Delivering on our strategy

In 2018, good progress was made in implementing our Group Strategy 2017-2020 ‘Winning Together’. The Strategy has five, interlinked elements:

  1. Become truly client-centric bringing the best of Ramboll
  2. Further develop and grow our regional strongholds
  3. Grow internationally through Spearhead services building on our platform
  4. Be a recognised leader for sustainable solutions
  5. Secure the future by accelerating digitalisation.

Regarding client-centricity, the strengthened focus on our Group Key Accounts has paid off as these clients delivered 15% organic growth – more than twice our total organic growth for 2018. Meanwhile, client satisfaction – as measured systematically through our Client Satisfaction Survey – remains high at 4.34 on a scale from 1-5.

In terms of our regional strongholds, it has been a positive year for our emerging strongholds in the UK and the US. Strong client and market focus in target sectors has delivered significant improvements in performance in the UK despite the uncertainties surrounding Brexit. In the US, the strategic acquisition of OBG has doubled our presence to approximately 2,000 staff while expanding our portfolio to include highly complementary, multidisciplinary engineering capabilities in Water, Energy and Environment. With the OBG acquisition, we have turned the US into an attractive multi-market stronghold with high potential for further organic and acquisition driven growth.

In our traditional Nordic strongholds, 2018 saw continued consolidation and increased competitive pressure from non-Nordic players. The Nordics remain a very attractive market and with our strong position and heritage, we continue to develop and defend our leading position. In doing so, we believe our strategic priorities within Spearheads, sustainability, automation and new digital solutions will be our key differentiators.

Matrix

Organisation matrix

Ramboll's 21 global spearhead services

Buildings

  • Hospitals
  • Aviation
  • High-Rise

Transport

  • Rail Systems
  • Major Crossings
  • Smart Mobility

Energy

  • Power Systems
  • Towers & Telecom
  • Power Generation
  • Energy from Waste
  • Wind
  • District Energy
  • Field Development
  • Gas/LNG
  • Pipelines
  • Jackets

Management Consulting

  • Social & Economic Impacts
  • Stakeholder Intelligence

Water

  • Climate Adaptation and Landscape
  • Water and Wastewater Treatment

Environment & Health

  • Impact Assessment

The Middle East & Asia region has benefitted significantly from the new global Buildings and Transport Spearheads – bringing the best of Ramboll expertise to the region for key project wins, as well as key competencies from the region to our strongholds. In general, the launch of our global Spearheads in 2018 has been a great success and contributed significantly to our performance. By strengthening expertise, client-centricity and collaboration across our geographies, the Spearheads have resulted in new projects and sources of revenue. They have also been a success financially with a large majority of our 10 new Spearheads delivering results on or above target. In our Buildings and Transport markets, the six new Spearheads delivered an impressive 16% revenue growth in 2018.

Our work on becoming a recognised leader for sustainable solutions saw some key achievements in 2018 as we accelerated the implementation of our sustainability strategy. This included the launch our Sustainable Buildings Strategy, a new Smart Mobility Spearhead, and a breakthrough in integrated Water Management in the US market. The UN Sustainable Development Goals (SDGs) are our main yardstick for measuring progress, and we aim to increase the part of our revenue with a direct positive contribution to the SDGs by 40%.

2018 was also the year we launched our complete Digital & Innovation strategy with the ambition to become a digital leader in the industry.

The strategy targets a fundamental digital transformation of ‘How We Work’, ‘What We Offer’ and ‘How We Innovate’. A key 2018 activity of the strategy was the Innovation Accelerator which tapped into the hundreds of innovative ideas throughout the company, funneled the ones with most potential through a novel business development process and finally selected three cases now ready to scale in Ramboll for new revenue streams.

In terms of strategy enablers, we successfully launched the new matrix operating model to drive client-centric growth and collaboration across our markets and geographies. The intended results are already showing: organic growth was 7%, the order book is at a record high and internal trade was up 40% on 2017.

The Middle East & Asia region has benefitted significantly from the new global Buildings and Transport Spearheads – bringing the best of Ramboll expertise to the region for key project wins, as well as key competencies from the region to our strongholds. In general, the launch of our global Spearheads in 2018 has been a great success and contributed significantly to our performance. By strengthening expertise, client-centricity and collaboration across our geographies, the Spearheads have resulted in new projects and sources of revenue. They have also been a success financially with a large majority of our 10 new Spearheads delivering results on or above target. In our Buildings and Transport markets, the six new Spearheads delivered an impressive 16% revenue growth in 2018.

Our work on becoming a recognised leader for sustainable solutions saw some key achievements in 2018 as we accelerated the implementation of our sustainability strategy. This included the launch of our Sustainable Buildings Strategy, a new Smart Mobility Spearhead, and a breakthrough in integrated Water Management in the US market. The UN Sustainable Development Goals (SDGs) are our main yardstick for measuring progress, and we aim to increase the part of our revenue with a direct positive contribution to the SDGs by 40%.

