Arcadis stock rises following strong 4Q24 results

Investing.com -- Shares of Arcadis (AS:ARDS) (EURONEXT:ARCAD) climbed 2% as the company reported fourth-quarter results that surpassed consensus expectations, particularly in profitability.

The operating EBITA for the fourth quarter increased by 12% to €120 million, outperforming the consensus estimate of €117 million. This rise was attributed to organic net revenue growth of 2.8%, with significant contributions from the Resilience and Places sectors, and modest growth in Mobility. The company’s EBITA margin also saw a notable increase of 120 basis points, reaching 12.6%.

Arcadis’ overall performance for the fiscal year was equally robust. The company’s full-year operating EBITA rose by 14% to €447 million, slightly ahead of the consensus forecast of €443 million. This increase was driven by a 4.5% growth in organic net revenue, with notable developments in Energy Transition, Climate Adaptation, and Intelligent Highway Solutions.

Net profit surged by an impressive 52% to €243 million, and the adjusted EPS went up by 19% to €3.00, leading to an 18% increase in the proposed dividend to €1.00 per share. Furthermore, the free cash flow improved by 20% to €228 million, allowing the company to reduce its net debt by 15% to €739 million.

The company’s order intake for the fiscal year increased by 14% to €4,442 million, resulting in a 16% rise in the order backlog to €3,673 million. This was bolstered by a 50% surge in order intake to €1,250 million in the third quarter. Large multi-year project wins, such as the Zuidasdok in Amsterdam, have provided Arcadis with long-term visibility, although their full revenue contribution is anticipated to commence from the second half of 2025.

Arcadis has confirmed that it is on track to meet its strategic goals outlined in ’Accelerating a Planet Positive Future’, targeting mid to high single-digit organic net revenue growth and an EBITA margin of over 12.5% by fiscal year 2026. Analysts are expecting that the company’s operating EBITA will grow by 13% to €504 million in FY25, supported by an estimated 6.7% increase in organic net revenue and an EBITA margin improvement of 50 basis points to 12.0%.

A statement from Jefferies commended the company’s performance: "Arcadis’ top-line growth is in line with peers, and the profitability gap is rapidly closing, while the valuation discount has recently widened to 26%, compared to 12% post 3Q24 results."

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