H1 2024 Key figures2
› Revenue of EUR 3,021.7 million in the first half of 2024, up 4.0% year on year and up 9.2% organically (including 10.4% in the second quarter)
› Adjusted operating profit of EUR 451.9 million, up 4.1% versus EUR 434.2 million in H1 2023, representing an adjusted operating margin of 15.0%, up 29 basis points organically year-on-year
› Operating profit of EUR 388.5 million, up 4.2% versus EUR 372.9 million in H1 2023
› Adjusted net profit of EUR 288.3 million, up 4.3% versus EUR 276.3 million in H1 2023
› Attributable net profit of EUR 234.3 million, up 0.8% versus EUR 232.5 million in H1 2023
› Free cash flow of EUR 189.9 million, up 44% year
› Adjusted net debt/EBITDA ratio kept at a low level of 1.06x as of June 30, 2024, versus 0.95x last year
H1 2024 Highlights
› Ongoing execution of the new strategy LEAP | 28, announced on March 20, 2024. The strategy intends to deliver a step change in growth and performance, built around three pillars: Focused Portfolio, Performance-led Execution and an Evolved People model
› Strong growth recorded in most regions (Americas, Middle East, Africa and Asia-Pacific)
› Growth momentum maintained for sustainability services across the entire portfolio
› Acquisition of four bolt-on companies for a total cumulated annualized revenue of c. EUR 41 million in line with the LEAP | 28 portfolio strategy of creating new strongholds in i) Cybersecurity (one acquisition); ii) Consumer Products Services Technology (three acquisitions)
› Completion of the EUR 200 million share buyback program (c. 1.6% of the Group’s shares) announced in March at the Capital Markets Day. The program was executed in two steps (phase one through the Wendel Group market placement and phase two directly on the market)
› Inaugural rated issuance of a EUR 500 million bond following the assignment of the first long-term A3 credit rating for Bureau Veritas (with a “stable” outlook) delivered by Moody’s
2024 Outlook upgraded
Leveraging a healthy and growing sales pipeline, high customer demand for ‘new economy services’ and strong underlying market growth, Bureau Veritas now expects to deliver for the full year 2024:
› High single-digit organic revenue growth (from mid-to-high single-digit previously).
› Improvement in adjusted operating margin at constant exchange rates.
› Strong cash flow, with a cash conversion3 above 90%.
The Group expects H2 organic revenue growth to be broadly in line with H1.
NEUILLY-SUR-SEINE, France–(BUSINESS WIRE)–Hinda Gharbi, Chief Executive Officer, commented:
“In the first half of the year, we kick started the execution of our LEAP I 28 strategy which was launched at the end of March 2024. Our H1 results confirm our commitment to a step change in growth and returns with organic growth of 9.2%, a solid organic margin improvement of 29 basis points and EPS growth of 16% at constant currency. I thank all my colleagues around the world for these excellent results. We are also actively managing our portfolio through an accelerated M&A program with four acquisitions completed since the beginning of the year. In addition, we have completed our EUR 200 million share buyback program announced in March 2024. Finally, in light of our strong first half performance, our robust backlog and considering our focused operational execution, we are upgrading our revenue outlook for 2024.”
H1 2024 KEY FIGURES
The Board of Directors of Bureau Veritas met on July 25, 2024, and approved the financial statements for the first half of 2024 (H1 2024). The main consolidated financial items are:
|
IN EUR MILLIONS |
H1 2024 |
H1 2023 |
CHANGE |
CONSTANT CURRENCY |
|
Revenue |
3,021.7 |
2,904.2 |
+4.0% |
+9.3% |
|
Adjusted operating profit(a) |
451.9 |
434.2 |
+4.1% |
+11.6% |
|
Adjusted operating margin(a) |
15.0% |
15.0% |
(0)bps |
+33bps |
|
Operating profit |
388.5 |
372.9 |
+4.2% |
+12.9% |
|
Adjusted net profit(a) |
288.3 |
276.3 |
+4.3% |
+16.1% |
|
Attributable net profit |
234.3 |
232.5 |
+0.8% |
+14.5% |
|
Adjusted EPS(a) |
0.64 |
0.61 |
+4.5% |
+16.3% |
|
EPS |
0.52 |
0.51 |
+0.9% |
+14.7% |
|
Operating cash-flow |
262.4 |
222.1 |
+18.1% |
+32.6% |
|
Free cash flow(a) |
189.9 |
131.9 |
+44.0% |
+65.0% |
|
Adjusted net financial debt(a) |
1,112.2 |
930.8 |
+19.5% |
|
|
(a) Alternative performance indicators are presented, defined and reconciled with IFRS in appendices 6 and 8 of this press release |
||||
H1 2024 HIGHLIGHTS
› Strong organic revenue growth across the board throughout the first half
Group revenue in the first half of 2024 increased by 9.2% organically compared to the first half of 2023, including 10.4% in the second quarter, benefiting from robust underlying trends across businesses and geographies.
