3Q15_4112015_VENGBureau Veritas: revenue for the first nine months of 2015
Chief Executive Officer, Didier Michaud-Daniel, commented:
"After the strong performance achieved in the first semester of 2015, growth has slowed in the third quarter, reflecting persistent weakness in minerals and oil & gas markets as well as the deterioration of the macroeconomic environment in some emerging countries, including Brazil. This has impacted our Industry and Commodities businesses.
The Marine & Offshore has continued to deliver strong growth. The Consumer Products business posted lower growth, notably due to some delays in client product launches. All other businesses have improved their performance versus the first semester driven notably by robust activity in the EMEA region.
Due to the deterioration in the global macroeconomic environment, we now anticipate 2015 revenue growth to be above 10% with an organic growth slightly lower than last year (which was 2.5%). The operating margin should improve in 2015 and the Group will continue to generate strong cash flow.
Despite short term uncertainties in our environment, we are very confident about the strengths of Bureau Veritas and our ability to enhance its growth profile. With the implementation of the growth initiatives presented during our investor days in October, we are rebalancing our portfolio to be less exposed to economic cycles."
Revenue as of September 30
| EUR millions | 2015 | 2014 | Total growth | Organic | Scope | Currencies |
| 3rd quarter | 1,143.0 | 1,065.0 | +7.3% | +0.9% | +2.9% | +3.5% |
| 9 months | 3,461.7 | 3,032.4 | +14.2% | +2.7% | +4.5% | +7.0% |
Revenue
9M 2015 revenue totaled 3,461.7 million, a 14.2% increase versus last year. Q3 2015 revenue totaled €1,143 million, up 7.3% compared to Q3 2014.
Organic growth was 2.7% for the first nine months of 2015, including +0.9% in the third quarter. The slowdown versus the first semester reflects persistent weakness in minerals and oil & gas markets as well as the deterioration of the macroeconomic environment in some emerging countries, including Brazil. Business in the Middle East, Africa and Eastern Europe region has registered however strong organic growth of 8.1% in Q3. Activities in Europe continued to be very dynamic (+5.2% organic growth) thanks to the commercial initiatives launched last year and the improvement in the economic environment. Business in Asia Pacific (-0.8% organic decline) was mixed with a modest growth in Asia, offset by further reduction in Australia driven by the Mining and Oil & Gas end-market weaknesses which have also impacted activities in the Americas (-4.5% organic decline).
The consolidation of companies acquired contributed to 4.5% of growth for the first nine months of 2015 and +2.9% in the third quarter. Since the beginning of the year, the Group has completed seven acquisitions, representing €70 million in annualized revenues. Four acquisitions were carried out in China, reinforcing the Groups' position in the domestic market for Construction, Industry and Consumer Products. Additionally, Bureau Veritas acquired HydrOcean, a company specialized in hydrodynamic digital simulation for the maritime industry.
Currency fluctuations had a positive but lower impact of +3.5% in Q3, and represented +7.0% for the first nine months of 2015.
Revenue by business
| (€m) | 2015 | 2014 | Growth | |||
| Total | Organic | Scope | Currencies | |||
| Marine & Offshore | 101.7 | 83.3 | 22.1% | 8.6% | 10.1% | 3.3% |
| Industry | 251.6 | 255.9 | (1.7)% | (4.6)% | 1.4% | 1.5% |
| In-service Inspection & Verification | 146.0 | 138.4 | 5.5% | 2.7% | - | 2.8% |
| Construction | 141.5 | 118.9 | 19.0% | 2.9% | 13.8% | 2.3% |
| Certification | 78.3 | 73.9 | 6.0% | 4.9% | - | 1.1% |
| Commodities | 188.6 | 181.7 | 3.8% | 0.6% | 0.7% | 2.5% |
| Consumer Products | 170.6 | 150.6 | 13.3% | 0.1% | 0.5% | 12.7% |
| Government Services & International Trade (GSIT) | 64.7 | 62.3 | 3.9% | 3.3% | 0.1% | 0.5% |
| Total Q3 | 1,143.0 | 1,065.0 | 7.3% | 0.9% | 2.9% | 3.5% |
| Marine & Offshore | 303.9 | 233.7 | 30.0% | 10.6% | 13.3% | 6.1% |
| Industry | 785.9 | 716.5 | 9.7% | 0.7% | 2.6% | 6.4% |
| In-service Inspection & Verification | 433.5 | 404.0 | 7.3% | 2.1% | 1.1% | 4.1% |
| Construction | 415.8 | 332.5 | 25.1% | 1.7% | 17.9% | 5.5% |
| Certification | 253.2 | 234.3 | 8.1% | 4.6% | - | 3.5% |
| Commodities | 579.6 | 510.4 | 13.6% | 3.8% | 2.8% | 7.0% |
| Consumer Products | 492.9 | 412.5 | 19.5% | 2.2% | 1.0% | 16.3% |
| GSIT | 196.9 | 188.5 | 4.5% | (0.8)% | 2.4% | 2.9% |
| Total 9M | 3,461.7 | 3,032.4 | 14.2% | 2.7% | 4.5% | 7.0% |
Marine & Offshore
The business enjoyed double-digit organic growth in the first nine months of 2015. The In-service segment benefited from the expansion in the classed fleet and the increase in special surveys. The New construction segment also grew, yet at a more moderate pace in the third quarter.
In September, Bureau Veritas acquired HydrOcean, a company specialized in hydrodynamic digital simulation for the maritime industry.
2015 is an excellent year for the Marine & Offshore business. Going forward, the Group will benefit from the resilience of its In-service business, and will continue to develop innovative services to mitigate the cyclicality of the New construction market.