2018 was also the year we launched our complete Digital & Innovation strategy with the ambition to become a digital leader in the industry. The strategy targets a fundamental digital transformation of ‘How We Work’, ‘What We Offer’ and ‘How We Innovate’. A key 2018 activity of the strategy was the Innovation Accelerator which tapped into the hundreds of innovative ideas throughout the company, funneled the ones with most potential through a novel business development process and finally selected three cases now ready to scale in Ramboll for new revenue streams.

In terms of strategy enablers, we successfully launched the new matrix operating model to drive client-centric growth and collaboration across our markets and geographies. The intended results are already showing: organic growth was 7%, the order book is at a record high and internal trade was up 40% on 2017.

Ramboll accelerated its growth curve in 2018 but delivered slightly lower profit.

Financial performance

Gross revenue of DKK 11,351 million was 5.7% higher when compared to DKK 10,740 million in 2017.

Organic growth was 7.0%. Net growth from acquisitions was 0.8%, whilst the reporting currency DKK against foreign currencies had negative 2.1% impact on revenue.
Organic growth: 7.0%
UK, North America and Middle East & Asia delivered two-digit organic growth rates and in our markets especially, Buildings and Environment & Health saw strong organic growth.
Revenue growth
Operating profit before depreciation and goodwill amortisation (EBITDA) decreased by DKK 28 million to DKK 760 million and EBITDA margin decreased from 7.3% in 2017 to 6.7% in 2018. Operating profit before goodwill amortisation (EBITA) was DKK 597 million compared to DKK 619 million in 2017, corresponding to an EBITA margin of 5.3%, which was 0.5% lower than in 2017. Adjusted for working days impact (14 million) and currency impact (10 million), EBITA is 2 million higher than in 2017.
EBITA margin

The lower EBITA compared to 2017 was a result of a slowdown in our traditionally strong performing business units Sweden, Denmark and Energy and strong growth in areas with lower profit levels. In 2018 we also doubled the investment in digitalisation and innovation to support our strategic ambition to be a digital leader in our industry – and this had an effect on profit.

Overall, growth was above expectations while profit before goodwill amortisation was below our expectations set in the Annual Report 2017.

EBITA half-year

EBITA half-year

In 2018, other costs, totalling DKK 91 million consisted of restructuring and integration and acquisition costs. The integration- and acquisition costs are related to new acquisitions made in 2018 and the OBG acquisition. The restructuring costs are related to Germany, whereas other income came from gain on disposals of fixed assets. In 2017 the other income of DKK 113 million was related to the divestment of laboratory business in Finland.

Goodwill amortisation decreased by DKK 11 million to DKK 197 million compared to DKK 209 million in 2017. In 2018, goodwill impairments of DKK 27 million were made in Germany.

Net financial income was DKK 43 million compared to net financial costs of DKK 133 million in 2017. The increase was mainly caused by a higher unrealised gain on a USD-denominated intercompany loan, amounting to DKK 53 million as the USD has strengthened towards DKK.

As a consequence of the above, profit before tax increased by 17% to DKK 361 million compared to DKK 308 million in 2017.

Tax on profit decreased to DKK 123 million (2017: DKK 162 million). The effective tax rate was 34.1% (2017: 52.5%). The decline in effective tax rate was explained mainly by the fact that the provision set up in 2017 to cover US transition tax turned out to exceed the annual transition tax in 2018.

Net profit increased to DKK 238 million in 2018 from DKK 146 million in 2017, which is the highest net profit in the last 10 years.

In 2018, private sector revenue represented 65% of total revenue equal to 2017 (2017: 65%) with public sector revenue representing 35% (2017: 35%). Environment & Health and Buildings account for the larger part of the private revenue with 22% and 20%, respectively, while Transport and Buildings account for 13% and 12% of the public revenue.

The most significant growth in revenue in the markets in 2018 was achieved by Buildings (9%), whereas Environment & Health grew by 7%. The UK, North America and Middle East & Asia accounted for the highest revenue growth in the geographies.
Public/private split

Ramboll provides solutions to a wide range of clients in both the private and public sectors. The split varies between the markets and in 2018 was as show above.

The Buildings market accounts for 33% of the total revenue, followed by Environment & Health and Transport at 24% and 23% respectively.
Revenue by market
Denmark is the largest geographical segment, accounting for 25% (2017: 27%) of the total revenue. The share of revenue generated in Finland is 14%, whereas Norway, Sweden and North America account for 13% of Group revenue.
Revenue by geography

Cash flow

Cash flow from operating activities of DKK 496 million was higher than the DKK 317 million generated in 2017. The positive change was driven by lower working capital, where work-in-progress was reduced compared to 2017 combined with
a strong cash collection.