This is reflected by business as follows:
› Over a third of the portfolio (Marine & Offshore, Industry, and Certification) achieved robust double-digit organic revenue growth in the first half, ranging from 14.7% to 17.5%. These divisions benefited from sustained trends in decarbonization and the energy transition, particularly for Marine & Offshore and Industry. Additionally, the Certification segment experienced strong demand for sustainability and ESG-driven services.
› An eighth of the portfolio (Consumer Products Services) delivered high single-digit organic revenue growth (up 7.3%). The growth was led by the consumer segment in most geographies and by its strategy of geography, sector, and services diversification.
› Half of the portfolio, including Buildings & Infrastructure and Agri-Food & Commodities, achieved mid-single-digit organic revenue growth (up 4.3% and 4.6% respectively).
› Solid financial position
At the end of June 2024, the Group’s adjusted net financial debt increased compared to the level as of December 31, 2023, as a result of the use of cash and cash equivalents linked to the EUR 200 million share buyback program executed in Q2. The Group has a solid financial structure with most of its maturities beyond 2026.
Bureau Veritas had EUR 1.5 billion in available cash and cash equivalents, and EUR 600 million in undrawn committed credit lines as of June 30, 2024. The adjusted net financial debt/EBITDA ratio was maintained at a low level of 1.06x (from 0.95x last year).
The average maturity of the Group’s financial debt was 4.9 years, with a blended average cost of funds over the half year of 2.9% (excluding the impact of IFRS 16), compared to 2.7% at December 31, 2023.
› Bureau Veritas shareholders approved the distribution of a dividend for the 2023 financial year
At the Bureau Veritas Annual Shareholders’ Meeting, shareholders approved the distribution of a dividend of EUR 0.83 per share for the 2023 financial year (3rd resolution, approved at 99.99%), paid in cash on July 4, 2024.
› 2024 share buyback program
The Group executed the EUR 200 million share buyback program announced on March 20, 2024, as follows:
› an acquisition of c. 0.8% of the Group’s shares or the equivalent of EUR 100 million on April 5, 2024, completed under the Wendel placement.
› an additional acquisition of the remaining EUR 100 million, completed by the Group through the market in May and June 2024, of an additional c. 0.8% of its shares.
As of June 30, 2024, the entire program had therefore been completed.
In accordance with the purpose of the share buyback program approved by the Annual Shareholders’ Meeting, the shares bought back will be used for cancellation purposes and for any other purposes authorized by the Company’s shareholders at the Annual Shareholders’ Meeting of June 22, 2023.
› First A3 long-term credit rating by Moody’s and inaugural A3 rated bond issuance of EUR 500 million with a May 2036 maturity
On April 24, 2024, Bureau Veritas announced that it had been assigned its first long-term credit rating of A3 by Moody’s, with a “stable” outlook. This long-term credit rating will help Bureau Veritas in further diversifying its sources of funding, gaining enhanced access to capital markets, and managing debt maturities in line with the Group’s strategy. The full rating report is available on moodys.com.
Subsequently, on May 16, 2024, the Group announced the successful completion of a EUR 500 million A3 rated new bond issuance maturing in May 2036 and carrying a coupon of 3.5%. The final orderbook amounted to more than EUR 1.5 billion, which represents three times the targeted amount. Such a high level of oversubscription enabled Bureau Veritas to price with a final spread much below initial price indications. This underlines the strong confidence of investors in Bureau Veritas’ business model as well as the quality of its credit profile.
