Bureau Veritas Sa · EURONEXT:BVI

Bureau Veritas Sa — H1 2017 Earnings Presentation

48 slides from Bureau Veritas Sa's earnings presentation, Jul 28, 2017

  1. Slide 1: H1 2017 Results

    2017 © Bureau Veritas H1 2017 Results July 28, 2017

  2. Slide 2: Agenda / H1 2017 Results

    Agenda / H1 2017 Results  Highlights  Financial Review  Business Review  Digital@BV  Outlook  Q&A © Bureau Veritas  Appendix

  3. Slide 3: Highlights

    Highlights b BUREAU. VERITAS © Bureau Veritas

  4. Slide 4: H1 2017 Highlights

    H1 2017 Highlights  Group half-year revenue at €2.36bn, up 6.2% y/y  Confirmed organic growth of 1.3% in H1  Adjusted for calendar effect, growth trends similar in Q2 compared to Q1 despite Marine shortfall  All Businesses apart from M&O on improving trends vs. FY 2016  Growth Initiatives accel

  5. Slide 5: Growth Initiatives accelerated in H1

    5 Growth Initiatives accelerated in H1 B&I +4.8% OPEX +7.1% Agri-Food +1.8% H1 2017: +7.1% organic vs. +4.9% in 2016 Automotive +26.7% © Bureau Veritas SmartWorld +12.9% 0 200 400 €m H1 2017 Results July 28, 2017 5

  6. Slide 6: M&A strategy on track

    M&A strategy on track Agri-Food SmartWorld March Jan. €35m €9.5m Food testing & inspections E&E testing & certification YTD 2017: €100m or 2% of annualized Building & Infrastructure Building & Infrastructure revenue Feb. July €50m €4m Mandatory supervision of © Bureau Veritas Construction code compl

  7. Slide 7: Financial Review

    Financial Review © Bureau Veritas

  8. Slide 8: H1 2017 Revenue Growth

    H1 2017 Revenue Growth +6.2% (in € millions) +1.6% 2,360.1 +3.3% 2,221.4 +1.3% H1 2016 Organic* Acquisitions Currencies H1 2017 © Bureau Veritas *Organic growth is the increase in revenue versus last year, at constant currency and scope H1 2017 Results July 28, 2017 8

  9. Slide 9: Q2 2017 Revenue Growth

    Q2 2017 Revenue Growth (in € millions) +3.1% +1.2% 1,227.2 1,162.0 +0.8%** Q2 2016 Organic* Acquisitions Currencies Q2 2017 © Bureau Veritas * Organic growth is the increase in revenue versus last year, at constant currency and scope ** Despite the Marine revenue shortfall costing 1.2 pts to Group o

  10. Slide 10: H1 2017 revenue growth by business

    H1 2017 revenue growth by business % @ constant revenue currency 8% Certification 6.1% 0.2% +6.3% 14% Consumer Products 5.2% 2.1% +7.3% 23% Building & Infrastructure 4.0% 4.3% +8.3% 23% Agri-Food & Commodities 0.8% 8.7% +9.5% 24% Industry (1.1)% 0.1% (1.0)% 8% Marine & Offshore (7.5)% 1.1% (6.4)% ©

  11. Slide 11: H1 2017 Overview of BV Growth Initiatives

    H1 2017 Overview of BV 5 Growth Initiatives (in € millions) Base business V2 5 Growth initiatives contributing 35.8 contributing +2.0pts to (0.7)pts to organic growth 73.5 organic growth 45.9 16.6 2 360.1 2 221.4 H1 2016 Base business Growth Initiatives Acquisitions Currency H1 2017 © Bureau Veritas

  12. Slide 12: H1 2017 key financial metrics

    H1 2017 key financial metrics y/y at constant (In € millions) H1 2017 H1 2016 y/y currency Revenue 2 360.1 2 221.4 +6.2% +4.6% Adjusted operating margin flat Adjusted operating profit * 359.4 350.5 +2.5% +1.4% organically excluding Adjusted operating margin * 15.2% 15.8% (60bp) (50bp) M&O and Indust

