- Revenue growth and strong cash flow
Operational
Strong performance key markets North America, the UK, Continental Europe, and Australia
Firm measures taken to turn around lagging performance in the Middle East and Asia
Non-core clean energy assets Brazil: Preparation for divestment of all assets initiated

Financial
Significantly improved balance sheet
Net working capital improved to 15.1% (2017: 16.9%); DSO to 80 days (2017: 88 days)
Strong free cash flow of €149 million leading to a year-end Net debt to EBITDA ratio of 1.7
Organic net revenue growth of 3% to €2.4 billion (gross revenues of €3.3 billion)
Operating EBITA margin decreased to 7.3% (2017: 7.6%); including project write-offs and provisions related to the Middle East and Asia with a total margin impact of 0.8%
Goodwill impairment of €40 million, mainly reflecting re-assessment of Middle East, leading to a net loss of €27 million. Net income from operations of €88 million (2017: €101 million)
Proposal to maintain dividend at €0.47 per share (2017: €0.47), pay-out ratio 47%

Amsterdam, 14 February 2019 - Arcadis (EURONEXT: ARCAD), the leading global Design & Consultancy for natural and built assets, reports 3% organic net revenue growth over 2018. The majority of Arcadis' businesses performed well, while set-backs in the Middle East and Asia negatively impacted results. Arcadis takes firm measures to turnaround these regions. Key financial metrics such as cash flow, net working capital and net debt significantly improved.

CEO STATEMENT
Peter Oosterveer, CEO Arcadis comments: "We made significant steps in 2018 towards our 2020 targets in our key markets North America, the UK, Continental Europe and Australia, which combined with CallisonRTKL, represent approximately 85% of our business. The set-backs we faced in the Middle East and Asia negatively impacted our results, especially in Q4. Overall, we generated strong cash flow from disciplined working capital management throughout the organization. As a result, our leverage ratio at year-end improved to 1.7, well within our 2020 strategic target range of between 1.0 and 2.0.

We are taking decisive actions to turnaround the underperforming businesses. Earlier headwinds in the Middle East caused us to be more selective, in order to de-risk our portfolio. This resulted in lower revenues and, as a consequence, we impaired goodwill. In Asia, we appointed new leadership and are executing the plan to focus on profitable core businesses, to exit certain countries and phase-out activities that underperform. In Latin America, we expect to improve our results in Brazil in a more stable post-election business environment. We are making progress with our non-core clean energy assets; ensuring new gas offtake contracts and bringing the largest gas-to-power plant to the operational status.

There is no denying that 2018 has been a challenging year for Arcadis, but we are pleased with the growth in the majority of our business, the strengthening of our balance sheet, as well as with the actions taken to improve our performance. Our strategy towards 2020 is clear and we have confidence that our efforts in 2018 will further pay off in 2019. This confidence and our cash generation in 2018 enables us to propose to maintain our dividend at €0.47 per share."

STRATEGY UPDATE
Late 2017, Arcadis launched its strategy of 'Creating a Sustainable Future', based on three pillars: People & Culture, Innovation & Growth, and Focus & Performance. Key Performance Indicators were identified for all three pillars and we are pleased with the progress to date, which includes;

People & Culture
Our focus on creating a stronger, unique culture with a growth mindset and a disciplined focus on pursuing the right clients while creating better financial performance is starting to bear fruit, in particular in North America, the UK, Continental Europe and Australia.

Our voluntary staff turnover slightly increased, with small increases in Asia, Australia and CallisonRTKL, partly offset by an improvement in North America. The overall engagement score for Arcadis improved compared to 2017, slightly above our target for the year.

Innovation & Growth
In 2018, we made significant progress on our Digital Agenda. We helped our clients succeed in a data driven world by offering more data analytics solutions, which were strengthened by the acquisition of SEAMS. Our 2017 acquisition of E2 ManageTech formed the foundation for Arcadis to be recognized by Verdantix as a market leader in delivering Digital EHS services.

To accelerate the digital capabilities of our people we have developed 'Expedition DNA', our on-line learning platform, which to date has seen a voluntary participation of over 26% of our global workforce. The majority of our businesses created organic growth in line with our targets and the growth for our key clients exceeded our goals. We have sharpened our focus further by streamlining our client portfolio resulting in the identification of 250 key global and local clients.

Focus & Performance
In 2018, we initiated our program of "Make Every Project Count", focused on improving project performance by aligning behaviors, processes and systems to "The Arcadis Way". As a result of the program we see a higher focus on project selectivity and financial performance, including cash collection. We optimized the operating model of our GECs and expect to further grow this capability by approximately 15% in 2019.

Throughout 2018, we furthermore completed our portfolio analysis for both the Middle East as well as for Asia to allow us to focus where we can lead and de-prioritize businesses that fail to meet our criteria. Changes we made in 2017 in North America formed the cornerstone for our very robust performance throughout 2018 with Operating EBITA already in the 2020 range, just as has been the case in the UK, Continental Europe, Australia and CallisonRTKL.

As a result of this increased focus, we delivered strong cash flow and significantly improved our balance sheet. The accomplishments to date combined with our continued focus on the implementation of the three strategic pillars will enable Arcadis to achieve its targeted operating EBITA margin in the range of 8.5-9.5% in 2020, as well as to satisfy other key performance indicators.

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tijd 13.49
De Midcap 738,68 +9,80 +1,34% Arcadis EUR 13,62 +1,90 vol. 725.000