Arcadis to divest architecture, China businesses under 2029 strategy

Arcadis to Sell Architecture and China Operations as Part of 2029 Strategy

Arcadis Announces Strategic Divestments and Growth Plans

By Lucie Barbier and Amy-Jo Crowley

Overview of the 2027-2029 Strategy

Sept 29 (Reuters) - Dutch engineering and consulting firm Arcadis said on Tuesday it planned to divest most of its architecture business and its China operations as part of a 2027-2029 strategy.

The strategy lays out Arcadis' plans to accelerate growth, lift profitability and streamline its portfolio, as the company seeks to demonstrate its standalone value after rejecting a takeover approach from Canadian rival WSP Global earlier in September.

CEO’s Perspective on Value Creation

"The events of the last few months have reinforced the value that we have in Arcadis," CEO Heather Polinsky told Reuters. "Today, we're focused on showing how we can unlock that value through a strategy of focus, simplification and performance."

Restructuring and Financial Targets

Job Cuts and Growth Area Hiring

Arcadis plans to cut around 1,000 full-time-equivalent positions through an overhead restructuring in 2027, while continuing to hire in growth areas.

Profit Margin Improvements

It said the divestiture of China and architecture businesses would increase its operating core profit margin, the proportion of operating earnings before interest, taxes, depreciation and amortisation to sales, by around 1 percentage point. It confirmed the 2026 operating EBITDA margin target of 14.3% to 14.6% on Tuesday.

Details of the Divestitures

China Operations Sale

The company is in advanced discussions to sell the business to local management in China, in a deal that would see it retain a minority stake for a period, Polinsky said, while adding Arcadis did not expect significant proceeds from the disposals.

Architecture Business Sale

The architecture business generates around €200 million ($227 million) in revenue but has low profitability, Polinsky said. Arcadis has begun preparing for the sale process and is appointing a bank to advise on the disposals.

Potential for Future Takeover Bids

Polinsky declined to speculate on whether Arcadis could become a takeover target again following WSP's approach.

Long-Term Financial Objectives

Revenue and Margin Targets

Under the 2027-2029 strategy, the company targets yearly organic net revenue growth in a mid-single-digit percentage and a mid- to high-teens operating EBITDA margin.

Dividend Policy

It also aims to pay out 30% to 40% of its net income from operations as dividends between 2027 and 2029.

($1 = €0.8800)

(Reporting by Lucie Barbier in Gdansk and Amy-Jo Crowley in London, editing by Milla Nissi-Prussak)