Outlook
Outlook
Slide 37: 2018 outlook
2018 outlook Full-year organic Full-year adjusted Full-year cash flow revenue growth to operating margin to generation accelerate slightly improve at to improve at vs. full-year 2017 constant currency constant currency vs. full-year 2017 vs. full-year 2017 FY 2017 Results - March 1, 2018 37
Slide 38: Reaffirmed 2020 ambition
Reaffirmed 2020 ambition Add €1.5bn Above 17% Continuous of incremental adjusted high revenue1 operating Free Cash Flow Half organic margin1 generation Half acquisition 5-7% organic growth by 2020 (1) At 2015 plan initial exchange rates (as presented during October 2015 Investor Days) FY 2017 Result
Slide 39: Q&A
Q&A
Slide 40: 2018 Financial Calendar and Contacts
2018 Financial Calendar and Contacts ► Q1 2018 Trading update - April 26, 2018 ► H1 2018 Results - July 26, 2018 ► Annual Shareholders’ meeting 2017 - May 15, 2018 ► Q3 2018 Trading update - October 25, 2018 Investor Relations Information Bureau Veritas Head Office – 40/52 Boulevard du Parc 92200 Ne
Slide 41: Appendix
Appendix
Slide 42: Revenue by business
Revenue by business Q4 2017 FY 2017 (in € millions) €m Organic Scope FX €m Organic Scope FX Marine & Offshore 88.3 (4.2)% +0.0% (4.0)% 364.9 (5.3)% +0.6% (2.2)% Agri-Food & Commodities 265.9 +4.9% +2.2% (5.5)% 1,072.5 +2.4% +5.6% (1.2)% Industry 270.8 (0.2)% (1.2)% (5.8)% 1,096.3 (0.8)% (0.9)% (1.5)
Slide 43: Adjusted operating profit by business
Adjusted operating profit by business Adjusted operating profit (€m) Adjusted operating margin (%) (in € millions) FY 2017 FY 2016 Var. (%) FY 2017 FY 2016 Var. (bp) Marine & Offshore 80.2 99.2 (19.1)% 22.0% 25.3% (330) Agri-Food & Commodities 134.6 117.1 +14.9% 12.6% 11.7% +90 Industry 133.1 148.4
Slide 44: Consolidated income statement
Consolidated income statement (in € millions) FY 2017 FY 2016 Revenue 4,689.4 4,549.2 Purchase and external charges (1,394.1) (1,340.3) Personnel costs (2,449.0) (2,349.9) Taxes other than on income (46.4) (44.8) Net (additions to) / reversals of provisions (11.5) (31.7) Depreciation and amortizatio
Slide 45: Consolidated statement of financial position
Consolidated statement of financial position (in € millions) FY 2017 FY 2016 Goodwill 1,965.1 1,977.6 Intangible assets 640.2 686.8 Property, plant and equipment 486.3 518.6 Other non-current assets 262.7 218.4 Total non-current assets 3,354.3 3,401.4 Trade and other receivables 1,573.1 1,496.1 Othe
Slide 46: Consolidated statement of cash flows
Consolidated statement of cash flows (in € millions) FY 2017 FY 2016 Profit before income tax 503.2 524.0 Elimination of cash flows from financing and investing activities 103.8 61.1 Provisions and other non-cash items (0.3) 57.9 Depreciation, amortization and impairment 203.7 202.4 Movements in wor
Slide 47: Adjusted net financial debt
Adjusted net financial debt (in € millions) FY 2017 FY 2016 Non-current borrowings and debt 2,240.0 2,492.9 Current borrowings and debt 199.2 583.5 Bank overdrafts 9.8 6.0 Gross financial debt 2,449.0 3,082.4 Total cash and cash equivalents (364.3) 1,094.1 Net financial debt 2,084.7 1,988.3 Impact o
Slide 48: Earnings per share
Earnings per share (in € millions) FY 2017 FY 2016 Basic EPS 0.71 0.73 Basic adjusted EPS 0.95 0.94 Weighted average number of shares 436,422,741 437,147,988 Diluted EPS 0.70 0.73 Diluted adjusted EPS 0.95 0.93 Weighted average number of shares 439,934,069 440,143,701 for diluted earnings FY 2017 Re
Slide 49: Portfolio of businesses (2017)
Portfolio of businesses (2017) Revenue Adjusted operating profit Marine & Offshore Marine & Offshore 8% 11% 14% Agri-Food & Agri-Food & Commodities 22% Commodities 8% 23% Industry 18% Industry 8% Buildings & Buildings & Infrastructure Infrastructure 24% Certification 18% Certification 23% 23% Consum
Slide 50: Revenue is growing in all geographies
Revenue is growing in all geographies 7.3% 3.3% Organic growth 2017 Revenue by geographic area Acquisitions growth 4.0% 3.2% 3.3% Americas Europe 25% (0.1%) 34% FY 2017 FY 2017 5.6% 1.8% 31% 10% Africa, 4.8% Asia Pacific Middle East 1.8% 0.8% FY 2017 FY 2017 FY 2017 Results - March 1, 2018 50
Slide 51: Forex: negative impact in 2017
Forex: negative impact in 2017 FY 2017 revenue currency exposure Currency change y/y USD (and pegged) -2.0% CNY -3.6% OTHER CAD 0.1% 11.6% HKD -2.4% TRY 0.7% PEN 0.8% AUD 1.0% COP 1.2% EUR 28.2% KRW 1.3% BRL 6.9% ARS 1.3% GBP -6.5% INR 1.6% TWD 1.6% CLP 2.1% SGD 1.7% AED -2.0% JPY 2.0% JPY -5.1% CLP
Slide 52: 2017 restructuring: €57.1m
2017 restructuring: €57.1m By Business Activity By Geography 5% Marine & Offshore 12% Europe Agri-Food & Commodities 33% Africa / Middle East Industry 20% Asia Pacific 42% 52% Buildings & Infrastructure Americas Other businesses 9% 21% 6% FY 2017 Results - March 1, 2018 52
Slide 53: O&G exposure = 20% of Group revenue
O&G exposure = 20% of Group revenue1 BV Business Market % of 2017 revenue Main driver (Main) ► National Oil Companies / Majors Industry, Buildings CAPEX <5% Capex / Infrastructure projects & Infrastructure and construction activity c.10% Industry, Buildings ► National Oil Companies / Majors OPEX & I
Slide 54: Ownership at December 31, 2017
Ownership at December 31, 2017 1.3% Wendel 40.1% Managers and employees 57.2% Free float 1.5% Treasury shares FY 2017 Results - March 1, 2018 54
Slide 55: Glossary
Glossary Adjusted Operating Profit (AOP) excludes amortization of GRT (Marine): Gross Register Ton acquisition intangibles, goodwill impairment, restructuring, acquisition and disposal-related items (non-recurring items) GS: Government Services Adjusted Operating Margin is defined as IoT: Internet o