IndustrY
Organic growth was positive in the first nine months of 2015, but included negative growth in the third quarter. Oil & Gas-related activities suffered from the impact of the low oil price environment, with delays in projects and pressure on prices, mainly in the Americas and Australia. Activities in Asia and in Europe were strong, benefitting from the commercial initiatives and diversification in the Power sector.
For the full year 2015, the Group expects organic growth to be slightly negative, reflecting the impact from weaker activity in Oil & Gas. Mid-long term, Bureau Veritas plans to develop its market share in OPEX related services for the Oil & Gas, Power & Utilities and Chemicals markets where high fragmentation and low level of outsourcing offer strong opportunities to build recurring business models.
In-Service inspeCtion & verification (IVS)
Organic growth improved in the first nine months of 2015 despite the negative impact from Oil & Gas-related activities in Canada. Recovery was confirmed in Europe, particularly in Spain and in France. Activity in the USA and in the UK also increased thanks to commercial initiatives.
For the full year 2015, the Group expects the same trends to continue. Mid-long term, the Group will continue to develop both voluntary and mandatory services targeting the Building & Infrastructure market in mature and emerging countries.
Construction
Organic growth has improved during the first nine months. Growth came from Latin America and the Middle East. The activity in France has stabilized, mainly due to the development of asset management related activities.
The Group has continued to develop its platform in China, through the acquisition of Shandong Chengxin in January and Shanghai Xietong in July.
For the full year 2015, the Group will benefit from the ramp-up of contracts in the Middle East and the improvement in France. Going forward, it will pursue its expansion in emerging markets where urbanization generates increasing needs in infrastructure and transportation.
Certification
The business enjoyed a good level of activity in the first nine months of 2015, especially in Europe, in the Americas and in South East Asia. Business was particularly strong in specific schemes for the automotive, the aeronautics, the food and the transportation sectors.
Going forward, the business should benefit from the launch of transition packages for revised QHSE schemes (ISO 9K, 14K). Bureau Veritas will develop its activity with large international corporations and expand in news schemes related to data safety, sustainability, energy efficiency and asset management.
COMMODITIES
The Commodities business grew in the first nine months of 2015, but the pace of growth slowed in the third quarter due to the sharp contraction in upstream Metals & Minerals testing (M&M). The Oil & Petrochemicals segment (O&P) had robust growth, reflecting the resilience of trade related activities. The Agriculture segment continued to expand.
Subdued growth is expected for 2015, due to continuous weakness in upstream activities. Going forward, Bureau Veritas will develop new services for the O&P segment and more recurring OPEX and trade related activities for the M&M segment.
CONSUMER PRODUCTS
The Consumer products business experienced a slowdown in growth in the first nine months of 2015. This was attributable to delays in product launches from a key client in Electricals & Electronics (E&E) and the reduction in testing and inspection programs by some clients in Softlines/Hardlines.
Organic growth for the full year 2015 should be moderate, with a limited recovery in E&E. Mid-long term growth will be driven by initiatives in Smartworld, Automotive, Food, domestic markets in Asia.
GOVERNMENT Services & international trade
Organic growth in the first nine months of 2015 was still negative, but organic growth was back in positive territory in the third quarter of 2015. This performance was driven notably by the solid performance of existing contracts in Africa, the Middle East and a more favorable comparison base in Iraq. Diversification activities saw mixed trends, impacted in particular by the contraction of activity in Automotive in Brazil.
For the full year 2015, the business should post moderate growth, thanks to a favorable comparison base. Going forward, the Group will continue to support the transition to Verification of Conformity and Single Windows solutions.
Financial position
At end-September 2015, the Group's adjusted net financial debt has slightly decreased compared with the level at June 30, 2015.
Outlook
Due to the deterioration in the global macroeconomic environment, we now anticipate 2015 revenue growth to be above 10% with an organic growth slightly lower than last year (which was 2.5%). The operating margin should improve in 2015 and the Group will continue to generate strong cash flow.
Conference call
Wednesday, November 4, 2015 at 6.00 p.m. CET
The conference call in English will be broadcast live and after the event on the Group's website (http://finance.bureauveritas.com).
All supporting documents will also be available on the website.
2016 financial agenda
February 25, 2016: 2015 full year results
May 12, 2016: Q1 2016 trading update
May 17, 2016: Shareholders' Meeting
July 28, 2016: 2016 first half results
November 7, 2016: Q3 2016 trading update
Contacts
| Analysts / Investors | Press |
| Claire Plais +33 (0)1 55 24 76 09 Mark Reinhard +33 (0)1 55 24 77 80 | Véronique Gielec +33 (0)1 55 24 76 01 |
| Finance.investors@bureauveritas.com | Veronique.gielec@bureauveritas.com |
About Bureau Veritas
Bureau Veritas is a world leader in laboratory testing, inspection and certification services. Created in 1828, the Group has around 66,700 employees located in 1,400 offices and laboratories around the globe. Bureau Veritas helps its clients to improve their performance by offering services and innovative solutions in order to ensure that their assets, products, infrastructure and processes meet standards and regulations in terms of quality, health and safety, environmental protection and social responsibility.
Bureau Veritas is listed on Euronext Paris and belongs to the Next 20 index.
Compartment A, ISIN code FR 0006174348, stock symbol: BVI.
For more information, go to www.bureauveritas.com
This press release 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 registration document filed by Bureau Veritas with the French Autorité des marchés financiers that could cause actual results to differ from the plans, objectives and expectations expressed in such forward-looking statements. These forward-looking statements speak only as of the date on which they are made, and Bureau Veritas undertakes no obligation to update or revise any of them, whether as a result of new information, future events or otherwise, according to applicable regulations.