4 sep 2018

Costs of digital transformation impacted short-term bottom-line, confidence in long-term strategy

Royal HaskoningDHV reports slightly disappointing results over the first six months of 2018. The focus on digital transformation of both service delivery and engineering processes has impacted results and organic growth. The order book remained healthy and grew 3% compared to a very strong first half year in 2017. Overall, the company is well positioned to deliver its long-term strategic ambitions and continues to invest in innovations and digital transformation.

Erik Oostwegel, CEO: "We are well on our way to transform our organisation in line with the current and future digital demands and needs of our clients. Going forward it is clear that our existing business should benefit more from our focus on innovation and this issue has been addressed. I’m confident that our strategic direction and the programs we now have in place, will fully support our long-term ambition."

Nynke Dalstra, CFO: "In the first half of 2018 we continued to invest significantly in digital transformation and innovation. For example, we have trained 980 employees in BIM, Python, Revit and more. We also signed partnerships to firm up our digital skills and portfolio that add value to our clients and employees which is also reflected in remaining high client satisfaction and job satisfaction scores.”

New digital services have been developed in partnership with clients (e.g. BlueLabel, Fastlane). A consistent approach to innovation has been launched and the company is building new strategic partnerships. In May a minority shareholding was taken in data intelligence lab HAL24K and in July data science company Ynformed was acquired. The Ynformed team consists of experts in artificial intelligence, machine learning and data algorithms. Ynformed will continue to operate under its own name and from its office in Utrecht.In August Royal HaskoningDHV acquired the rail unit (approx. 40 staff) of Verebus Engineering (part of the TÜV Nord Group) to complete the portfolio of rail expertise and strengthen the capabilities to deliver major, integrated projects in the railway market.

Financial performance

The continued investment in the future of the company came with corresponding innovation costs and hours. The results were also negatively impacted by bad debt provisions for late payments and exchange rate differences. EBITA recurring performance was down to €9.5 million. The net half year result of €4.9 million represents a decrease compared to 2017. The order book is healthy and compared to a very strong first half of 2017 it grew 3%. Organically, operating income increased with 0.9% compared to the first half year of 2017. Free cash flow was negative due to seasonal influences and comparable to last year. This, together with an equity ratio of 51.8%, leaves the business in a healthy financial position.

Financial H1 key figures

(€ million, unless stated otherwise) 20182017
Operating income302306
Added value238244
EBITA recurring*9.512.3
Net result4.96.7
Operating margin (recurring) 3.2%4.0%
Free cash flow-26-24
 Total workforce (mid-year headcount)5,823  5,864

* EBITA recurring excludes non-operational items which were €0.3 million negative in H1 2018 (H1 2017: €0.3 million negative).

Jan-Willem Jongbloed

Regional Manager Latin America

Lima, Peru

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