Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome, and thank you for joining the Arcadis conference call and live webcast to present and discuss the second quarter and first half 2026 results. All participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a question and answer session. Anyone who wishes to ask a question may press star, followed by one on their telephone anytime during the call. At this time, I would like to turn the conference over to Ms. Christine Disch, Investor Relations Director. Ms. Disch, you may now proceed.
Thank you, Geli. Good day, everyone, and welcome to our half year and second quarter 2026 results conference call. My name is Christine Disch, and I'm the Investor Relations Director here at Arcadis. With me on this call are CEO Heather Polinsky and our CFO Simon Crowe. We would like to start with a presentation, and as usual, this will be followed by Q&A. We would like to draw your attention to the fact that in today's session, management may reiterate forward-looking statements which were made in the press release. Please note that the risks to these statements are described on the press release itself and on the company's websites. Let's start. Please, over to you, Heather.
Thank you, Christine. Hello, everyone. Welcome to our half year and second quarter 2026 results. You will have seen our results, medium-term guidance, and rejection of the WSP proposal this morning. I will focus on our half year results and second quarter results in this presentation, as well as our medium-term guidance. We are happy to take questions on those. As it relates to the rejection, we have elaborated on our board's reasoning in our press release. There is nothing more to say. Turning to the momentum we are creating through our results. We have delivered strong quarter results. The actions we have taken to improve performance, together with our strategic investments, are increasingly reflected in our results. We are seeing growth accelerate, order intake strengthen, and margin improvement continue. Given this progress and the momentum across the business, we have upgraded our 2026 growth outlook.
We are also pleased to provide our midterm guidance and introduce our 2027-2029 strategy, setting out the next phase of value creation and growth for Arcadis. I'll take you through this shortly. First, let me turn to the Q2 results. We are executing our strategic priorities at pace and seeing tangible results across the business. Net order intake increased 13.5% year-on-year, reflecting our renewed sales focus, capitalizing on strong client demand and accelerating growth momentum compared to Q1. Margin improved year-on-year, driven by disciplined performance actions and a shift in business mix, while we continue to invest in the capabilities needed to deliver sustainable, profitable growth. Our strategy is gaining traction.
We are winning where clients need us most and delivering with greater speed, consistency, and impact, enabling us to create better outcomes and greater values for our clients, and as a result, our shareholders. Our first half results have been supported by sustained momentum that we built throughout Q2. Margin performance slightly improved to 11.2%, reflecting the benefit of our operational focus while we continue to invest in growth and strategic priorities. Order intake is up more than 10%, resulting in record high backlog. We're proud to show green areas across the board. Our backlog also gives us confidence in our future trajectory. Our strong employee engagement and talent metrics further reinforce our confidence in the ability to execute and deliver on our strategy. At Arcadis, our success comes through the knowledge, innovative spirit, and passion of our people.
It is critical we bring our people with us. We are proud to recognize that we score in the top 10% of professional services firms on employee satisfaction. As I said at the full year and Q1, we've only just begun. We are fully committed to unlocking further value and driving improved performance in the periods ahead. Now let's take a closer look at our business areas. Resilience continues to be a strong star performer with sustained momentum in H1. There was notable strength in water in the U.S., where the business grew 15% year-on-year in the first half, with record-breaking backlog. While we are also amping up our AMP8 programs in the U.K. Our German business delivered exceptional performance, double-digit year-on-year growth driven by large multi-year energy grid, biogas pipelines, and substation projects with TenneT, Amprion, and Gasunie.
In environmental restoration, order intake is improving across our geographies with key wins with large energy, mining, and chemical companies. Now turning to Places. There was some momentum improvement in the quarter demonstrating progress against our strategic priorities. Data centers and U.S. pharma continue to perform strongly. We are reversing the decline in Places with a strong book-to-bill. We continue to expand our leading data center position in Europe with new hyperscaler wins. As have we shared over the last six months, we are reshaping our property and investments business towards higher growth opportunities. This enables us to strengthen our portfolio and redeploy architectural resources to areas of sustained client demand, including transit, mission-critical facilities, and workplace solutions. I'll return to how these actions support our longer-term growth strategy later in the presentation.
Mobility delivered sustained performance in the first half, supported by continued strength in rail and highways across Canada, the U.S., Germany, and the Netherlands. In the U.K., we are seeing encouraging progress with improved order intake, including a EUR 90 million commission for design and program management services for the new HS2 Washwood Heath Depot, helping us to offset the wind down of other large projects. Major infrastructure programs remain critical to our strategy. We continue to leverage our global expertise to secure important new wins. A clear example is our appointment as the lead designer for Roberts Bank Terminal 2 in Vancouver. The win demonstrates the strength of our global expertise, bringing together teams from Canada and the Netherlands, and building on decades of experience delivering complex port infrastructure around the world.
