Arcadis (ARCAD) investor relations material

Strategic reset, transformation, and portfolio focus

• Announced a strategic reset to focus on core strengths, simplify operations, and drive performance, shifting to a client-centric, sector-led structure enabled by AI and digital innovation.

• Divesting non-core businesses, including most of the architecture business and China operations, representing about 10% of net revenues and 13% of workforce, to accelerate value creation and improve operating EBITDA margin by ~100 basis points.

• Portfolio segmented into core (transportation, energy, water), accelerate (industrial manufacturing, technology), and optimize (real estate, development) industries, with targeted growth and margin strategies for each.

• Overhead reduction of ~1,000 FTEs planned in 2027, with a total of over 3,000 FTEs impacted since the transformation began, while continuing to hire in growth areas.

• Ongoing portfolio discipline with regular reviews and decisive action on underperforming sectors.

Financial guidance, targets, and capital allocation

• 2027–2029 targets: mid-single-digit organic net revenue growth, mid- to high-teens operating EBITDA margin, 30–40% dividend payout ratio, and net debt/operating EBITDA of 1.5–2.5x.

• Margin expansion to be driven by portfolio optimization, operating leverage, improved billability, cost reduction, and value-based pricing.

• Capital allocation priorities: invest in business and talent, progressive dividend, value-accretive bolt-on acquisitions in core and accelerate sectors, and potential share buybacks from excess cash.

• Model remains capital-light and highly cash generative, with ~95% free cash flow conversion from net income, supporting organic growth, dividends, and M&A.

• Ambition to more than double EBITDA over time through sustainable growth, margin expansion, and disciplined capital allocation.

Organizational and operational transformation

• New operating model aligns profit with client accounts, integrates sales and delivery, and replaces the Global Business Area structure.

• Enhanced performance culture with sharper accountability, leadership renewal, reduced management layers, and new incentives.

• Global Excellence Centers fully integrated, supporting scalability, standardization, and talent deployment.

• Over 200 leaders appointed in 2026 to create a simpler, flatter, and more agile organization.

• Non-financial targets embedded in performance scorecards, covering people, community, environmental impact, and safety.