Latin America and Middle East woes drag down firm’s numbers
Arcadis said problems in Brazil and less work in key Middle East markets helped send both profit and revenue down in the first half of this year.
The Netherlands-based consultant said pre-tax profit slumped 9% from €55m (£49m) last year to €50m (£44.5m) in the six months to the end of June.
It added that revenue was off 2% to €1.65bn (£1.47bn), down from the €1.68bn (£1.5bn) it posted for the same period in 2016.
Chief executive Peter Oosterveer, who took over from interim boss Renier Vree in April, said Arcadis had been hit by clients holding off making decisions about future schemes in Latin America as well as racking up an €11m (£9.8m) loss from its operations in Brazil.
And Oosterveer said work in Qatar and Saudi Arabia had also fallen. He admitted: “We remain cautious about market developments in Brazil and in the Middle East.”
Overall, Arcadis said revenues in its Asian, Latin American and Middle Eastern operations declined as did the revenue from its design business CallisonRKTL.
The Americas make up 31% of revenue for the consultant and the firm said increased revenue in the US, driven by its environment and infrastructure operations, was offset by the falls in Latin America meaning overall turnover for the Americas fell 1% to €599m (£533m).
Revenue for Europe and the Middle East, which makes up 45% of the firm’s business, also fell by 5.5% from €725m (£645m) to €685m (£609m) mainly as a result of the falling workloads in Qatar and Saudi Arabia.
But there was better news from the its business in the UK, where the firm is working on new stadia for Premier League clubs Chelsea and Tottenham Hotspur, with the firm saying its turnover here had climbed 5% thanks to increased work in the commercial and automotive sectors. It said turnover in the UK was helped by growing infrastructure work, particularly rail where it is carrying out work to revamp London Bridge station (pictured).
Speaking about the overall business, Oosterveer added: “We start to see the benefits of the initiatives to position Arcadis for profitable growth that were launched under interim CEO Renier Vree. This included more focus on clients and on reducing working capital, while the simplified operating model helped to reduce costs.
“We are pleased that we created momentum in our North American business, which returned to growth after three years of decline. We see positive business sentiment and higher backlog in most of our businesses
“In the Middle East, we received cash payments on overdue receivables and reached important milestones on multiple contracts. The results and developments in the first half year give us confidence that we will continue to make progress in the second half year.”
The firm said it had bought US technology firm E2 ManageTech for an undisclosed sum. The firm, which is based in Long Beach, California, was set up back in 1998 and employs 55 people. It specialises in providing IT services for the environmental, health and safety information market.
E2 chief executive Vijay Gudivaka is staying at the business where he will head up Arcadis’s technology division in North America for environmental, health and safety as well as sustainability.