We are encouraged by the strength of our pipeline in Germany and North America, which, together with our backlog, supports our confidence in stronger growth momentum in the second half. As you've heard today, we are seeing the benefits of our management actions. Most importantly, we are seeing the impact in our order intake. Clients are increasingly choosing Arcadis for critical programs where our sector expertise, integrated capabilities, and innovation make a difference. Reflecting this progress and continued momentum, we are upgrading our 2026 growth outlook to low double digit, while reaffirming our margin outlook of 11.7%-12%. Over to Simon for more details about the second quarter.
Thank you, Heather. Good morning and afternoon to you all. As you have just heard, we've achieved a strong first half with a step up in growth margin, good cash collection, and a very strong order intake. I'm pleased with the progress we're making this year. When we last spoke, we told you that we were focused on building a strong performance culture, growing the sales capability and growing the top line. That started to come through with the growth acceleration. It's early days, but the momentum is there and the backlog is growing. We continue to invest in growth through targeted recruitment and increased business development. It's about putting the client and our talented people at the center of everything we do. We are also continuing to cut non-billable cost, tightly control what we spend, and drive the high-performing teams to expand our margin.
We have a laser focus on cash collection. We've learned from the past. We are making growth, margin expansion, and cash collection the rallying call for all Arcadians as we continue to deliver great work for great clients in a strong market. As you will hear from Heather later, we've been really busy over the last few months resetting our strategy. I'm very excited that she's going to share some of the details today. This is key to right-sizing the cost base that is well underway. We're making good progress in cutting out unnecessary expenditure. Everything that I've been talking to you about since my first earnings call at the back end of last year is starting to show signs of positive progress.
We still have a long way to go. We've recruited some great people, reorganized ourselves to differentiate Arcadis, focused on our growth sectors and services, and simplified the way we work to ensure we get the margin accretion. Our teams are responding really well. There is a palpable buzz in the air. We have upgraded our 2026 growth guidance while maintaining our margin guidance as we continue to invest for growth. I'll now expand on selected key highlights of our Q2 2026 and half one 2026 performance. Order intake was strong for the quarter and has developed positively over the half year, with broad-based momentum across all business areas, supporting a 1.1x book-to-bill. Contributions from Resilience in Germany and Brazil, Mobility in the U.K. and Germany, and data centers in Places has helped us grow.
The sales pipeline is healthy and continues to grow and is driven both by larger pursuits and project wins. We're pivoting towards higher growth and higher value areas where we can differentiate and have a strong track record. Backlog represents a significant opportunity, and we're investing in our people, sales capacity, and incentive programs needed to deliver it. Turning now to Resilience. We're very strong in Resilience, as evidenced by our Q2 performance, which was led by the U.S., Germany, and Netherlands. We love this business and continue to invest and encourage our teams to excel in every way. We're increasingly focused on this market and concentrating our resources across key growth markets where Arcadis has a strong track record, can deliver differentiated value, and is a trusted advisor. Our clients are responding well.
Margin expansion reflects our progress in delivering our strategy with 90 basis points expansion year-on-year. Water remains particularly strong, driven by our leading position in the U.S., and with AMP8 in the U.K. finally ramping up as planned, delivering double-digit growth. Strong contributions were also seen from the energy transition in Germany and environmental restoration in LATAM. Resilience is a business that is a key part of our strategy and is driving growth, margin expansion, and good cash collection. Turning now to Places. Places decline and net revenue is finally decelerating. The business is turning around. We've replaced the leadership and pivoted towards growth areas such as pharma and data centers. This is starting to slow the decline and ensure that we return to growth as soon as possible.
Property and investment work continues to be a drag on Places growth and margin performance. We're working hard to get back to growth and profitability by working on the attractive projects with the repositioning and rightsizing starting to kick in. A further 200 people left the business in Q2. Strong performers such as data centers are further stepping up growth. Turning now to Mobility. This delivered some growth while we were ramping up some major projects and working to convert our pipeline. Margin step-up was driven by pricing discipline, good margin on large infrastructure programs, and GEC utilization, while partly being offset by the pursuit costs of major infrastructure opportunities in the U.S. Order intake was strong, and our confidence in H2 is supported by pipeline and backlog.
Some of the projects that will continue to deliver and step up in revenue H2 are Washwood Heath, Fraser River Tunnel, Torrens to Darlington, and the Hudson Tunnel. Turning now to cash flow. Our half-year cash flow was in line with seasonality, and we remain sharply focused on cash generation. Our working capital percentage as a percentage of annualized growth revenue came in at 12.2%, well below last year's 13.4%. We are confident on our trajectory as we move into the second half of the year. On capital allocation, our framework remains consistent with previous cycles, focused on driving growth and investing in our key markets and delivering returns to our shareholders. First, we confirm our commitment to a dividend payout ratio of 30%-40% of net income, complemented by additional shareholder returns where appropriate.