  13. Slide 13: Adjusted operating margin

    Adjusted operating margin ADJUSTED OPERATING MARGIN EVOLUTION Y/Y ADJUSTED OPERATING MARGIN BY BUSINESS H1 2017 y/y (bp) (10)bp (50)bp Marine & Offshore 23.6% (320) Agri-Food & Commodities 11.3% (90) 15.8% o/w 15.7% M&O (30)bp Industry 11.5% (70) Industry (20)bp 15.2% Building & Infrastructure 14.0%

  14. Slide 14: Non-recurring items

    Non-recurring items (in € millions) H1 2017 H1 2016 y/y Adjusted operating profit 359.4 350.5 +8.9 Amortization of intangibles (40.1) (32.0) (8.2) Higher restructuring primarily focused on Restructuring (31.4) (11.5) (20.0) businesses in down-cycles and also efficiency Acquisitions and disposals (1.

  15. Slide 15: Net financial expenses

    Net financial expenses (in € millions) H1 2017 H1 2016 y/y Increase of financial charges due to average Net financial charges (46.7) (42.3) (4.4) net debt increase, partly offset by lower Foreign exchange gain/loss (10.9) 1.3 (12.3) cost of debt Interest charge on pension plans (1.7) (1.5) (0.2) Oth

  16. Slide 16: Tax / Tax rate

    Tax / Tax rate (in € millions) H1 2017 H1 2016 y/y Profit before Tax 226.0 260.5 (34.5) Tax 80.0 93.6 (13.7) Positive impact of ETR 35.4% 35.9% utilization of losses carried forward Adjusted ETR 33.9% 34.6% (70bp) (essentially in Australia) © Bureau Veritas Effective tax rate (ETR) = Income tax expe

  17. Slide 17: Cash flow statement

    Cash flow statement (in € millions) H1 2017 H1 2016 y/y Profit before income tax 225.5 260.5 (35.0) Elimination of financing and investing activities 78.5 51.1 27.4 Provisions and other non-cash items (16.8) 6.2 (23.0) Depreciation, amortization and impairment 107.9 90.8 17.1 Income tax paid (100.4)

  18. Slide 18: Financial structure

    Financial structure ADJUSTED NET DEBT NET DEBT / EBITDA RATIO* 15.6 41.6 2,270.6 254.4 2.5 76.7 2.51 1,996.4 28.4 2.44 2.20 2.02 Bank covenant at 3.25x Dec 2016 FCF Acquis. Dividends Stock Conversion Other June 2017 Dec-15 Jun-16 Dec-16 Jun-17 options var. (FX) buybacks © Bureau Veritas  Sound fina

  19. Slide 19: Business Review

    Business Review © Bureau Veritas

  20. Slide 20: Marine & Offshore

    Marine & Offshore KEY FINANCIALS H1 2017 HIGHLIGHTS 2017 MARKET / BV OUTLOOK  New Construction: Equipment H1 2017 H1 2016 Var. certification accelerating the decline in  New Construction under pressure new-build activity  Low past order intakes to drive Revenue (6.3)% similar decline in H2 Organi

  21. Slide 21: Marine & Offshore

    Marine & Offshore MGT GROWTH OF BV ACTIVE FLEET 120 115 TREND IN WORLD NEW ORDERS (2017 VS. 2016) 110 105 Trend 100 Mar May Sep Mar May Sep Mar May Jan Nov Jan Nov Jan Jul Jul Dry Bulk  2015 2016 2017 Containers  Other Dry = PROGRESSIVE REINSTATEMENT OF LAID-UP SHIPS AT BV Tankers  Gas (LNG car

  22. Slide 22: Agri-Food & Commodities

    Agri-Food & Commodities KEY FINANCIALS H1 2017 HIGHLIGHTS 2017 MARKET / BV OUTLOOK  O&P (+2.6% organic): strong growth in Europe, H1 2017 H1 2016 Var. price pressure in North America  Environment to improve in 2017  M&M (+2.5%): Trade positive (Europe + Asia Revenue 541.0 485.4 11.5% driven), Ups

  23. Slide 23: Industry

    Industry KEY FINANCIALS H1 2017 HIGHLIGHTS 2017 MARKET / BV OUTLOOK H1 2017 H1 2016 Var.  O&G Capex decline: -12% at Group level  Slightly negative growth expected  Americas (39% of rev.) positive growth Revenue 1.4%  O&G Capex: No new significant 559.6 551.7  Australia, Korea decline: end of p