Investments in tangible assets amounted to DKK 237 million (2017: DKK 148 million). Consequently, free cash flow was DKK 259 million (2017: DKK 169 million).

Investments in acquisitions of companies were DKK 996 million compared to DKK 116 million in 2017. The increase was mainly caused by prepayment of the OBG acquisition and final deferred consideration to the Environ owners.

Cash conversion ended at 116% compared to 65% in 2017.

At year-end, Ramboll had a net interest-bearing debt position of DKK 701 million compared to a net cash position of DKK 81 million at the end of 2017. Ramboll has a solid financial position with a committed funding facility of DKK 2,500 million expiring December 2023.

Cash conversion ratio

Balance sheet

Total assets of DKK 7.6 billion were DKK 1.2 billion higher than at year-end 2017.

Equity increased by DKK 171 million to DKK 2,351 million since the end of 2017. This movement consists of net profit of DKK 238 million, dividend of DKK -50 million and exchange rate and value adjustments of DKK -17 million.

The equity ratio was 31% compared to 34% at year-end 2017. The lower solvency in 2018, is related to the prepaid acquisition of OBG.

Markets and expectations

Ramboll has achieved strong organic and sustainable growth with significant improvements in the UK, North America and Middle East & Asia and in the Environment & Health markets.

The order book amounts to DKK 7.3 billion which was a significant increase of 31% compared to year-end 2017 (DKK 5.6 billion) and month secured have increased from 7.0 at year-end 2017 to 8.8 year-end 2018.

Ramboll will continue its strategic priorities for 2020 to ensure that we are at the forefront of digital development and create value for our clients through innovation and digitalisation.

Ramboll will also concentrate on global Spearhead services – services where we utilise our global expertise to provide high-end solutions internationally, which are already performing well, as drivers for future growth.

Ramboll’s target to increase revenue by 40% from services related to sustainable solutions has been a successful business transformation accelerator, where the UN Sustainable Development Goals remain a central language and yardstick.

In the beginning of 2018, we merged our Oil & Gas and Energy markets into one strong global organisation, enabling us to be a key support to our clients in their transition to cleaner energy.

In 2018, we experienced increasing demands from our clients across our markets to deliver measurable sustainable solutions. In Buildings, interest in certification schemes from clients is increasing, as are our services to make buildings more healthy, sustainable, smart and energy efficient. Many of our clients view national building codes as a point of departure for new developments and seek partners such as Ramboll to fulfill their sustainability ambitions.

Similarly, our markets within urban solutions are developing positively. In 2018 we launched our Smart Mobility Spearhead which, together with our world leading expertise within climate adaptation through blue-green solutions, plays a central role in our smart city ambitions.

Order book monthly secured

Managing and mitigating risks

We have identified the most serious business risks related to Ramboll’s operation and ensured that these risks are monitored, measured and mitigated:

  • Claims caused by errors or omissions in the services provided by Ramboll
  • Bad debtors and project write-downs
  • Market activities compared to capacity/resources
  • Ability to retain and attract the right employees
  • Mergers and acquisitions
  • Breach of Code of Conduct (Including Anti-Corruption, IT support / Cyber Security and Data Protection).

Subsequent events

With the exception of events described in this Annual Report, of which the most significant event is the acquisition of OBG with effect as of 1 January 2019, Ramboll is not aware of events subsequent to 31 December 2018 that are expected to have a material impact on Ramboll’s financial position. Please refer to note 27 for further description of the transactions related to the OBG acquisition.

Group Executive Board 

In 2018 there were no changes to the Group Executive Board.

Board of Directors

Ramboll’s Group Board of Directors is composed of professionals with a broad mix of experience. At the Annual General Meeting in April 2018, Thomas Gregers Honoré was elected as new member of the Board of Directors. 

Dividend

The Group Board of Directors proposes a dividend of DKK 50 million. A dividend of DKK 50 million corresponds to 21% of net profit and 19% of free cash flow for the year.

Looking to the future

The overall market situation for Ramboll in 2019 is expected to remain challenging.

Our key focus areas in 2019 are to continue the positive growth curve and improve our operational performance across the businesses to better convert growth into profit.

We will concentrate on increasing client-centric initiatives to provide better value to our clients and identify more high margin opportunities. We will continue our focus on driving collaboration across our geography and market business units which is a main contributor to growth and higher margins. And we will successfully integrate our new colleagues from OBG.

In 2019, we expect a positive organic growth, though at a lower level than 2018. We expect both our operating profit before goodwill amortisation (EBITA) and the EBITA margin to improve compared to 2018.

Key statistics