Second, we will continue to strengthen our balance sheet, keeping our leverage within our target range of 1.5x- 2.5x and retaining our investment-grade credit rating. We are investing in our business and will continue to pursue value-accretive M&A in line with our strategic priorities while keeping CapEx spend light versus previous years. That includes our recent acquisition of SATEL Iberia, which will strengthen our power infrastructure capabilities in one of Europe's fastest-growing markets. It also includes our investment in Nomic, an AI tool built specifically for engineering document workflows. Nomic will help us deliver better outcomes for our clients while further driving up our productivity. We'll continue to monitor and assess the opportunity for share buybacks. Turning now to our margin levers and rightsizing measures that are supporting our objective to have an increasingly simple, client-focused operating model.
Rightsizing of people of underperforming areas continues while investing in our key growth areas. Our cost-out program is progressing well, with corporate overhead reductions and operating expense reductions expected to contribute to 40 basis points - 50 basis points margin uplift. Improved project margins through the centralization, automation, and standardization in the GEC with the use of AI, as well as strategic investments, have also supported profitability. Taken together, these actions continue to give us confidence in our ability to deliver the margin progression targeted to 2026. In summary, I'm pleased with the work we started at the end of last year. This is now starting to show in our results. We're just getting going. I'm excited about the opportunities ahead for us to get closer to our clients, grow in our high-performing markets, and move away from some of the less attractive areas.
The strategy and work we have done makes it easier for us to do that. I'm confident that the results will continue to come through. I'll now hand back to Heather to take you through the strategy update.
Thanks, Simon. Since the start of the year, I have been clear about where we're heading, focusing on growth markets, simplifying our business around our clients, and building a high-performance culture that delivers stronger returns. We're making good progress. Our foundation is stronger. Momentum is building. There is no reason to wait. Let me take you through our strategy, the changes we're making, and what they mean for the future growth and performance. We operate in a large, changing market underpinned by powerful trends. We are tailoring our strategy to the trends we are seeing. From rapid investment in data centers and energy transition, to urgent needs to modernize aging inadequate infrastructure, demand for our expertise continues to grow. Clients are increasingly looking for trusted partners who can help them manage this complexity across the entire asset lifecycle, from planning and design through delivery, operation, and renewal.
This is where Arcadis is uniquely positioned. In the last six months alone, my executive team and I have met with more than 80 clients. Their message has been clear. They value Arcadis for our technical expertise, sector knowledge, and ability to solve complex challenges. Increasingly, they are asking us to do more across more assets, programs, and geographies. We see that as a strong endorsement of our strategy and a meaningful opportunity for future growth. Let me explain more. Our strategy for 2027 to 2029 is built on three simple principles to drive profitable growth and lasting results. We are focusing on our strengths, reshaping our portfolio, and investing in high-growth industries and sectors where we are best positioned to deliver for our clients. We are simplifying our model, including reducing management layers, overhead cost reduction through automation and back office AI efficiencies.
We are aligning our model to combine data, talent, and the right delivery mechanisms to streamline how we work. We are driving forward a performance culture, increasing commerciality, and empowering our talent to own and deliver world-class outcomes. AI and digital underpin each of these pillars. Our investments are already helping us deliver greater client value, unlock the power of our local know-how, and scale expertise across our global network to improve productivity. This is not just a future opportunity, it is something we are delivering today. A great example is Nomic that Simon mentioned earlier. We are not just talking about AI. For the last six months, we have been transforming knowledge gained through hundreds of projects into scalable, data-driven insights on lump sum projects for our clients.
We are confident that disciplined execution against these three strategic pillars, supported by AI and digital, will deliver profitable growth and lasting value for all of our clients, people, and investors. We are bringing sharper discipline to our portfolio. As we assessed our strengths, we have characterized our target industries into three distinct strategic buckets. One is core, and these are large, structurally growing, low cyclicality markets where we already hold a leading position. Here, we will drive organic growth, implement select bolt-on M&A, and expand our end-to-end services. Two, we will accelerate. These are fast-growing sectors where we have a strong foothold. Here, we will invest heavily in our people and brand, grow key global clients, and increase our wallet share. The third bucket is optimize. These represent more cyclical businesses, where we will participate selectively and only where we can do that profitably.
Here, we will apply strict pricing hurdles, maintain margin discipline, and divert investment to higher yield areas. Across all of our industries, our differentiation in environmental services is well recognized by our clients. Scaling our environmental capabilities to meet client demand is where we will see and will remain a top priority for us. To simplify how we work, we are stepping away from our GBA model and organizing our business and focusing our people around end markets where our clients are to better align our organization with our clients' needs. These sectors will be structured within four industries: transportation, power and water, industrial manufacturing and tech, and real estate and development. Transportation and power and water represent our largest industries, where we have leading positions, and they are core strategic focuses for us.
