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Investing.com -- Arcadis N.V. (EURONEXT:ARCAD) shares plunged 16.6% on Thursday after the engineering consultancy reported third-quarter results showing improved organic growth but disappointing free cash flow.
The company posted operating EBITA of €108 million, down 1% year-on-year and 3% below analyst consensus of €111 million.
Net revenue for the quarter reached €936 million, reflecting 1.0% organic growth compared to analyst expectations of 1.6%. While the company managed to expand its operating EBITA margin to 11.6% from 11.4% a year earlier, a negative 4.3% foreign exchange impact, primarily from the US dollar, weighed on results.
Free cash flow fell 40% to €80 million, significantly below the €125 million consensus estimate, due to elevated working capital at 14.0% of annualized gross revenues (up from 12.7% a year ago).
The company attributed this to "temporarily elevated Work in Progress position" with large projects awaiting milestone completions and impacts from ERP implementation in North America.
"Arcadis delivered solid results in the third quarter of 2025, supported by continued strong demand in our key markets North America and Europe," said CEO Alan Brookes. "Leading positions in high-growth markets such as Energy, Water, Climate and Technology continued to drive performance."
The company’s backlog remained relatively stable at €3.5 billion, showing 1.6% organic growth year-on-year, though order intake declined 29% to €882 million compared to an exceptionally strong Q3 2024 that included large mobility projects in North America.
By segment, Resilience (37% of revenue) grew 3.8% organically, while Mobility (24%) increased 1.9%. However, Places (36%) declined 3.0% due to delays in large capital expenditure decisions from European industrial clients and softness in property markets in Canada and the UK.
Arcadis maintained its focus on "accelerating profitable growth, enhancing operational efficiency, and driving robust cash generation" but did not provide specific earnings guidance.
The company has set clear billing and cash collection targets to reduce working capital in the coming quarter.
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