Bilfinger Se Unsp/Adr

Good afternoon, ladies and gentlemen, and welcome to Billfinger's Preliminary Results 2023 webcast. My name is Bettina Schneider, and I'm here together with Thomas Schulz, our Group CEO, and Matti Jekyll, our Group CFO. We start now with the presentations, and afterwards you will have the opportunity to ask your questions via call or via chat in the webcast. as in our quarterly results conference calls. I would like to inform you, you're right now in a listen-only mode, and the webcast is being recorded. And with this, I hand over to Thomas Schulz.

Thank you, Bettina. Hello, everybody. Let's start directly with the highlights of a quite successful year for our Billfinger Group. Our orders were growing 5% organically, our revenue 7% organically, and our EBITDA margin really made a good development to 4.3%. Our cash flow was 122 million euro, and for the year 2024, based on that good result, we guide on the revenue 4.5 to 4.8 billion euro, and on the EBITDA 4.9 to 5.2%. We see in all regions, all markets, all industries a positive market situation for that what we offer to the industries. Our dividend proposal is 1.80 Euro per share. And we will host a new capital market day on the 12th of June in Frankfurt during the Arkema chemical exhibition. When we look into the year 2023, we definitely show a sustainable, profitable growth, which is in line with that what we announced and very detailed showed you all on the capital market day in February 2023. Our revenue, our EBITDA and our free cash flow exceeded the forecast, which is an all positive and gives us the possibility With the strategy and the market outlook that we can guide 4.5 to 4.8 billion euro in the revenue side and 4.9% to 5.2% on the EBITDA line. We expect 100 to 140 million euro in cash flow, in free cash flow. which is in line with the targets what we gave last February that we want to have in the year 2024, the 5% EBITDA as well as a 70% cash conversion cycle. It is important to see this year as the step towards our mid-term targets, which is for the time 2025 to 2027, where we promised the market a 4% to 5% growth as well as a 6% to 7% EBITDA and a more than 80% cash conversion. We think and we see and we will have in that presentation all the elements to prove that we are on a very good way towards these mid-term targets. One big part of that is, of course, our strategy. Our strategy to be the number one in efficiency and sustainability for all our clients wherever they are. That strategy implementation is well on track and actually well on track to deliver the mid-term targets too. The efficiency program is completed. The functional organization implementation is done and established and works very well. Our competence development efforts with the so-called Billfinger Education Game, GMBH, which is a pilot for training and education of new as well as existing colleagues, is well on the way. And we actually started a little bit earlier than we had it in the strategy. We started already beginning of October 2023. Our way to standardize and bundle that lever is well on the way and proven with the implementation of the global product centers. which gives us a possibility to give all the quality and competences wherever the client is in the regions what we cover. The other lever is the de-risking. We had a big de-risking activity which is finalized in North America, in US, and it will go on to bring more of the project business into a product business. That transformation is high on our agenda and actually well on the way. The market expansion. which is the external, which is the market-related part of our strategy, will be with the acquisition of stock. What we think and what we believe the closing will happen in the first six months of this year will do a significant step forward. But we look further for expansion in existing regions, in existing core business of our Billfinger Group. In that part, of course, is included that we let business go, which is not fitting into the strategy, and with that not fitting into the group, like the coal-firing service business, what we have down in South Africa. That's still on the list to divest. Out of that, when you talk about to be the number one in efficiency and sustainability, you have to prove yourself that you are sustainable and efficient. On the efficiency, I think the efficiency program actually did a big step in the right direction. On the sustainability part, you see here on that slide how our business is classified by an own classification, what we actually showed in February last year the first time, where you can say that the A to C class is sustainable business to several degree, A very sustainable, And the D class is business which is not adding any sustainability to the performance of the clients and ourselves. And that business we will let go. You see a slight movement into ABC throughout the year 2023. But in the part of the ESG, we performed two. In the environmental part, in scope one and two, we reduced, despite an increase in revenue of 7%, we reduced 9% our CO2 footprint. From 2023 on, we actually