Our accelerate efforts are on high-value sectors like digital infrastructure, data centers and semiconductor facilities, life sciences and pharmaceuticals, and general manufacturing. This is where we'll look to scale our position. Real estate and development fits into our optimize category, where we will follow a disciplined and selective pursuit of projects to ensure they meet our strict margin criteria. Across our four primary industries, our service offering will be centered around our clients. We can provide a fully integrated offering. By managing the entire life cycle of an asset, we eliminate friction for our clients, drive higher margin advisory work, and secure long-term revenue streams. Our ability to offer end-to-end services as one integrated solution is what sets us apart. At the same time, we are being selective in where we offer these end-to-end solutions, focusing on the sectors where we're best positioned to deliver for our clients.
Turning to our people and driving a performance culture. We are embedding a more commercial, performance-driven mindset across our people that is client-centric and entrepreneurial, while also driving efficiencies. As you heard in our previous results, this is well underway. We have already conducted targeted leadership changes, strengthened our commercial discipline, and aligned our sales incentive with our priority clients, and this will continue. We are investing in our talent, sharpening our incentive structures around growth, margin, and value, and resetting our talent strategy to attract and develop the next generation of Arcadians. Why do our clients choose Arcadis? First, because experience matters. We bring a long heritage and deep expertise in some of the world's most complex sectors. When clients are making major investments, they want a partner who has done it before and can get it right.
Second, because we are number one globally in environmental services, it is not an add-on for us. Simply, environmental expertise is built into the way we work. Third, because the world is becoming more complex, not less, clients need partners who can bring everything together and turn complexity into progress. That's where Arcadis is at its strongest. Finally, because we support clients across the entire asset life cycle, from the earliest planning decisions to renewal and everything in between, we help clients maximize value at every stage rather than just solving for one moment in time. Crucially, all of this shows up in the numbers. 95% of our revenue comes from repeat clients. Very simply, our clients like us, and they keep choosing Arcadis. Let me hand it over to Simon to discuss our targets for 2027 to 2029.
Thanks, Heather. The combination of attractive market opportunities, the strength of our client relationships, and the differentiated capabilities gives us confidence in the next phase of our strategy. For 2027 to 2029, we're targeting mid-single-digit organic net revenue growth while also expanding profitability to a mid to high teens operating EBITDA margin by 2029. To support that next stage of our evolution, we will also transitioning to operating EBITDA as our primary guidance metric from the 1st of January 2027. Our mid-single-digit 2027 to 2029 organic growth outlook is underpinned by strategic prioritization to reshape our revenue mix around high growth end markets. As Heather said, we're dropping the GBAs from the 1st of January 2027 and moving to four industries: power and water, transportation, industrial manufacturing and tech, and real estate and development. This is how we will manage and report our financials going forward.
Our focus will result in us concentrating 85% of our revenues in the industries we've identified as core and accelerate by 2029, compared to 74% today. We're already seeing our targeted level of growth in our core and accelerate sectors. More focus will allow us to deliver this more consistently. As mentioned, we are reiterating our 2026 operating EBITA margin guidance of 11.7%-12%. This implies an operating EBITDA margin of 14.3%-14.6%. By 2029, we expect to reach mid high teens operating EBITDA. This margin is underpinned by the three pillars of our strategy: focusing on our strengths, including reshaping the portfolio and driving operating leverage from growth as we can grow our top line faster than our overhead structure.
Simplifying our model around clients, including reducing management layers, overhead cost reduction through automation and back office AI efficiencies, continuing to embed GECs into how we work to overall reduce the cost of delivery and raising the utilization rates. Thirdly, driving performance culture by aligning performance with incentives, as well as investing in training, as well as stimulating entrepreneurship and commercial acumen to drive growth and profits. I'll now hand back to Heather just to wrap up.
Thanks, Simon. In conclusion, our H1 performance showcases the actions we are taking. We are focusing on our strengths, simplifying around our clients, and driving a performance culture that is going to support our growth trajectory, and we are moving in the right direction. This gives us the confidence to upgrade our guidance for this year, as well as present our medium-term financial objectives. We are staying focused on our strategy, focusing on what we can control, and making strong progress in delivering on our top priorities. With that, I'll open it up for Q&A.
Ladies and gentlemen, at this time, we will begin the question- and- answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. In the interest of time, please limit yourself to two questions. One moment for the first question, please. The first question is from the line of Martijn den Drijver with ABN AMRO. Please go ahead.
Yes, thank you, operator. Good afternoon, Heather. Good afternoon, Simon. My first question comes in two parts, if you'll allow me. What have you baked into your EBITDA margin guidance in medium term? Because if I look at what WSP, Tetra Tech, Stantec, AECOM has for their current strategic periods, it's roughly at 19%. If you take your midpoint, it's slightly lower, it's trailing that. Can you explain why that difference exists? My second part of the question is, you mentioned in the presentation that on 2026, on average, your EBITDA margin is 14.5. If you exclude property and investments, it would already be 15%. Is that included in that guidance? Is that portfolio management element also included in your guidance? That would be question one.
