Bilfinger Se Unsp/Adr

Ladies and gentlemen, a very warm welcome to a Billfinger's second quarter 2025 Results Conference Call. My name is Yasmin Denz and I'm joined today by Thomas Schulz, our Group CEO, and Matti Jekyll, our Group CFO. As always, all documents related to our Q2 reporting have been made available on our website. As usual, we will start our webcast with the presentation on the quarterly highlights, the current market environment and our financials, and then open the webcast for your questions. You will then be able to ask questions by pressing star and 1 on your telephone keypad or via the chat function. At this time, all participants have been placed on a listen-only modus. The webcast will be recorded and I will now hand over to our CEO. Thomas, please, the floor is yours.

Thank you, Jasmin. Hello everybody out of the very warm Mannheim here in Germany. Let us start with the highlights for the quarter two. It was a quite successful quarter and we were in the order received 18% up, organically 16% up. Actually the highest order intake for most likely all time. When we look into the revenue, it's 4% up, organically 2%. And the EBITDA margin developed itself from 5.4 to 5.5. But here we had in last year a special effect in it with the badwill of 10 million. So we actually compare with an increase of 90 basis points. The cash flow is more than double. It's a 103% growth. And we of course confirm the outlook and as always we confirm the midpoints of the outlook. All that what I just said for our performance in quarter two is in a very volatile market and we see for our business quite a stable development. On top of it, because it's part of our vision, it's part of our business model, it's the core of our strategy, the efficiency and sustainability, we got the net zero targets approved by the science-based target initiative. And last but not least, we will have Capital Markets Day on the 2nd of December, and there we will give new mid-term targets up to 2030. But before we go further into the business, some ESG topics which are utmost important for us as BILFINGER, especially the safety. We are under the top performers in all the industries where we work regarding the safety. This is not only important for us as an employer and for the culture within the company and the culture to work with partners and with customers. It is actually a given thing if you would like to have sustainable long-term contracts and partnering with the clients that you show a good performance. Here we show a slight improvement on the total recordable incident frequency. And we actually lowered it from 1.01 to 0.89. This figure, this KPI means it's the amount of incidents what we had regarding 1 million working hours. Below that graph you have the lost time injury frequency. This is a similar thing. It works against one million working hours and it's about all the incidents where we lost working time because people had to go to home early or to hospital and so on. So both for us in the right direction, but of course our target is to be zero on both and we work on that. On the right side you see the announcement what I had on the highlights. It's about that our net zero targets are approved by the science-based targets initiative. The reduction of absolute greenhouse gas emissions in scope 1, 2 and 3 by 90%. This is for us as Bielfinger, this is for our suppliers, for our customers a very positive news. out of that into the business, into the industries. And as you know, we cover the industries where we have sustainably more than 10% of our revenue line realized in. And this is for us, the chemicals, petrochem, the energy, the oil and gas, and the pharma, biopharma. But we are, of course, in significant more like food, utility, mining, cement. We are in more industries. But this is for us the package of the most important ones. On the left side, you have the production index. It's an indicator how the industries in the areas US or North America, Europe and Middle East, that means our area would be covered from Billfinger's side, develop in the business since the base year 2019, the last year before Corona. And when you look on that graph, you see that we actually have since 2019 for three out of the four more or less no real growth realized in the industry. Only pharma, biopharma sticks out. To give a little bit more details, in the chemicals and petrochem, we have significant regional differences. We have areas like in US or in the Middle East and partly in Europe with good growth rates. And then on the other side, especially in Germany, very much challenged. So our revenue share is 23%. Based on that mix, what I just said regarding the regional differences, our demand moves sideways. But the outsourcing potential, especially for clients being challenged, is quite good. Then on the energy sector and energy industry. This is mainly driven for higher demand on storage and transmission, for a higher demand of availability, for a higher demand to get sustainable, predominantly sustainable, but fossil energy too, stored and delivered into wherever people live and are. This is 23% of the revenue share. We see the demand positive and the outsourcing potential where customers could give us and can give us and give us actually complete parts of their maintenance