Royal HaskoningDHV: stable 2018 results & significant investments in digital
19-03-2019
Royal HaskoningDHV reports an organic operating income growth of 3.1%, a recurring EBITA of €25.9 million and a stable net result of €12.7 million over 2018. These results were delivered against continued investments in strategic priorities with the focus to strengthen its domain knowledge and data-driven expertise.
Looking back at 2018, I’m excited about the progress we made with regards to our strategy implementation. We have invested in our people and innovations to accelerate our digital ways of working in order to deliver better and faster solutions with and for our clients.
Erik Oostwegel continues: “To bring our strategy to life, we proactively co-create innovations with partners and clients to enhance society. We can do this effectively because our clients see us as their trusted partner and are satisfied with the services we provide them to face challenges such as climate change, urbanisation, resource optimisation and technology disruption. Therefore, we’re particularly pleased with the high client satisfaction score of 8.3 and an increase of our Net Promotor Score to +39. This is a continued strong result following the intelligent work of our colleagues and strong client relationships we have built over the years."
Financial performance
Royal HaskoningDHV CFO Nynke Dalstra: “We are satisfied with our financial results of 2018 which indicate a modest growth in organic operating income of 3.1% (2017: 1.4%) and an operating margin of 4.2% (2017: 4.9%). Despite the significant investments in the future of our company and the corresponding innovation costs and hours, the net result was only slightly lower at €12.7 million (2017: €12.8 million). This is the remaining result after a profit sharing with employees of €8.5 million (2017: €8.5 million).”Restructuring and one-off costs were lower than in 2017 at €3.3 million (2017: €4.7 million). They mainly relate to costs associated with restructuring in South Africa and pension costs in the United Kingdom.
The order book ended at €306 million (2017: €341 million) due to disappointing sales, especially in Industry & Buildings and in South Africa.
Return on depositary receipts which can be held by employees only, was 11.0% (2017: 10.6%).
The free cash flow was €17.4 million (2017: €33.8 million) despite investments and acquisitions. This, together with an equity ratio of 48% (2017: 46%) leaves the business in a healthy financial position.
Financial key figures
| (€ million, unless stated otherwise) | 2018 | 2017 |
|---|---|---|
| Operating income | 614.8 | 608.6 |
| Added value | 477.7 | 479.0 |
| EBITA recurring* | 25.9 | 29.6 |
| Net result |
12.7 | 12.8 |
| Operating margin (recurring) |
4.2% | 4.9% |
| Free cash flow |
17.4 | 33.8 |
| Total workforce (mid-year headcount) | 5,864 | 5,771 |
Ground-breaking projects
To keep its domain knowledge at the highest levels, Royal HaskoningDHV stimulates employees to actively participate in internal and external knowledge networks and supports continuous learning through internal academies and connecting mindpower.This increased the ability to win and realise ground-breaking projects like the world’s longest sea bridge and tunnel combination connecting Hong Kong to Macau. In China, Royal HaskoningDHV entered into a partnership for the delivery of the state-of-the-art Nereda® technology ensuring excellent and sustainable wastewater treatment. In the United Kingdom, Royal HaskoningDHV continued its involvement in the development of offshore wind farms on the Dogger Bank: having been the lead environmental impact assessment and consents advisor, the company is now delivering an equivalent role in the Dogger Bank Wind Farms plan for construction. Each of the three projects will see the installation of up to 200 wind turbines, powering approximately 850,000 homes annually with clean renewable energy.
Other 2018 successes include the design of the artificial Lotus Island in Vietnam, the Milaha shipyard upgrade in Doha, the appointment as engineering advisor for Schiphol airport’s expansion, and the new collaboration to provide asset management services for the Chemelot chemical site in the south of the Netherlands.
Digital savvy
To further support digital ways of working, in 2018 the Digital Academy was launched: a learning community for all employees with a strong focus on BIM, digital engineering, data science and analytics, software development, generative design, programming, interoperability and scrum.A great example is the digital engineering work for the new Feyenoord Stadium. A parametric design approach enables real-time insight into design changes and how that impacts the spectator experience, the stadium’s structure and project costs. Together with the client and the architect, a new stadium with perfect sightlines is being created for the ultimate fan experience.
Acquisitions and investments
During 2018, Royal HaskoningDHV made several strategic acquisitions and investments.
- In May, Royal HaskoningDHV took a minority shareholding in data intelligence scale-up HAL24K and has started using their Dimension platform for advanced data science solution building and deployments. For example, the partnership is now working for a Dutch water authority to explore how data science can provide new insights and improvements in their operations.
- In July, Royal HaskoningDHV acquired data science company Ynformed. Already the combination of Royal HaskoningDHV’s domain knowledge with Ynformed’s data science expertise has proven successful in developing scalable crowd monitoring services for railway stations and airports to accurately predict crowd volumes. Also, the development of HydroTwin, an AI based solution for monitoring and risk prediction in the water system, is progressing well.
- In August, Royal HaskoningDHV acquired the rail unit of Verebus Engineering, thereby completing its portfolio of rail expertise. Following the acquisition Royal HaskoningDHV won the contract to design and engineer the train signalling and power systems for one of the Netherlands’ biggest rail extension projects, in Zwolle by ProRail and NoorderSpoort.
Outlook
Erik Oostwegel: “For our four main markets, we expect growth in the Netherlands and Indonesia, but uncertainty characterises developments in the United Kingdom and South Africa. In the United Kingdom this is due to Brexit and in South Africa it’s because of the upcoming elections after which we expect market conditions will ease and investments will increase.“We have a great team, the right processes in place and sound long-lasting client relationships. Our focus on data and digital will continue in 2019, both internally, with clients and partners, and through strategic acquisitions. We look forward to making the coming year a success and driving forward in our mission to enhance society together.
“As concern mounts over the accelerating impact of climate change and the urgent need for energy transition, our mission is more relevant than ever. Coupled with our multidisciplinary expertise across water, energy, industry and transport, our company is in an excellent position to deliver distinctive new services and solutions to meet these challenges and enhance society.” Erik concludes.
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