Great questions, Martijn. I'll start, and I'm sure Heather will Listen, we're not limiting our ambition here. We've set out our strategy and our guidance today, we're not limiting our ambition at all. We're reshaping the portfolio. We've got operating leverage. We've got greater selectivity. We're reducing management layers. We've got overhead cost reduction, AI efficiencies. We've got our GECs. We've got higher utilization rates embedded in those targets. There's a massive amount that we're doing, and we've been talking about this for months. You and I have talked about it during the investor meeting. This is just a natural extension. We're not limiting ourselves to what we've put out today. Obviously, we're coming from a place that we are today. We've seen some momentum with Q2. We've got a lot of positives that we've talked about, great backlog, great order intake.
We're definitely not limiting ourselves.
Simon, in addition to that, we are also investing for growth for the future, and that's a key component of reshaping our portfolio and really pivoting towards larger projects and larger pursuits and hiring people to really help us in changing the overall culture of the organization. In addition to that, investments in automation and standardization, as well as additional sales capacity and incentive programs are part of our investment strategy.
This begs a short follow-up because you didn't answer the question about, is portfolio management included in the targets?
We are absolutely looking at that portfolio, and that's included in our targets as we go forward.
Okay, great. Thank you. My second question is with regards to Mobility. You had very strong order intake in Q1 that did not fully materialize in organic growth in Q2. Would it be fair to say that that delay in mobilization of large projects, which will probably occur in H2, hampered your EBITDA margin a little bit because of lower utilization of those people that are waiting for those projects to start? Is that the right way to think about it?
Absolutely. We are ramping up on several projects, and you know that there's a great benefit with some of the larger projects because they create a much more stable backlog for us. Sometimes they take a little bit of time to, one, be selected and two, to ramp up on. We feel confident about H2. Yes.
Understood. Thank you.
Thank you.
The next question is from the line of Luuk van Beek with Degroof Petercam. Please go ahead.
Yes. Well, first of all, a question about your upgraded organic growth target in combination with the stable margin target. If I listen well to your presentation, then the additional revenues are mainly in, say, high-value types of projects, and there should be some operational leverage. Still, you don't raise your margin target. Is that because you do additional investments in future growth, and if so, in what areas? My second question is about the target percentage for real estate and development. Is that purely organic or does it also include divestments? Because if it's purely organic, then you would need to continue to adjust your capacity over the coming years because it implies an absolute decrease in revenues. Can you comment on that?
Yeah, look, we're investing in growth. That's absolutely right. Our organic growth targets, we've raised those today for 2026. We're maintaining our margin guidance that we gave out, and we are investing in the business. Obviously, we're very pleased with the growth, and we'll continue to invest in the growth. Yeah, on P&I, look, we're looking at the portfolio. We're looking at where we should invest and where we should not invest. As we've laid out in our strategy, we're looking to optimize. We are very focused on turning that business around. You've seen some positive signs of that business turning around already. We've changed a lot of the team there. We focused the markets that we actually deliver in, and we have exited some people there, and that's showing its results already.
Simon, we're not waiting till 2027 to start implementing this focus. In 2026, the investments that we're making are very much focused around the core and accelerate industries that we've talked about so far.
Okay. Thank you.
The next question is from the line of Natasha Brilliant with UBS. Please go ahead.
Thank you very much, and thank you for taking my questions. My first question is just thinking about your midterm organic growth guidance. You're now targeting single-digit growth, whereas previously it was mid to high single-digit growth. Having talked about kind of the structural drivers and the market, my question is really how fast do you expect the relevant underlying markets to grow? Just to give us some context to your growth, and why have you moderated your target down slightly versus the last strategic cycle? My second question, which is partly related to that, is just to talk about the pricing environment. How have you thought about the evolution of pricing versus volume within your top-line guidance? I know previously you've talked about historic pricing, perhaps not being as competitive or not being competitive enough. Is that changing?
How should we think about sort of AI and how that might impact pricing as well? Two big questions, but it's two. Thank you.
Let me start with the first one on the organic growth. We aren't limiting our ambitions here, we are recognizing that two things, as you point out, we have a strong momentum, we have strong markets, we are continuing to drive that growth. We also want to be realistic of where we've been, where we're coming from, we want to make sure that we achieve our growth targets within these areas. What we're proposing is really been achieved in many of the sectors that we have a strong right to win, we have the strong ability to drive growth. Simon, anything else on the growth side?
Yeah, we're focusing on the areas we can accelerate and are core to us and where we've been really successful. Power and water will naturally have higher growth rates than other areas. Data centers, industrial manufacturing, our pharma business will have higher growth rates. Transport and Mobility, again, will have higher growth rates. We're investing in those businesses. We're pivoting to that. We want to gain market share, deepen our relationships with clients, deliver consistent growth, and improve our margins through better execution. We can see that today. Our Resilience business is doing brilliantly. It's absolutely fantastic. If all of my businesses were doing so like that, I'd be a happy guy. Unfortunately, they're not. There's some drag.
