Bureau Veritas SA (BVRDF) Q1 2025 Earnings Call Highlights: Strong Revenue Growth and Strategic ...

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Fri, Apr 25, 2025, 5:00 PM 5 min read

Revenue: EUR1.6 billion in Q1 2025, an 8.3% increase year-over-year.
Organic Revenue Growth: 7.3% in Q1 2025.
Acquisitions Contribution: 3% to revenue, net of divestment contributing 1.4%.
Currency Impact: Negative 0.4% for the quarter.
Share Buyback Program: New EUR200 million program to be completed by June 2025.
Industry Division Growth: 14.3% organic growth in Q1 2025.
Marine & Offshore Division Growth: 11.8% organic increase.
Certification Division Growth: 10.9% organic revenue growth.
Agri-Food & Commodities Growth: 6% organic growth.
Building and Infrastructure Growth: 2.5% organic revenue growth.
Consumer Product Division Growth: 3.4% organic growth.
Regional Performance: Middle East and Africa led with 25% organic revenue increase.
Backlog: Marine & Offshore backlog at 27 million gross tonnes, up 16% year-on-year.
Cash Conversion: Expected above 90% for full year 2025.

Release Date: April 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Bureau Veritas SA (BVRDF) reported a robust Q1 2025 with revenue reaching EUR1.6 billion, reflecting an 8.3% increase compared to the same period last year.
Organic revenue growth was strong at 7.3%, demonstrating resilience and effective execution of business plans.
The company announced a new EUR200 million share buyback program, indicating confidence in its business model and current share price level.
Three core businesses, Industry, Marine & Offshore, and Certification, grew double-digit organically, showcasing strong performance in key areas.
The Middle East and Africa region led with a 25% organic revenue increase, driven by strong activity in Energy and Buildings and Infrastructure.

Negative Points

The currency impact was a negative 0.4% for the quarter, slightly affecting overall revenue growth.
Consumer Products, Services, and Buildings and Infrastructure recorded low single-digit organic growth, indicating slower performance in these segments.
The Asia Pacific region experienced a slight contraction in the Building and Infrastructure segment, primarily due to weaker public spending in China.
The technology business recorded a mid-single-digit organic contraction, impacted by reduced new product launches in electronics and wireless.
The company is facing macroeconomic uncertainties and evolving global trade dynamics, which could impact future performance.

Q & A Highlights

Q: Given the growth rate in Q1, can you discuss expectations for Q2 and the rest of the year, especially with tougher comparatives? Also, in Consumer Products, you mentioned a pull forward of demand initially in the quarter, which later unwound. Can you provide more details on this and what customers are saying about tariffs and macro uncertainty? A: Our portfolio is designed to be resilient, and we have a solid backlog linked to long-term projects. The fundamentals underpinning our market growth remain strong. In Consumer Products, the performance was as expected, with robust growth in South Asia and Southeast Asia. The exposure to China is minimal, and we are monitoring the tariff situation closely. We expect to maintain our outlook and deliver on our commitments.

Q: In the Americas, is it fair to assume a contraction organically within Latin America given the U.S. did high single digit? Also, how should we think about China sequentially? A: In Latin America, the contraction is due to halted activities in Brazil and delayed infrastructure projects in Mexico, not related to Argentina. In China, the market remains difficult, particularly in Building and Infrastructure, leading us to focus on emerging markets like the Middle East and Africa, which are growing double digits.

Q: With more companies stepping away from decarbonization targets, are you seeing any change in the mix from your energy-focused customers between Oil & Gas and renewables? A: There is room for both Oil & Gas and renewables. Oil & Gas is affordable and scalable, while renewables are necessary to meet the massive energy demand. Different regions are approaching this differently, but we expect both sectors to continue growing. Our exposure to Oil & Gas is only 14% of group revenue, with two-thirds behaving like OpEx, making it resilient.

Q: Regarding the 25% organic growth in Africa and the Middle East, could you provide more detail on the building blocks of that growth? A: The growth in the Middle East and Africa is driven by new contracts and projects in resources, energy, and infrastructure. It's heavily volume-driven as we gain market share and expand our footprint in these regions.

Q: What is your exposure to international trade and tariffs in the products part of your business, which accounts for 37% of your revenues? A: The Consumer Products segment, which is 13% of our revenue, is most exposed to tariffs. However, we are seeing opportunities as customers shift to new geographies. The rest of the products, like commodities, have long-term contracts and are less impacted by tariffs, with visibility driven by supply and demand.

Q: Can you discuss the framework used to set your guidance and what would lead to an adjustment later in the year? A: We assess our exposures based on current information and customer feedback. Our mix, backlog, and opportunity pipeline are strong, supporting our unchanged outlook. We will reassess once there is more stability in the macro environment.

Q: On the B&I business and the high single-digit growth in the U.S., is that sustainable through the rest of the year given macro concerns? A: The U.S. backlog is strong across multiple subsegments like data centers and infrastructure. The current administration's infrastructure spend and reindustrialization efforts are positive indicators for sustained growth in the U.S. B&I sector.

Q: Regarding the share buyback, why announce it now rather than waiting for more clarity on trade frictions? A: The share buyback is a tool for shareholder returns. We believe it's an opportune time given our business outlook, capital allocation strategy, and current share price levels. It does not jeopardize our strategy execution or M&A ambitions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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