  24. Slide 24: Industry: OPEX model

    Industry: OPEX model 20 Typical Opex contracts  Resilient, with a high renewal rate Margin profile (%) 15  Longer on average (5 years)  Most of the time smaller in size compared to Capex contracts 10  Ramp-up phase, with profitability matching Capex contracts once Lean is implemented 5 Year 1 Ye

  25. Slide 25: Building & Infrastructure

    Building & Infrastructure KEY FINANCIALS H1 2017 HIGHLIGHTS 2017 MARKET / BV OUTLOOK H1 2017 H1 2016 Var.  Order book points to accelerating growth Revenue 8.6%  Building in-service (41%): 2% growth in Europe by year end Organic 547.5 504.0 4.0%  Construction-related activities (59%): stronger or

  26. Slide 26: Certification

    Certification KEY FINANCIALS H1 2017 HIGHLIGHTS 2017 MARKET / BV OUTLOOK  Good performance across all major service  Good growth expected H1 2017 H1 2016 Var. categories and regions  Positive calendar effect reversal in Q2  ISO 2015, Automotive & Aerospace Revenue 9.4% standard revisions 188.8 1

  27. Slide 27: Consumer Products

    Consumer Products KEY FINANCIALS H1 2017 HIGHLIGHTS 2017 MARKET / BV OUTLOOK H1 2017 H1 2016 Var.  Robust organic growth across all major regions, with North / South Asia rebalancing  Robust growth expected Revenue 9.3% Organic 332.4 304.1 5.2%  E&E: best performer led by Auto / Mobile  Accompan

  28. Slide 28: Digital@BV

    Digital@BV © Bureau Veritas

  29. Slide 29: Digital@BV - a key lever of the BV Strategic Plan

    Digital@BV - a key lever of the BV Strategic Plan New Digital Solutions New Services Digitally Data Data Augmented TIC TIC for digital products TIC for digital services Gate keeping Intelligence Selected BV Digital Offerings Improve efficiency Support our ambition Capture an emerging for existing TI

  30. Slide 30: Outlook

    Outlook BUREAU VERITAS © Bureau Veritas

  31. Slide 31: Confirmed 2017 Outlook

    Confirmed 2017 Outlook  Full-year organic revenue growth expected to be slightly positive, with acceleration in the second- half confirmed  Full-year adjusted operating margin at around 16%  Full-year cash flow generation to improve from FY 2016 © Bureau Veritas H1 2017 Results July 28, 2017 31

  32. Slide 32: Q&A

    Q&A © Bureau Veritas

  33. Slide 33: Appendix

    Appendix b BUREAU. VERITAS © Bureau Veritas

  34. Slide 34: Q2 2017 revenue growth by business

    Q2 2017 revenue growth by business % @ constant revenue currency 6.1% 1.6% +7.7% 15% Consumer Products Building & Infrastructure 3.5% 4.9% +8.4% 23% 8% Certification 2.3%0.2% +2.5% 23% Agri-Food & Commodities 1.0% 9.6% +10.6% 23% Industry (1.2%) (0.4%) (1.6)% 8% Marine & Offshore (13.1%) 0.6% (12.5)

  35. Slide 35: Revenue by business

    Revenue by business Q2 2017 H1 2017 €m Organic Scope FX €m Organic Scope FX Marine & Offshore 93.7 (13.1)% 0.6% 0.9% 190.8 (7.5)% 1.1% 0.1% Agri-Food & Commodities 277.4 1.0% 9.6% 0.8% 541.0 0.8% 8.7% 2.0% Industry 282.4 (0.4)% (1.2)% 1.2% 559.6 (1.1)% 0.1% 2.4% Building & Infrastructure 279.4 3.5%

  36. Slide 36: Adjusted operating profit by business

    Adjusted operating profit by business Adjusted operating profit (€m) Adjusted operating margin (%) H1 2017 H1 2016 Var. (%) H1 2017 H1 2016 Var. (bp) Marine & Offshore 45.0 54.5 -17.4% 23.6% 26.8% (320) Agri-Food & Commodities 61.4 59.3 3.5% 11.3% 12.2% (90) Industry 64.6 67.5 -4.3% 11.5% 12.2% (70)