We're looking to prune the portfolio. Coming onto your second question, it's price and volume. Look, we're looking to drive the market, drive the volume, but also not at the expense of price. I think we're getting better at pricing. We're getting better at commerciality. We're getting better at sales. We're recruiting salespeople. We're training the salespeople. We've got some people in helping us who know about pricing, know about value pricing. We're looking for more lump sum work where we can drive the efficiencies from AI, from the GECs through into the margin. That's all of the things that I've been talking about and Heather's been talking about for a couple of months now. We're just continuing along that journey. We're telling you about that today. We've been working on it for many, many months, it's all come together to drive that forward.
Simon, this also gets with our performance metrics for our people being around both growth and profitability. Generating overall value is a really key component of that to make sure that we are really having profitable growth as we go forward. Also, I would say that what we're seeing is a real entrepreneurial shift in the culture of the organization, looking at more co-creation and really working with our clients to explore outcome-based contracts where we have a strong technical capability and where that makes sense.
We're looking to move much closer to the clients. We were always close to the clients. We had relationships. Now it's about forecasting, budgeting client by client, making sure we got the account leads in place. Those account leads are driven by incentives. They've got training, and they're driven to grow the business across all of our services, if appropriate, in that particular sector.
Yeah, part of that is what is behind the focus in the key sectors. The closer and the more focused that we can get, the closer we can spend time with our clients, the more we can truly get that intimate relationship to understand the pricing points, to understand the projects, and to really be able to move into that trusted advisor status. Simon mentioned a couple of our businesses that are doing really well. Part of the reason is that they fall into that category. They understand the market, they have the commerciality, and they sit in a trusted advisor status. We want to be really deliberate about where we make the investments to have those types of relationships and deliver that kind of results.
Perfect. Thank you. I appreciate all the detail. Thanks so much.
The next question is from the line of Simon van Oppen with Kepler Cheuvreux. Please go ahead.
Hi, good afternoon, and thank you for taking my questions. I have a question, first of all, on CapEx. It seems to be quite a low level if you compare to prior years. I was just wondering why can you now sustain lower CapEx levels, and what should we anticipate going forward? That's my first question.
Yeah, I think that sort of EUR 20 million to EUR 30 million is around the right level. I think we've pruned our offices and our portfolio there. We've focused on our tech spend, and we're leasing the laptops. We're not buying the laptops anymore. That's spread over a few years. We've got a real discipline on our office spend. It's CapEx light going forward.
All right. That's helpful. Maybe secondly, you secured a roughly GBP 250 million U.K. government framework. I was wondering if it's already reflected in the order intake and backlog of today's results.
No, we do not book Master Service Agreements until we have a specific order and a specific contract.
Okay. Thank you. Maybe lastly on Germany, I noticed that the revenues increased by roughly 20% year-over-year. That, of course, includes the two acquisitions done last year, but it still seems quite a strong level of organic growth. Germany seems now to be your fourth largest market. Can you please comment on your organic growth in Germany? Also, yeah, curious to hear your M&A agenda here.
The infrastructure spend that we see in Germany is increasing. It's part of the reason that we made an acquisition last year of WSP's rail business, and it's also related to our energy-related services. Another acquisition that we made, Giftge, two years ago, is really helping us in capitalizing on that expenditure that we're seeing within Germany, and specifically as it relates to the example I gave earlier on TenneT, Amprion, and Gasunie, and the work that we're doing there.
Thank you, Heather. On M&A in Germany, any comment?
Well, look, we continue to look around all of our markets, where we can see a complementary acquisition, a small bolt-on, of course, nothing too big, just as we've done with SATEL. It's that kind of acquisition that we're looking for. We'll continue to look in all of our markets.
All right. Thank you very much.
The next question is from the line of Kristof Samoy with KBC Securities. Please go ahead.
Yes. Good afternoon. Thank you for taking my questions. I have first an operational question. On Resilience, we've seen a nice uptick in the second quarter growth, but quarterly order intake did not materially differ from the past two quarters. Is the uptick in growth, is that proof of a lasting return of the profitable book-and-burn business that we saw in the past, or is it mainly the result of a ramp-up of AMP8 in the U.K.? That's the first, and then maybe we can go one by one.
Sure. The Resilience growth is always low in Q2. Order intake is seasonal for us, and so that's where we tend to see that happen. No, there's no structural changes or rationale for it other than that's typically the trend that we see.
Does that mean that the uptick in the organic growth rates in the second quarter that you just reported, they can become a base for the next quarters?
No, we don't anticipate that. The backlog is strong within Resilience, so we do not see any risk in our Q3, Q4, if that's what you're asking.
