BUREAU VERITAS SA
RATING ACTION AND RATIONALE
- EthiFinance Ratings affirms Bureau Veritas SA’s long term rating at A-, maintaining its Stable outlook. Concurrently, we affirm Bureau Veritas’s short-term rating of EF1.
- Bureau Veritas (“BV”) is a global company specializing in testing, inspection, and certification (TIC) services.
Our ratings affirmation reflects BV’s sustainable top-line growth and stable yoy credit metrics. In FY24, the company achieved 6.4% sales growth (including a -4.4% FX effects). The organic growth rate of 10.2% was primarily driven by strong performance in the Industry, Certification and Marine & Offshore segments, benefiting from ongoing energy transition initiatives and the renewal of ageing assets. Adj EBITDA margin improved by 50 bps yoy, through recovery in consumer products, which delivered a standalone EBIT margin of 22% (vs 20% in FY23). Further contributions came from sustained profitability improvements within the Marine & offshore and Industry segments. As anticipated in our previous rating review, the EthiFinance Ratings-adjusted net leverage ratio slightly deteriorated from 1.5x in FY23 to 1.6x in FY24 due to the cash outflow related to the €200m share buyback program. We expect this ratio to gradually improve to reach 1.3x by year-end 2027, incorporating an additional €200m share buyback program in 2025, and our assumption of annual cash outflows of €50m earmarked for bolt-on acquisitions. Additionally, we expect BV to achieve a revenue CAGR (2024-27) of 5%, aligning with the overall growth projections for the TIC market. This growth will be underpinned by increasing regulatory requirements, which should favour BV, and the ongoing transformation of global supply chains.
BV holds the second-largest market share within the TIC industry, behind Swiss-based SGS, with which it recently engaged in potential merger discussions that ultimately proved unsuccessful. Strategically, BV has shifted its business model towards services associated with customer operational expenses (OpEx), aiming to generate recurring revenue streams in addition to its traditional focus on CapEx. This strategic repositioning, driven by new product development and the expansion of global trade, supports sustained organic growth. In FY24, BV pursued its bolt-on M&A strategy by acquiring 10 companies that generated a combined annualized revenue of €180m, for which the full-year effect is expected to support growth from 2025 onwards. Conversely, it divested its food testing business segment, which generated €133m FY23. The net proceeds of €290m from this divestment are expected to be reinvested in markets where BV maintains a leading position and has high performance. Additionally, the company remains open to pursuing larger, debt-funded acquisitions (with revenue > €100m) going forward.
However, our rating is slightly constrained by our industry risk assessment (BBB+), reflecting BV’s high exposure to global supply chain dynamics across diverse sectors, which are impacted by macro headwinds such as US tariffs on goods. Profitability is further impacted by reduced margins in the consumer products segment (such as toys, textiles and electrical goods), due to a global decline in demand for electrical and wireless equipment, and a temporary slowdown in new product launches. This downward trend is also shared by BV’s close competitors, such as Intertek and SGS. Additionally, our ratings remain further constrained by BV’s moderate equity/ adj debt ratio of 64%.
The TIC industry, which belongs to commercial & professional services, has medium ESG risks under our methodology (heatmap score of between 3 and 3.5). This results in a sector assessment that is not impacted by industry-related ESG considerations. Sustainability assurance and certification business lines constitute a pivotal and rapidly growing sub-sector within the TIC industry.
According to our rating methodology, the company’s ESG policy is advanced, with a score between 0 and 1, which counts positively on our financial assessment and therefore improves our rating accordingly. As a consultancy firm providing guidance on sustainability initiatives and facilitating their evaluation, BV leverages its in-house approach (BV Green line), serving both internal and customer-oriented ESG objectives. The company’s ESG framework includes targeted efforts to address corruption, enhance cybersecurity, and protect workforce welfare. Its inclusion in the CAC40 ESG index highlights its commitment to upholding these standards.
