Bureau Veritas Cuts 2015 Targets as Taxes Hit Earnings

Bureau Veritas SA, the world’s second-largest provider of testing, inspection and certification services, slashed profitability and earnings targets, citing unfavorable exchange rates as well as rising taxes and regulations in France.

Adjusted earnings per share will grow between 5 percent and 7 percent a year from 2012 to 2015, it said in a statement today. The French company, which tests and certifies goods and services from ships and power plants to bicycles and children’s toys, previously forecast growth of 10 percent to 15 percent.

“We would be very close to 10 percent if we exclude rising taxes and exchange rates,” Chief Executive Officer Didier Michaud-Daniel said on a call with journalists. “The tax rate was 27 percent in 2011, it’s 32 percent today.”

The company, in which France’s largest publicly traded investment firm Wendel SA owns 51 percent, has made acquisitions in North America and Asia to reduce its exposure to the stronger euro and sputtering growth in Southern Europe. In France, where Bureau Veritas gets 18 percent of its revenue, President Francois Hollande this week replaced three ministers as he plans to roll back tax increases and regulations that have stalled industrial production and housing starts.

Asked about the necessary changes in France, Michaud-Daniel said “it’s time to revise” rules introduced by the French government in recent months which have “completely paralyzed the construction market.”

The adjusted operating margin of the company, which is based in Neuilly-sur-Seine near Paris, will be about 17 percent in 2015 as the company uses some of its savings to boost its sales force and new offerings, it said today. Bureau Veritas previously forecast the margin to be between 17.2 percent and 17.7 percent.

Excluding currency effects, revenue will grow by more than 9 percent on average per year in the 2012-2015 period, the company reiterated today, adding that is now predicts a higher contribution from acquisitions than previously forecast.

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