Principal Markets - Water

Our water practice focuses on the supply of clean drinking water, the treatment of waste water and water management related services, including the management of rivers and coastal zones, urban and rural water challenges and issues related to climate change and rising sea levels.

Clients

In Water, most of our work is for governments: municipalities, cities, provinces, states, ministries, water boards, the U.S. Army Corps of Engineers etc. We also work for utilities, project developers, contractors and other private sector firms, including industrial clients.

Socio-economic drivers and changing client needs driving growth

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.

Supply chain integration. Clients ask for alternative delivery methods to achieve better integration in the entire supply chain. This includes Design/Build and Design, Build, Finance and Operate (DBFO) approaches, whereby one party or a consortium takes responsibility for developing, designing and building and, in the case of DBFO, also financing and operating a project. ARCADIS' focus in these projects is on delivering its specialized services to create competitive solutions based on thorough knowledge of local conditions.

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.

Present position and strategy

ARCADIS is a leading player in the fast growing global water market

By mid 2009 we completed the merger with U.S.-based Malcolm Pirnie, a leading engineering consultancy in the water market, also active in environment, with 1,700 people and revenues of $ 392 million. This major step fits our strategy: it substantially enhances our position in the U.S. infrastructure market and it adds high level capabilities in the water market that we can leverage globally. In addition, with 85% of its clients coming from the public sector, it gives us a more balanced client portfolio in the United States. The merger is expected to generate significant business and operational synergies. To capitalize on the expected strong growth in the global water market, water has become a separate business line as of 2010. By combining Malcolm Pirnie's world-class expertise in water quality, treatment and strategic planning with ARCADIS' experience and reputation in water management and coastal engineering, we achieve a major position in the global water market with annual revenues representing around 18% of our combined revenues.

ARCADIS is now a top ten player in the fast growing global water market. We intend to expand that position through exporting the know-how of Malcolm Pirnie to other markets and apply our extensive water management capabilities to combat the effects of climate change around the world.

Strategic ambitions in the global water market are prepared for completion in July 2010, at which time we will also set our growth goals and margin targets for the business line water.