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Investing.com -- Arcadis (AS:ARDS) on Wednesday posted a 2% rise in first-quarter operating EBITA to €106 million, meeting expectations as stable revenue and backlog growth offset weaker spending in key markets, sending it.
The operating result was in line with the consensus estimate of €105 million, while the company’s operating EBITA margin improved to 10.9%, slightly ahead of the 10.8% expected by analysts.
Organic net revenues were flat for the quarter. Growth of 4% in the Resilience segment was offset by declines of 2.7% in Places and 1.9% in Mobility.
Jefferies analysts attributed the lower results in Places and Mobility to reduced infrastructure spending in the United Kingdom (TADAWUL:4280) and Australia and noted continued volatility in short-term client spending tied to uncertainty in government policy.
Arcadis reported a 12% year-over-year increase in its order backlog to €3.7 billion. On an organic basis, backlog grew 2.8% in the quarter.
The company said it incurred €22 million in non-operating costs, primarily tied to restructuring and right-sizing efforts in the U.K. and Australia.
Free cash flow turned negative, with usage increasing 42% year-over-year to €138 million.
Arcadis cited the timing of software payments as the main reason for the higher cash outflow.
The company did not update its full-year guidance but said it remains on track to meet its strategic financial targets for the 2024–2026 period.
During the Jefferies Pan-European MidCap Conference, management said the start of fiscal 2025 reflected greater hesitancy among clients but emphasized that no material project cancellations had been recorded.
Arcadis expects an acceleration in organic revenue growth during the second half of the year, supported by a strong pipeline and ramping of larger projects.
Jefferies analysts said the recent introduction of U.S. tariffs may have added to broader macroeconomic uncertainty but did not alter Arcadis’ long-term positioning.
Shares of Arcadis have declined 36% from their peak following the company’s third-quarter 2024 results and currently trade at 10.0 times forecast 2025 enterprise value to EBIT, Jefferies said.
That reflects a 44% discount to engineering consulting peers, widening from 12% post-third-quarter 2024.
Jefferies maintains a €65 price target for the stock, based on a discounted cash flow valuation that implies a 14.3 times multiple on 2025 estimated EBITA, or a 20% discount to the sector.