It's a great business. Just to be clear, it's a really good business. It grows very mid-teens. It's very strong margins. It's a book-and-burn business, as Heather said. You see it and you deliver it very quickly. You don't build massive order books up. You just see it, deliver it, and move on to the next quarter. I think that's what you were asking.
Secondly, I'm well aware of the comments that you made at the very beginning of this call, and that you're not going to comment on the proposals of your competitor. There was a clear explicit reference and a communication about undervaluation of the proposal. We are trading right now where we are trading, significantly below the proposal. I have not seen a concrete intention proposal or a plan to launch, for instance, a share buyback despite this undervaluation. At the same time, during the presentation, you stressed and made a lot of reference to the accelerate strategic bucket. The fact that we don't see a share buyback announcement, does that mean we can expect large transformational M&A in the short term?
In the past few quarters, you made it clear, and I think that was Simon, that the primary focus would be on restructuring and optimizing the business.
We have a clear plan. We've laid out our reasons for rejecting the offer. They're very clear. We see a lot of intrinsic value in Arcadis. Obviously, the market values where it values us today. We're very focused on the strategy, very focused on pivoting to the growth markets. Our prospects over the coming years are very, very strong. Our markets are very strong, and we're very successful in a lot of those markets, and we intend to capitalize on that.
You do not rule out the possibility for transformational M&A in the remainder of the year?
We are always open to industry consolidation. That's something that's out there. At the moment, we've got a really solid strategy, a really solid plan, and we believe our growth prospects are very strong. We do M&A, but it's really bolt-on. That's what we do. We're doing bolt-on M&As, and that's what we're focused on. Could you expect us to do more acquisitions like SATEL? Of course, you could. That's what we did last year. We did a couple last year, and we continue to focus on that.
Okay. Thank you.
The next question is from the line of Chase Coughlan with Van Lanschot Kempen. Please go ahead.
Hi. Good afternoon, all, and thank you for taking my questions. Firstly, on the full year 2026 margin guide, I'm curious because the second half implied step-up is pretty significant year-over-year, even to meet the bottom end of that guidance range. I'm just curious on, is that primarily coming just from group-level cost savings, or is that also maybe driven by the Places business in particular? Is there one business unit that should drive most of that sequential improvement? That's my first question.
Yeah, it's a combination of everything, really. It's the cost out that we continue to look at. It's the non-billable people that we've identified in the business. We're looking to get those people more billable, which we're having some success at. It's driving the GEC into the lump sum projects. It's using automation and AI. It's really making sure that our transformation delivers those cost savings and those efficiencies and that focus and that simplification, and it's the growth and driving the top line.
Simon, we've taken a lot of actions in the first half of the year that the run rate hasn't yet fully manifested itself. We're confident on the trajectory for the second half of the year.
Yeah. Okay, very clear. My second question, Simon, you just mentioned the acquisition SATEL in Spain. Could you give some indication as to revenue or EBITDA contribution from that deal?
Yeah. It's small. It's small single-digit EBITA from that. Obviously, we're hoping to grow that, but it's not huge. 250 people, you can do the math. We love the market, we love the business, we love the prospects, and I think they love the fact that they're combining with Arcadis. The cultures are very similar. The cultural fit is huge, and we think we can drive the growth out of that cultural alignment going forward.
Okay, perfect. Thank you very much.
The next question is from the line of Maarten Verbeek with The IDEA!. Please go ahead.
Good afternoon, it's Maarten Verbeek of The IDEA!. Simon, you mentioned the CapEx, some EUR 20 million-EUR 30 million, but you also hinted that you will do more through leasing. When we look at the indirect CapEx, read the lease liabilities, how much do you expect that to be on an annual rate going forward?
I'm not going to give specific guidance on that. I think nothing much is changing, going forward. If you're building your model, we moved to leasing our laptops. We reduced our CapEx from, I think, EUR 40 million-EUR 50 million to EUR 20 million-EUR 30 million. I think if you want to put that in your model, that's good. There's nothing significant else that we'll be doing. Same as it's been.
Okay. We now look at the depreciation, the D is some 250 basis points. With growing business, it's likely that part as a portion of revenue is going to decrease in the years ahead?
We've got about EUR 100 million, 2.5%, as you say. Most of that comes from our property portfolio, the leasing, and a bit comes from our things that we put in the offices and laptops. Yeah, if we grow our business, we'll have more laptops. If we open more offices, we'll have some more leases. We're trying to get the operating leverage coming through and push that down. We don't want to expand that.
Secondly, you made a net revenue split between your core and accelerated portfolios against the optimized, and the core meters should increase its contribution from 74 to 85, taking the 5% organic growth rate. That suggests that these businesses will grow by some 8.5% on average in the years ahead. Is that a fair calculation, looking at the bar chart? Do you expect that to be back-end loaded, or do you expect a gradual or more or less stable organic growth from these businesses in the next three to four years?