measure scope-free upstream, and we have here close to 800,000 tons of CO2, and you will see more in the coming years how to reduce that. On the social part, on the S part, which is on the upper right side of the slide, we have two KPIs. One is the TRIF, and there we see an improvement from 1.31 to 1.19, but on the LTIF, we actually see a side move. which is not for us enough. And special program is initiated for 2024 to do here a good step in the right direction. The G part with the governance, we selected the amount of audits on the supplier and we gave as a figure more than 600 and with close to 1200 realized another good job of our organization. Out of that, we go to the efficiency program. It's the last time that we report on it. Because it's done. Since the 31st of last year, December of last year, it's done. At the end, around 800 positions were eliminated. And we will deliver 55 million EBITDA improvement as a proto part as a full year run rate. Out of the 55 million, 30 million will go into training and education, on top of that what we already do, to real concrete our attempts and our way of doing to increase competence of the Billfinger Group. Because the competence stands for sustainable, profitable growth. Out of that, into our orders. When you look here on that slide on the upper left side, you see quarter by quarter since quarter 421, our order intake. In that slide, it's clear that we had a 5% organic growth from 22 to 23. And the quarter four came actually stronger out than we had the two quarters before. But the year 2023 was a special year in the development of the order intake because the first quarter, last year was unbelievably strong with a lot of reasons for it what we explained when we announced the quarter one result. We will not repeat that in the year to come, in the year 2024. There we foresee the normal seasonality in the order intake. Our book to build on the full year is 1.06 and with that well in line with that what we said on the capital market day with growth perspective. The orders in itself, Europe had plus six, technology plus 16, and international was the minus 12. And that was the planned reduction based on de-risking and taking that business out of the U.S. portfolio, what we don't want to go on with. If you look into the revenue, there we had a 7% organic growth. Same picture as with the order intake. And you see that the fourth quarter came out quite strong for the whole year. And important in that to mention is that Europe, we're growing with 7% and technology with significant and good and great performance, 24%. International with minus 15% is as planned. Actually, international with North America and Middle East, Middle East performed on all areas significant better in 23 than in 22. And for us, quite a good development. Out of that... I go into some of the work we do. And one of the reasons to show that is actually to work intensified on it that we are not compared to construction companies and that we are not the former Billfinger Berger. It's important that we are recognized and seen as an industrial service provider throughout all industries. And if we take some selected orders, one here out of the Netherlands of our Norwegian client, Yara, it's about carbon capture, where we support Yara in taking 800,000 tons of CO2 out of the Dutch side, bringing it over to Norway and bringing it under the seabed in the Norwegian area. The other part is the oil and gas maintenance work, what we do for our dear customer Shell, In Louisiana, in U.S. And it's another proof that we transfer the U.S. business into the same core competences and same core businesses as we have the Bill Finger Group in Europe. The third one is a special one. It's out of the energy part. And in energy, we do a lot of regular work and a lot of special work. And the special work what we do here is with a small company, Proxima Fusion, actually a spin-off of the Max Planck Institute in Munich, to create a so-called atomic fusion reactor. And with that fusion reactor, which is a similar nuclear reaction, as you already know, only with the difference to bring the atoms together and not splitting them up, We as BILFINGER built the so-called magnetic field coil as a pilot and demonstration actually on a BILFINGER site here in Germany, beside Frankfurt. Out of that into innovation. We have a lot of people on customer side. And of course, we are faced with a lot of different challenges. And we are working on it to overcome these challenges through innovation. And one part what we would like to show here is digitalized scaffolding. Because scaffolding in industrial areas is quite a dangerous and quite a complex thing. And on top of it, it takes a long time to realize and it actually blocks customers to be on full production if it's not done properly. With a digitalized approach, we are actually able to save up to 20% of the cost to make it significant faster. than in the normal regular way and the safety part is significant more safe than any older or regular way of doing it. Out of that, from the innovation, we go to the financial figures to Matti.