This issuance allows Bureau Veritas to seize attractive market conditions for general corporate purposes, including the refinancing of its bond maturing in January 2025, thereby lengthening the average maturity of its debt.
FOCUSED PORTFOLIO
In line with the LEAP | 28 strategy of active portfolio management and to focus the portfolio on market leadership positions, Bureau Veritas has activated an M&A program to develop new market strongholds:
› in Cybersecurity: in July 2024, the Group signed an agreement to acquire Security Innovation, a US-based player specialized in software security services focused on software testing, SDLC advisory (Secure Software Development Lifecycle) and training. It realized revenues of c. EUR 21 million in 2023.
› in Consumer Technology Testing: the Group signed definitive agreements to acquire three players in Asia. They will expand its position in testing and certification services for the Electrical and Electronics consumer products segment. The acquired companies’ revenue was a combined c. EUR 20 million in 2023.
|
|
ANNUALIZED REVENUE |
COUNTRY/ AREA |
SIGNING DATE |
FIELD OF EXPERTISE |
|
|
Cybersecurity |
|
||||
|
Security Innovation |
EUR 21m |
USA |
July 2024 |
Software security services company focused on software testing, SDLC advisory & training |
|
|
Consumer Products Services |
|||||
|
OneTech Corp. |
EUR 12m |
South Korea |
March 2024 |
Testing and certification services for Electrical and Electronics consumer products |
|
|
Kostec Co., Ltd |
EUR 5m |
South Korea |
March 2024 |
Testing and certification services for Electrical and Electronics consumer products |
|
|
Hi Physix Laboratory India Pvt. |
EUR 3m |
India |
March 2024 |
Electrical and electronics products testing and certification services laboratory |
|
For more information, the press release is available by clicking here.
As part of its active portfolio management strategy, the Group signed an agreement for the divestment of a non-core technical supervision business on construction projects in China in June 2024. This business represents less than EUR 30 million in annualized revenue.
CORPORATE SOCIAL RESPONSIBILITY COMMITMENTS
› Corporate Social Responsibility (CSR) key indicators
|
|
UNITED NATIONS’ SDGS |
H1 2024 |
2023 |
2028 TARGET |
|
ENVIRONMENT / NATURAL CAPITAL |
|
|
|
|
|
CO2 emissions (Scopes 1 & 2, 1,000 tons)4 |
#13 |
147 |
149 |
107 |
|
SOCIAL & HUMAN CAPITAL |
|
|
|
|
|
Total Accident Rate (TAR)5 |
#3 |
0.25 |
0.25 |
0.23 |
|
Gender balance in senior leadership (EC-II)6 |
#5 |
28.4% |
29.3% |
36% |
|
Number of learning hours per employee (per year)7 |
#8 |
13.9 |
36.1 |
40.0 |
|
GOVERNANCE |
|
|
|
|
|
Proportion of employees trained to the Code of Ethics |
#16 |
98.8% |
97.4% |
99.0% |
› Bureau Veritas joins the United Nations Global Compact
On February 26, 2024, Bureau Veritas announced that it had joined the United Nations Global Compact, the world’s largest corporate social responsibility (CSR) initiative. With this move, the Group confirms its commitment to abiding by the Ten Principles of the voluntary initiative, which seeks to advance universal principles on human rights, labor, the environment, and anti-corruption.
› Strong recognition by non-financial rating agencies
On March 7, 2024, the Group was ranked first in its category by Morningstar Sustainalytics. With a 9.1 rating, the Group ranks first in the ‘Research and Consulting’ category out of 72 companies and is now classified in the “Negligible risk” category.
› 2024 Transparency Awards
On July 4, 2024, Bureau Veritas was awarded the 2024 Transparency Award by Labrador in the “CAC Large 60” category. This award acknowledges the CAC Large 60 company with the highest score across 337 evaluation criteria from three public information sources: the Universal Registration Document, the Notice of Meeting for the Annual Shareholders’ Meeting and the company website. In addition, the Group made remarkable progress in the overall ranking of the most transparent companies, coming 3rd out of the 121 companies evaluated this year.