ISSUER DESCRIPTION
Headquartered in France, Bureau Veritas (BV) is a leading player in the testing, inspection, and certification (TIC) industry. It has expertise in various sectors, including consumer products, commodities, industrial activities, and marine & offshore facilities. Through its 6 business divisions, BV provides B2B quality control solutions and operates as an independent entity to grant accreditations. It operates in various end-markets through its 84,000 employees, serving c. 400,000 clients in over 140 countries. The group maintains a well-balanced geographic portfolio, with Europe representing 35% of its FY24 revenues, followed closely by the Asia-Pacific region (APAC) at 29%, and the Americas at 27%. Bureau Veritas also has little client concentration risk, as its largest 25 clients collectively account only for 12% of its FY24 total revenues.
For FY24, the group reported €6.2bn in sales for €1.2 bn in adjusted EBITDA. The EthiFinance Ratings-adjusted net leverage ratio stood at 1.6x at end-2024. BV is listed on the Paris stock exchange, and has recently integrated into the French CAC40 index, with a current market capitalization of c. €12.4bn, as of 28 April 2025.
LIQUIDITY
- Excellent liquidity profile with strong refinancing capacities
We consider BV’s liquidity profile to be ‘Superior’ as the company can repay all its upcoming debt maturities without refinancing for more than two years. BV’s good access to the bond market, and its solid relations with banking counterparties supports our assessment further.
CREDIT METRICS EXPECTED EVOLUTION (CMEE)
- Stable CMEE
We have a Stable CMEE for BV, as we expect credit metrics to remain broadly stable over the next twelve months.
MAIN FINANCIAL FIGURES AND FORECASTS
RATING SNAPSHOT
RATING SENSITIVITY
- List of ratings:
- LT corporate rating: A-
- ST corporate rating: EF1
- Ratings Positive factors (↑)
An upgrade of our long-term rating would derive from a significant improvement of credit metrics, notably a net adjusted leverage ratio of 0.9x and/or an interest coverage ratio above 20.0x, on a sustained basis. An upgrade is contingent upon the overall TIC market growth.
An upgrade of our short-term rating would result from an upgrade of our long-term rating to A along with at least a Stable CMEE.
- Ratings Negative factors (↓)
A downgrade of our long-term rating could occur should the company’s credit metrics deteriorate, such as an adjusted net leverage above 1.8x, and/or an interest coverage ratio of below 10.0x, on a sustained basis. This could result from a strong fall in profitability.
A downgrade of our short-term rating would result from a significant downgrade of our long-term rating used as a reference, and therefore seems improbable at present.
Sources of information
The credit rating issued in this report is unsolicited. The credit rating is based exclusively on public information, being the main sources the following:
- Annual Audit Report.
- Corporate Governance Report.
- Corporate Website.
- Information published in the Official Bulletins.
The information was thoroughly reviewed to ensure that it is valid and consistent, and is considered satisfactory. Nevertheless, EthiFinance Ratings assumes no responsibility for the accuracy of the information and the conclusions drawn from it.
Level of the rated entity participation in the rating process
Additional information
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The rating was carried out in accordance with Regulation (EC) N°1060/2009 of the European Parliament and the
Council of 16 September 2009, on credit rating agencies. Principal methodology used in this research are :
- Corporate Rating Methodology - General : https://www.ethifinance.com/download/corporate-rating-methodology-general/?wpdmdl=35203
- The rating scale used in this report is available at https://www.ethifinance.com/en/ratings/ratingScale.
- EthiFinance Ratings publishes data on the historical default rates of the rating categories, which are located in the central statistics repository CEREP, of the European Securities and Markets Authority (ESMA).
- In accordance with Article 6 (2), in conjunction with Annex I, section B (4) of the Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009, it is reported that during the last 12 months EthiFinance Ratings has not provided ancillary services to the rated entity or its related third parties.
- The issued credit rating has been notified to the rated entity, and has not been modified since.
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