Thank you, Thomas. Good afternoon, everyone. Good to have you with us today on Valentine's Day, so to speak. Fourth quarter was very strong again, like last year, revenue and orders received both around 1.2 billion euros. But what really strikes out is the profitability. As you can see from a break-even position in fourth quarter 2022, we achieved an EBITDA margin of 5.8% and a net profit of 108 million euros in 2023. We exceeded our targets, which gave reason and cause for the profit warning that we issued about two weeks ago. And to take a more deeper look into what's behind it, we achieved 4.3% EBITDA margin, which was outside the outlook for 2023. If you remove special items and one-time effects, the EBITDA margin is a good and very solid 4.0%. an increase of one percentage point over last year, though we had about 3.0%. Also on cash flow, removing special items and one-time effects, we came out at 123 million euros. And if we adjust our guidance to those elements, then we're at the midpoint of 110 to 140 million. So on both items, EBITDA margin and free cash flow, Bielfinger delivered. Across all segments, we see a positive development in our EBITDA margin. From last year, fourth quarter, we were at 4.3%. If you add back the special items, that gives you 52 over 1.2 billion. And that compares to 5.8%, 69 million in the fourth quarter 2023. And that translates also into the full year. We are adding back to 65 million. That equals about 3.2% EBITDA margin. And we were able to grow this to 4.3% in 2023. Also a very good and positive outcome for Billfinger. On gross profit and SG&A expenses, we also made good progress. Gross profit grew from $450 37 million to 463 million euros for the full year. And the SG&A quota, which is an important KPI, declined from 7.1% to 6.6%, 298 million, even on absolute terms, a lower number than 2022, despite the fact that we had inflation adjustments on our staff costs. In the P&L, also a few details here. A very strong EBIT performance of 190 million translates into a net profit of 181 million. That's an interesting development. Where does it come from? You have the financial result, which hasn't changed from last year. You have income taxes on a much higher result. But then we also were able to reverse an impairment of deferred taxes to the tune of 61 million, which then gives us an earnings before tax of 182. And then you have discontinued and minorities gives you 181 million euros for the full year. That equals to an earnings per share of 484 euros and 84 cents. Now, looking at dividend, we always work with an adjusted net profit where we take a normalized tax rate. And if you do that calculation, then the adjusted net profit grew from 82 million last year to 117 million. And using a payout ratio of 58 million gives 1,081. per share as a dividend that the supervisory board and the executive board will propose to the shareholders meeting in the middle of May. On the cash flow, we also have positive one-time effect from disposing real estate. In the fourth quarter of 2023, that was a transaction that took about one and a half years to come to completion. And as you all know, when interest rates go up and construction costs increase, a lot of real estate is not being handled and transaction, but we were very successful here. to close this transaction at 26 million euros. Again, as I said, this was a deal that was coming for one and a half years and we are really happy to get this transaction closed under difficult circumstances. We paid out about 20 million euros on the efficiency program and the 40 million that's left will be paid out in 2024 and that is part of the guidance as Thomas said before. Looking at the cash conversion on an adjusted basis, so using adjusted free cash flow and adjusted EBITDA, which gives you the operational performance, we came out at 78%. That's a bit lower than last year. In 2022, we had a number of advanced payments in the fourth quarter, which we did not repeat to that extent. So that's why you see... a bit of a decline from 136 million to 122 million, but still a very good performance and within the targets of our strategy that we presented earlier in 2023. Let's go quickly through the segments or the intake, particularly in Europe. When you look at the quarterly development, very strong first quarter will not be repeated in 2024. That's not to be expected. And then a bit of a decline in quarter two and quarter three to 700 and 670 million euros. But again, strong finish in quarter four at 808 million. So that in total, the organic growth in E&M Europe was a strong 8%. to 3.1 billion on the order intake side. Revenue shows the typical seasonal pattern with a smaller number in the first quarter and then the largest number, highest number in the fourth quarter, but still a growth of 9% quarter over quarter and also 9% growth year over year to almost 3 billion euros in our very important segment E&M Europe. Profitability also, if we look at comparable numbers, quarter four last year was on an adjusted basis 44 million, 5.9%. This year, 6.6%. So again, you can see the improvements working in the profitability. Full year last year was 5.1% on an adjusted basis compared to 5.4%. This year, also a very good improvement in profitability in Europe. E&M International, order intake, you can see the dip mid-year, which was driven by the repositioning. But again, ticking up in the fourth quarter to $211 million. So the decline quarter over quarter, minus 13% for the full year, minus 10%. Really driven by giving up one business line in the United States. The revenue went up quite a bit in 2022 over a quarter. But as we finished those construction projects, the revenue became a lot more steady around the 170, 175 million euro mark. Revenue declined by about 12%. But the interesting feature here is the revenue split is only 30% in projects and 70% in frame and service contracts. Last year, the split was still 40% and 60%. So here you can see the effects of the de-risking. Profitability, again, I think this speaks for itself. The development in 2024 with a very strong finish, 5.4% EBITDA margin in the fourth quarter. We left the loss area, so to speak, in the middle of 2023, and that has set the stage for 2024 and going forward. Technologies, a significant increase in orders received and revenue, both double digit for the full year, 16% on orders received, 25% on the revenue. And here, interesting, the share of revenue within the pharma and biopharma sector has grown from 35% to 50% in 2023. And finally, profitability in our technology segment, that's a development that we're really proud of. Very stable profit generation in 2023, every quarter with a positive contribution and overall 4.5% for the year. That is a very good basis. going forward in 2020 or 2024. So in summary, Billfinger delivered on what we promised. And now I hand back to Thomas to see how we go forward with the markets.