OPERATIONAL APPOINTMENTS
› Khurram Majeed appointed Executive Vice-President, Commodities, Industry and Facilities, Middle East, Caspian and Africa
On April 1, 2024, Khurram Majeed became Executive Vice-President, Commodities, Industry and Facilities, for the Middle East, Caspian and Africa. With this role, the Group aims to leverage the full potential of the growing market opportunities in this region. This is a dynamic region undergoing several developments in natural resources, construction and industrial sectors. This new regional organization will also allow Bureau Veritas to strengthen its customer intimacy, to scale solutions faster and to increase resource utilization.
For more information, the press release is available by clicking here.
› Maria Lorente Fraguas to be appointed Executive Vice President and Chief People Officer
On July 25, 2024, the Group announces the appointment of Maria Lorente Fraguas as Executive Vice President and Chief People Officer, effective October 1, 2024.
As Bureau Veritas embarks on a new journey with the recent launch of its strategy LEAP I 28, this appointment will play a key role in evolving the Group’s people model, ensuring the development of new strategic skills and developing new ways of working through tech augmentation.
Maria Lorente Fraguas will be a member of the Group Executive Committee. She succeeds Kathryn Dolan who decided to pursue career opportunities outside Bureau Veritas.
2024 OUTLOOK UPGRADED
Leveraging a healthy and growing sales pipeline, high customer demand for ‘new economy services’ and strong underlying market growth, Bureau Veritas now expects to deliver for the full year 2024:
› High single-digit organic revenue growth (from mid-to-high single-digit previously).
› Improvement in adjusted operating margin at constant exchange rates.
› Strong cash flow, with a cash conversion8 above 90%.
The Group expects H2 organic revenue growth to be broadly in line with H1.
LEAP | 28 STRATEGY
On March 20, 2024, Bureau Veritas announced its new strategy, LEAP | 28, with the following ambitions:
|
2024-2028 |
|
|
GROWTH CAGR |
High single-digit total revenue growth9 |
|
With: |
Organic: mid-to-high single-digit |
|
And: |
M&A acceleration and portfolio high-grading |
|
MARGIN |
Consistent adjusted operating margin improvement8 |
|
EPS CAGR8 + DIVIDEND YIELD |
Double-digit returns |
|
CASH |
Strong cash conversion10: above 90% |
Over the period of 2024-2028, the use of Free Cash Flow generated from the Group’s operations will be balanced between Capital Expenditure (Capex), Mergers & Acquisitions (M&A) and shareholder returns (dividends):
|
ASSUMPTIONS |
|
|
CAPEX |
Around 2.5%-3.0% of Group revenue |
|
M&A |
M&A acceleration |
|
DIVIDEND |
Pay-out of 65% of Adjusted Net Profit |
|
LEVERAGE |
Between 1.0x-2.0x by 2028 |
ANALYSIS OF THE GROUP’S RESULTS AND FINANCIAL POSITION
› Revenue up 4.0% year on year (up 9.2% on an organic basis)
Revenue in the first half of 2024 amounted to EUR 3,021.7 million, a 4.0% increase compared to H1 2023.
The organic increase was 9.2% compared to H1 2023 (including 10.4% in the second quarter of 2024) benefiting from solid underlying trends across most businesses and geographies.
Three businesses delivered very strong organic growth: Marine & Offshore, up 14.7%, Industry, up 17.5%, and Certification, up 16.0%. Consumer Products Services further recovered, up 7.3% organically in the first half (including 8.3% in the second quarter) while both Agri Food & Commodities and Buildings & Infrastructure grew mid-single digits organically, both showing sequential improvement in the second quarter.
By geography, growth in the Americas was strong (27% of revenue; up 10.3% organically), led by a double-digit increase in Latin America and high single-digit growth in Canada. Europe (35% of revenue; up 5.1% organically) benefited from high activity levels in Southern and Eastern parts of the continent. Business in Asia-Pacific (28% of revenue; up 8.7% organically) accelerated in the second quarter (up 10.3% organically) led by China, and thanks to sustained double-digit growth essentially for Australia, India and Vietnam. Finally, Africa and the Middle East were amongst the best performing regions (10% of revenue; up 23.5% organically), supported by Buildings & Infrastructure and energy projects in the Middle East.