  37. Slide 37: H1 2017 revenue by main currencies

    H1 2017 revenue by main currencies H1 2017 REVENUE BY CURRENCY CURRENCY CHANGE Y/Y USD (and pegged) 3.0% CNY -2.0% OTHER TRY 1% 12% BRL 19.9% PEN 1% AUD 6.0% COP 1% ARS 1% EURO 28% GBP -9.5% KRW 1% CAD 2.7% TWD 2% INR 2% CLP 7.5% SGD 2% JPY 2.2% JPY 2% 1.3% SGD CLP 3% INR 5.4% CAD 4% TWD 10.0% KRW 6

  38. Slide 38: H1 2017 restructuring: €31.4m

    H1 2017 restructuring: €31.4m BY BUSINESS LINE BY NATURE Industry Other 14% businesses including Marine 21% B&I Other 19% Headcount Rest of Agri- Food & related Commodities 13% Goverment Services within Agri- Food & Commodities 34% © Bureau Veritas H1 2017 Results July 28, 2017 38

  39. Slide 39: Portfolio of businesses

    Portfolio of businesses REVENUE ADJUSTED OPERATING PROFIT Marine & Offshore Marine & Offshore 8% 13% 14% Agri-Food & Agri-Food & Commodities 22% Commodities 8% 23% Industry Industry 17% 9% Building & Building & Infrastructure Infrastructure 23% Certification 18% Certification 24% 21% © Bureau Verita

  40. Slide 40: Ambition on the 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: Consolidated income statement

    Consolidated income statement H1 2017 H1 2016 Revenue 2 360.1 2,221.4 Purchase and external charges (690.4) (640.3) Personnel costs (1 244.8) (1,162.4) Taxes other than on income (23.9) (24.7) Net (additions to) / reversals of provisions (11.7) (12.5) Depreciation and amortization (107.9) (92.0) Oth

  42. Slide 42: Consolidated financial position

    Consolidated financial position June 2017 Dec. 2016 Goodwill 1,924.0 1,977.6 Intangible assets 663.8 686.8 Property, plant and equipment 484.9 518.6 Other non-current assets 263.0 218.4 Total non-current assets 3,335.7 3,401.4 Trade and other receivables 1,576.2 1,496.1 Other current assets 103.8 10

  43. Slide 43: Cash flow statement

    Cash flow statement H1 2017 H1 2016 Profit before income tax 225,5 260.5 Elimination of cash flows from financing and investing activities 78,5 51.1 Provisions and other non-cash items (16,8) 6.2 Depreciation, amortization and impairment 107,9 90.8 Movements in working capital attributable to operat

  44. Slide 44: Adjusted net financial debt

    Adjusted net financial debt June 2017 Dec. 2016 Non-current borrowings and debt 2,430.5 2,492.9 Current borrowings and debt 64.5 583.5 Bank overdrafts 50.8 6.0 Gross financial debt 3,082.4 2,545.8 Total cash and cash equivalents 284.8 1,094.1 Consolidated net financial debt 2,260.9 1,988.3 Currency

  45. Slide 45: Earnings per share

    Earnings per share H1 2017 H1 2016 Basic EPS 0.30 0.37 Basic adjusted EPS 0.43 0.44 Weighted average number of shares 436,176,351 437,112,819 Diluted EPS 0.30 0.36 Diluted adjusted EPS 0.43 0.44 Weighted average number of shares for diluted earnings 440,308,261 440,886,882 © Bureau Veritas H1 2017 R

  46. Slide 46: Ownership at June 30, 2017

    Ownership at June 30, 2017 1.3% Treasury shares 40.1% Wendel 56.8% Managers and employees 1.8% Free float © Bureau Veritas H1 2017 Results July 28, 2017 46

  47. Slide 47: Glossary

    Glossary Organic growth is the increase in revenue versus last year, at constant currency and scope (i.e. acquisitions excluded) E&E: Electrics and Electronics QHSE: Quality Health Safety & Environment Adjusted Operating Profit (AOP) excludes amortization of acquisition intangibles, goodwill impairm

  48. Slide 48: Upcoming events

    Upcoming events Q3 2017 trading update - October 25, 2017 Investor Days – December 7 & 8, 2017 Investor Relations Information Bureau Veritas Head Office – 40 Boulevard du Parc 92200 Neuilly-sur-Seine Laurent Brunelle Mark Reinhard © Bureau Veritas +33 (0)1 55 24 76 09 +33 (0)1 55 24 77 80 laurent.br

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