Principal Markets - Environment

ARCADIS has a leading role in environmental services, in delivering projects that protect the earth's resources while meeting our clients' economic objectives. From soil, groundwater and sediment remediation and environmental impact assessments, through to consultancy on corporate energy, product stewardship, health and safety and waste management issues, our services support environmental policies for companies and governments alike.

Clients

In Environment we do a lot of work for the private sector, including the oil and gas, chemical and transportation industries. Many Fortune 500 companies are longstanding clients. We also work for governments; from federal clients (U.S. Department of Defense) to municipal customers.

Socio-economic drivers

Quality of life. As living standards increase, people want a higher quality physical environment. This leads to higher investment levels in the built environment, measures to conserve or upgrade nature and landscape, and sustainability as being inherent to quality.

Urbanization. Population growth and migration to cities cause greater urbanization and a growing number of mega cities. This means investments in residential areas, industrial sites, commercial properties and other facilities, not only in new urban areas but also in deteriorated inner cities, requiring redevelopment and remediation works.

Sustainability. An issue of paramount importance is preserving quality of life for future generations. Sustainability is integrated in everything we do. All our projects are evaluated in terms of their environmental impact with the intent to take mitigating measures in as far as is possible and feasible.

Climate change. This creates unprecedented challenges for delta areas where more than 50% of the world's population lives. The resulting opportunities for our business are many: reduction of greenhouse gasses; lowering the carbon footprint of projects; identifying new water resources; and counteracting the effects of potential flooding through better water management and flood protection.

Energy. The growing population, strong economic expansion and need to reduce emissions cause stronger demand for energy, especially renewable energy. This is a growth driver for all of our business lines.

Water. Scarcity of clean, safe, potable water is becoming an important issue. Water can be considered "the oil of the 21st century". This leads to a rising demand for services related to water supply, treatment and reuse. Globalization of industry. Multinational companies increasingly seek service providers with global capabilities. Many have vendor reduction programs in place to safeguard quality standards across their operations and increase efficiency.

Outsourcing and privatization. Companies are focusing on their core businesses, while outsourcing non-core functions such as facility management or environmental activities. A comparable trend is taking place in the public sector where the focus now is on policy making, while design and engineering are outsourced to the private sector.

Risk participation. Increasingly clients ask or require ARCADIS to take certain project risks. In these cases, our fee is dependent on our performance. ARCADIS has internal procedures to control the related risks.

We actively anticipate these changing client needs by partnering with clients and other parties in the supply chain in order to create more added value for clients. That gives opportunities for bigger projects and larger contracts, requiring a broad and deep knowledge base, adequate risk management and being global but acting local, providing ARCADIS with a competitive advantage.

Present Position and Updated Strategy

ARCADIS is a leading player in environment

The environmental market is largely driven by legacy issues related to soil, groundwater and sediment contamination. ARCADIS is a leading player in that field and the largest global provider of environmental services to the private sector. Our competitive strength is based on our worldwide presence and strong local resources that enable us to serve multinational clients internationally; our advanced, cost-effective remediation technology; our GRiP® program for guaranteed solutions; and our strong health & safety program and culture.

SWOT Analysis

Ambition and targets

Our ambition is to be the world's leading environmental services provider, based on a strong client focused approach, delivering high value added services, to key multinational, national and local clients. Our organic growth target is 7 - 9% per year with margins of 12 - 13%.

Environment strategy 2011 - 2013

We plan to achieve our ambitions by:

• Growth in current geographies. We will drive growth in Europe and Brazil, leveraging the relationship with multinational clients and using our advanced remediation skills, while further expanding our position in the United States. Besides multinational clients, the focus will be on key national clients and on large projects. Special attention will be given to the U.S. Department of Defense as a major client, also outside the United States.
• Building select new geographies. Priorities are Canada, Asia and Australia. These are promising markets, also to deliver services to our multinational clients.
• Diversifying capabilities. Although remediation is a large and attractive market, we want to continue to diversify by increasing work in D4 (Deactivation, Decommissioning, Decontamination and Demolition), Environmental Permitting and Planning and Strategic Environmental Consultancy. We will also enhance our capabilities in sustainability and renewable energy and use our strong oil & gas client base to branch out into upstream and offshore work.

Recent results

Outlook

The environmental market is expected to recover further. In the U.S. and Brazil this is clearly visible and it is expected that also in Europe economic recovery will push demand from companies. The crisis has caused companies to focus on core activities while looking at vendor reduction and outsourcing of environmental services. With our advanced technology and international positions we can benefit from this and increase market share. Contracting of new GRiP® projects was delayed, but the pipeline is well filled. Several framework contracts with the U.S. Army are yielding work, both in the U.S. and in Europe. Demand for consultancy services for energy savings and carbon footprint reduction is increasing.