The scope effect was a positive 0.1%, reflecting bolt-on acquisitions realized in the past few quarters and offset by the impact of a non-core disposal last year.
Currency fluctuations had a negative impact of 5.3% (including a negative impact of 5.0% in Q2), mainly due to the strength of the euro against most currencies.
› Adjusted operating profit up 4.1% to EUR 451.9 million (organic margin up 29 bps)
First half adjusted operating profit increased by 4.1% to EUR 451.9 million. This represents an adjusted operating margin of 15.0% stable compared to the first half of 2023. Organically, the Group’s margin increased by 29 basis points year on year to 15.3% while scope had a slight positive impact of 4bps. Foreign exchange trends were a negative impact of 33bps on the Group’s margin due to the strength of the euro against other currencies.
|
CHANGE IN ADJUSTED OPERATING MARGIN |
|
|
IN PERCENTAGE AND BASIS POINTS |
|
|
H1 2023 adjusted operating margin |
15.0% |
|
Organic change |
+29bps |
|
Organic adjusted operating margin |
15.3% |
|
Scope |
+4bps |
|
Constant currency adjusted operating margin |
15.3% |
|
Currency |
(33)bps |
|
H1 2024 adjusted operating margin |
15.0% |
The organic adjusted operating margin improved by 29 basis points with revenue growth and operating leverage delivering higher margins in Marine & Offshore, Industry, Consumer Products Services and Certification, partly offsetting lower margins in Agri-Food & Commodities and Buildings & Infrastructure.
Other adjustment items slightly increased to EUR 63.4 million versus EUR 61.3 million in the first half of 2023, and comprised:
- EUR 21.5 million in amortization of intangible assets resulting from acquisitions (from EUR 21.1 million in H1 2023).
- EUR 1.3 million in write-offs of non-current assets mainly linked to the commodities-related activities.
- EUR 7.8 million in restructuring costs, relating chiefly to Consumer Products Services and commodities-related activities (compared to EUR 18.6 million in H1 2023).
- EUR 32.8 million in net losses on disposals and acquisitions (net loss of EUR 0.2 million in H1 2023), mainly linked to the ongoing divestment of non-core B&I activities in China.
Operating profit totaled EUR 388.5 million, up 4.2% compared to EUR 372.9 million in the first half of 2023.
› Adjusted EPS of EUR 0.64, up 4.5% year on year and 16.3% at constant currency
Net financial expense amounted to EUR 25.6 million in the first half of 2024, compared to EUR 15.2 million in the same period one year earlier.
The improvement in net finance costs to EUR 19.8 million in H1 2024 (compared to EUR 24.6 million in H1 2023) is attributable to the impact of the redemption of EUR 500 million in September 2023 of the bond program issued in 2016 partially offset by a bond program of the same amount put in place in mid-2024.
In H1 2024, the Group recorded higher unfavorable exchange rate effects compared to the previous year, with a loss of EUR 5.8 million (compared to a gain of EUR 9.4 million in the first half of 2023).
The interest cost on pension plans amounted to a negative EUR 1.5 million in H1 2024, stable compared to H1 2023.
Consolidated income tax expense stood at EUR 115.9 million for H1 2024, compared to EUR 113.2 million for H1 2023.
This represents an effective tax rate (ETR) of 32.0% for the period, versus 31.6% in H1 2023.
The adjusted effective tax rate decreased by 1.7 percentage points compared to H1 2023, to 29.0%. It corresponds to the effective tax rate adjusted for the tax effect of adjustment items. The decrease is mainly due to a reduction in the amount of withholding taxes incurred over the period.
Attributable net profit for the period was EUR 234.3 million, versus EUR 232.5 million in H1 2023.
Earnings per share (EPS) was EUR 0.52, compared to EUR 0.51 in H1 2023.
Adjusted attributable net profit totaled EUR 288.3 million in H1 2024, up 4.3% versus EUR 276.3 million in H1 2023.
