Bureau Veritas reports H1 results

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 Aug 2008

Bureau Veritas, the world’s second-largest group in conformity assessment and certification services in the fields of quality, health and safety, environment and social responsibility, has announced high growth in H1 2008 earnings: Frank Piedelièvre, President and Chief Executive Officer at Bureau Veritas stated: “Bureau Veritas had a more than satisfactory performance over the first half of 2008. In a more difficult economic environment, we posted organic growth of 13%, thanks to a balanced and diversified portfolio of activities, present throughout the world. Adjusted operating profit rose 28% over the period, driven by the high revenue growth (+24%) and an improvement in margins in the majority of our operating
businesses.
We also made significant acquisitions and in less than 12 months have created a global platform for Mining & Minerals services representing €120 million in annual revenue and offering considerable development potential for the group.
In view of these performances, we are set to exceed our initial growth estimates for revenue and earnings in 2008.”
H1 2008 revenue rose 23.7% to €1,198.9 million, representing same-currency growth of 29.0% and breaking down as follows:
- Organic growth of 12.9%, with growth of more than 20% in the Marine, Industry and Consumer Products businesses;
- A 16.1% contribution from acquisitions, primarily with the consolidation of ECA in Spain and CCI and Amdel in Australia;
- A negative impact from exchange rates of 5.3%, due to a stronger euro relative to the US dollar, the Hong Kong dollar and sterling over the period.
In H1 2008, 12 companies were acquired, representing annual revenue of almost €160 million. The group notably bolstered its positions in Latin America in laboratory testing of minerals and other raw materials, industrial and agri-food products, via the acquisition of Chilean leader Cesmec (2007 revenue of €21.5 million) and the Brazilian no. 2 Anasol (2007 revenue of €10 million).
In May 2008, Bureau Veritas also acquired Amdel, the Australian leader in laboratory testing of minerals (geochemical, mineralogical and metallurgical testing, with annual revenue estimated at €113 million). This acquisition opens up considerable outlets in the mining industry, with the potential rollout of Amdel’s testing businesses in the Bureau Veritas network, especially in Africa and Latin America as well as the possibility of developing the entire range of HQSE inspection and certification services to major clients in the mining industry.
3) Adjusted operating profit: €180.3 million, +28.1%
H1 2008 adjusted operating profit rose 28.1% to €180.3 million vs. €140.7 million in the year-earlier period. The €39.6 million increase stemmed from an improvement in adjusted operating profit in the majority of operating businesses.
H1 2008 adjusted operating margin widened by 50 basis points to 15.0% vs. 14.5% in H1 2007.
Excluding the consolidation of recently-acquired companies, which have lower margins than the group average, adjusted operating margin would be 15.5%.
The contribution from the Marine business to adjusted operating profit rose 18.7% to €43.2 million on the back of better amortisation of fixed costs and the increased weight of China, where the business generates higher margins.
The contribution from the Industry business to adjusted operating profit leapt 75.0% to €24.5 million in H1 2008, driven in particular by improved earnings in Spain where the integration of ECA helped the group to reach critical size and unlock cost synergies. In Australia, the consolidation of Amdel since May 1 also helped boost margins.
The 134.7% surge in adjusted operating profit in the In-Service Inspection & Verification business to €17.6 million stemmed from the improvement in adjusted operating margin in the UK, thanks to the programme to re-engineer operating processes put in place over the past 12 months, as well as in Spain, thanks to the successful merger of ECA and Bureau Veritas’ inspection networks. In Italy, startup
losses in the IVS business fell substantially from 0.6 million in H1 2007 to 0.2 million in H1 2008.
Adjusted operating profit in the Health, Safety & Environment business fell by €0.3 million to €5.9 million due to difficulties encountered by three units in the division, which generated operating losses over the period (training in France, occupational health services in Spain and the HSE business in the UK). These three units have been the object of specific restructuring and performance improvement plans, which have been implemented by local management and should pay off in the second half of the
year.
Adjusted operating profit in the Construction business rose by 28.6% to €26.1 million in H1 2008 on the back of overall growth in the business and a slight improvement in operating margin despite the consolidation of ECA’s infrastructure inspection business, where the operating margin stood at 6%.
The contribution from the Certification business rose by 16.8% to €23.6 million, driven by growth in revenue. Adjusted operating margin widened by 80 basis points to 17.9% on June 30, 2008 despite the integration of AQSR in the US, which has lower profitability than the business average.
Adjusted operating profit in the Consumer Products business rose by 22.8% to €29.1 million while operating margin came in at 21.6% vs. 19.5% in H1 2007 driven by improved operating efficiencies in the European laboratory platform (Germany and France) and a slight improvement in profitability in the electrical and electronic product testing business in Taiwan and China.
The contribution from the Government Services & International Trade division fell by €2.1 million to €10.3 million in H1 2008 due to the narrowing in operating margin in the Government Services business to 13.5% from 18.6% in H1 2007 caused by the halt to the contract in Ecuador and start-up costs for the two new contracts in Mali and Guinea.
Adjusted attributable net profit: €112.5 million, + 24.4%
After taking account of other income and expense relative to acquisitions (€8.1 million), operating profit totalled €172.2 million, up 31.7% relative to H1 2007.
The €10.5 million increase in net financial expenses from €14.2 million in H1 2007 to €24.7 million in H1 2008 stemmed from the rise in financial debt. Interest charge totalled €23.4 million in H1 2008 (vs €12.9m in H1 2007) whereas other net financial costs were stable at €1.3 million.
Tax expenses on consolidated earnings stood at €37.9 million on June 30, 2008 vs. €31.4 million on June 30, 2007. The decline in the effective tax rate from 26.9% on June 30, 2007 to 25.6% on June 30, 2008 stemmed primarily from earnings growth in countries with lower tax rates as well as the benefits of moves to streamline the group’s legal structures.
Attributable net profit rose 28.2% to €106.5 million. Earnings per share totalled €0.99 vs. €0.80 in the year-earlier period.
Attributable net profit adjusted for other income and expense relative to acquisitions and other items considered as non-recurring net of tax rose 24.4% relative to H1 2007 to total €112.5 million. Adjusted earnings per share stood at €1.05 in H1 2008 compared with €0.88 in H1 2007.

Source: Bureau Veritas