I think your math's not bad at all. I think if you're modeling it out, that's not a bad set of numbers that you use. We'd like to think we can accelerate that growth. Obviously, we're starting from where we're starting, so we acknowledge that. We need to build the trust and credibility. We think we're doing that a little bit. We need to continue to do that. Your math is pretty good.
Also, it will be a bit more back-end loaded?
We're trying to get our growth as fast as possible.
Great. Thanks so much.
The next question is a follow-up question from Martijn den Drijver with ABN AMRO. Please go ahead.
Yes. Thank you, operator. Simon, I have a question as well that needs a bit of math, so please correct me when necessary. You've reduced the employees in H1 with 400. I seem to recall that there was a bit of a redundancy exercise also in the latter part of 2025. 400 in H1, let's say 200 in H2 2025, 600. You assume 75,000 in annual salary, you add 45% in social premiums and pensions. That gets to annualized savings of 64, meaning on a semi-annual basis, 32. You divide that by approximately EUR 1.9 billion, which is your net revenue for H2, roughly speaking. That gets me to 250 basis points tailwind on EBITA. In the presentation, you talk about 50 basis points. Where am I going wrong?
Yeah. It takes time for it to come through. I expect that all to come through very soon. Some of it's corporate overhead, some of it's in the business. Your math isn't wrong, but it just takes time to fall to the bottom line.
Are we talking about six months more, or do you think it'll take longer?
No, I think it's half two. I think the actions we've taken will manifest themselves in quarter three and quarter four. Yes. We're driving as fast as we can to show you those. We've had a lot of success. I'm pleased I started this six months ago or even nine months ago now to drive that overhead down, and our run rate is coming down really well.
Thank you for that color. Going back to the share buyback, is there some sort of net debt EBITDA leverage level at which you think share buyback is really appropriate?
Look, I think we're constantly reviewing the share buyback. You saw us do one last year. I think we're at a really interesting point in our cycle now. We're pivoting into the growth areas, the core markets, accelerators. We want to invest. We want to hire more salespeople. We want to hire more fantastic project managers. We've got lots of really interesting projects that we're bidding on. We want to invest in AI as well. You've seen us invest in Nomic. That's really key for us. Look, we keep an open mind. We discuss with the board about our capital allocation all the time, and we're committed to that investment-grade rating as well.
Thank you very much.
Thanks.
The next question is from the line of Dirk Verbiesen with ING. Please go ahead.
Yes, good afternoon to all. Some follow-up questions. Also on the restructuring efforts you are making, can you give us some guidance on what to expect and also for modeling purposes for the second half in terms of non-operating? If I listen to you, the plans you mentioned previously, 2025 and 2026 headcount reductions, it looks like second half will also be quite substantial in terms of non-operating costs. Any guidance would be helpful. The second question I have is more on the AMP8 work in the U.K. I think you're mentioning that it's ramping up and it looks quite encouraging. What is the momentum that we look at?
In terms of projects in hand in the backlog, can you maybe share some more insights here on how this is going to develop second half and maybe even into 2027? Because it's a long-term plan. There must be orders in the backlog. In terms of actual impact for the U.K. business, that would be interesting. Thanks.
Yeah, I'll take the non-op one. In terms of non-op, I think we reported about around EUR 40 million for the half one. We guided around EUR 60 million. I think it's more likely to be EUR 60 million to EUR 70 million. We're making a lot of progress. We're trying to accelerate that, there might be a little bit more cost there towards the Q3 and Q4. That's where we are on non-op. I'll hand over to Heather for AMP8.
Yeah. As we've spoken about, we had several wins with AMP8, and we have announced those wins. On top of that, now we're starting to see the ramp-up come through on the projects that we have for AMP8. We're feeling very positive. I think Simon mentioned about the double-digit growth in AMP8, and that should have a very positive impact on our U.K. business going forward. Obviously that is outside of any political changes that occur, but we feel confident in our H2 as it relates to AMP8.
Okay, thank you.
For specific clients, we are working with a number of the water utilities and have large scale, both MSAs and one-off projects where we're supporting large construction schemes.
If this model is running as planned and the work is coming through in terms of actual billable hours, is this a few tens of millions per year that you can generate there? Or what?
EUR 40 million.
A year.
That's okay. That could be the run rate going forward.
Yeah.
Okay.
Could be.
Thanks. Yeah, thanks.
Ladies and gentlemen, with this question, we conclude our Q&A session. I will now turn the conference over to Ms. Polinsky for any closing comments. Thank you.
Well, first of all, thank you all very much for your questions and your interest in Arcadis. We look forward to bringing the full passion we have for Arcadis and giving you even more details and proof points, as well as introducing you to several of our exceptional leaders at Capital Markets Day on the 29th of September. Thank you very much.
Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling and have a pleasant day.