Adjusted EPS stood at EUR 0.64, a 4.5% increase versus H1 2023 (EUR 0.61 per share).
› Strong Free Cash Flow at EUR 189.9 million
The half-year 2024 operating cash flow increased by 18.1% to EUR 262.4 million versus EUR 222.1 million in H1 2023. This was fueled by a lower working capital requirement outflow of EUR 168.1 million, compared to a EUR 196.2 million outflow in the previous year, despite strong revenue growth delivered in the second quarter (up 10.4% organically).
The working capital requirement (WCR) stood at EUR 540.6 million as of June 30, 2024, compared to EUR 517.6 million as of June 30, 2023. As a percentage of revenue, WCR slightly increased by c.20 basis points to 9.0%, compared to 8.8% at the end of H1 2023.
Purchases of property, plant and equipment and intangible assets, net of disposals (Net Capex), amounted to EUR 59.9 million in the first half of 2024, down 21.6% compared to the H1 2023 figure of EUR 76.4 million. The Group’s net capex-to-revenue ratio decreased to 2.0% as the growth was mainly fueled by non-laboratory driven activities. It is down 60 basis points from the higher level of H1 23 (2.6%).
Free cash flow (operating cash flow after tax, interest expenses and capex) was EUR 189.9 million, compared to EUR 131.9 million in H1 2023, up 44% year on year. On an organic basis, free cash flow reached EUR 204.1 million.
|
CHANGE IN FREE CASH FLOW |
|
|
IN EUR MILLIONS |
|
|
Free cash flow for the period ending on June 30, 2023 |
131.9 |
|
Organic change |
+72,2 |
|
Organic free cash flow |
204.1 |
|
Scope |
+13.5 |
|
Free cash flow at constant currency |
217.6 |
|
Currency |
(27.7) |
|
Free cash flow for the period ending on June 30, 2024 |
189.9 |
As of June 30, 2024, adjusted net financial debt was EUR 1,112.2 million, i.e. 1.06x trailing
twelve-month EBITDA, compared to 0.92x at December 31, 2023. The increase in adjusted net financial debt of EUR 176 million versus December 31, 2023 (EUR 936.2 million) reflects:
› free cash flow of EUR 189.9 million.
› dividend payments totaling EUR 9.1 million corresponding mainly to dividends paid to non-controlling interests and withholding taxes on intra-group dividends.
› acquisitions (net) and repayment of amounts owed to shareholders, accounting for EUR 76.9 million.
› net share buyback totaling EUR 199.1 million, as part of the Group’s LEAP | 28 strategy
› lease and interest payments (related to the application of IFRS 16), accounting for EUR 60.9 million.
› other items that increased the Group’s debt by EUR 19.0 million.
H1 2024 BUSINESS REVIEW
MARINE & OFFSHORE
|
IN EUR MILLIONS |
H1 2024 |
H1 2023 |
CHANGE |
ORGANIC |
SCOPE |
CURRENCY |
|
Revenue |
251.3 |
228.6 |
+9.9% |
+14.7% |
– |
(4.8)% |
|
Adjusted Operating Profit |
61.6 |
56.5 |
+9.1% |
|
|
|
|
Adjusted Operating Margin |
24.5% |
24.7% |
(20)bps |
+88bps |
– |
(108)bps |
Marine & Offshore was among the strongest performing businesses within the Group’s portfolio in the first half of 2024 with organic growth of 14.7% (including 15.8% in the second quarter), with the following trends:
› A strong double-digit increase in New Construction (41% of divisional revenue), in a buoyant construction market, supported by the conversion of the acceleration of new orders in Q1 and Q2 despite some capacity constraints in shipyards.
› Double-digit gr
Contacts
ANALYST/INVESTOR
Laurent Brunelle
+33 (0)1 55 24 76 09
laurent.brunelle@bureauveritas.com
Colin Verbrugghe
+33 (0)1 55 24 77 80
colin.verbrugghe@bureauveritas.com
Karine Ansart
karine.ansart@bureauveritas.com
MEDIA
Anette Rey
+33 (0)6 69 79 84 88
Martin Bovo
+33 (0) 6 14 46 79 94