and engineering related part is quite good. Then we have oil and gas. Oil and gas outside Europe, there is definitely a revival into fossil oil and gas supply and investments, especially in the Middle East, but in the US too. Whereas Europe has a strong LNG demand. So both situations, Middle East as well as US and then Europe, actually is positive in the demand for us and the outsourcing potential is positive and that part is 20% of the revenue share. Then we look into our booming industry, and that's pharma, biopharma. As we say for two to three years now, the localization demand, the reduced time to market, the faster realization and execution in that industry since corona is over, actually drives here the growth. It's 13% of our top line. Demand is good, and the outsourcing potential is good. Out of that we go into some selected orders to give you a kind of a picture what are we doing. 80% of that what we do with any client is more or less the same. This is the beauty of the Billfinger Group. We can move our experts from one industry to another, from one geography to another and with the competence what we have we can serve independent industries, which gives us a kind of a resilience, no matter how the industry goes. Let us start with chemicals and petrochem. Here, with a long-term customer, Mitsubishi Chemicals, we are for more than 20 years operating maintenance and other things on these assets. And now they decided for a new line. And we enjoy to get the contract for EY&C, for piping, steel work, and other things, and of course for the maintenance. It's a proof of our good efficiency improvement performance, what we deliver to that client for a very long period of time. Then in the middle part of the slide, it's from UAE. It's out of adjacent industries, not out of the top four. It is actually about a better supply, an enhanced supply of potable water. And we do the piping and the mechanical service for the desalination plant. On the right side, Germany, on the energy part, it's Berliner Energie und Wärme. Here it's about the planning and assembly of five large pump stations to modernize district heating. District heating, we see more and more, especially if you go from a geography in Europe, more to the north and more to the east. And I made that comment this morning too. if there will be in any way less war activity or no war any longer in Ukraine. We see especially in that part of the world A big demand for district heating modernization or rebuild because former Soviet Union countries depend in the winter time very much on district heating systems. Not to talk about that we are of course able to offer district cooling systems in line with the district heating if the summer gets quite hot as we enjoy it at the moment. Out of that into innovation. Industrial service providers are not that much known for innovation, but we do a lot. And we do the following way. We look into different industries, take their innovation and combine it to make tools and offerings to our clients. And here we have, again, an innovation in the digital part. What we drive a lot, we are very much looking into and working in the direction of artificial intelligence, too. It's Bilfinger Iris 3.0. It's a mobile all-in-one maintenance tool. To give some information about that, it's cloud-based, it's real asset data storage and analyze. It is automatically connected to the client and which is not a given, especially not in Europe, where every country is doing everything to be different than the others. We are in line with all the local requirements. The customer gets with that a possibility to see a more efficient planning of the maintenance and a more optimized utilization of their assets, no matter if it's e-machinery, wells or pumps. And we as Spielfinger utilize that, let the customer participate in it and it gives us and with that the customer the possibility to be more efficient in predictive maintenance. Not only higher data quality, not only more time saving, actually we are getting more and more into a position to see inefficient things happening before they happen. And we can do, of course, good maintenance work against that. Another proof how innovative we as BILFINGER are for our clients. With that, we go into the business back, how it looks like. The opportunity pipeline, as you well know, the business we can see it will go on and it is indexed to the April 2023. It's the graph on the left upper side. And we showed that over two years that you see the development. on which kind of pie we can bid on. And when you look into it, you see that actually since the quarter two last year to the quarter two this year, this amount where we can bid on is actually not growing. But we are growing. As you see in the next part of the graph, in the middle part, we had 18% orders received growth and the 16% organic growth. Actually, with close to 1.8 billion euro, this is the highest what we can find in all the data regarding the Bielfinger Industrial Service Company. This is a good development, but we have volatility in the order intake. There are reasons because we had a renewal of contract. We have some larger contracts in and it's a great figure, but don't expect that this will come each quarter. The order backlog, which is for us utmost important, you see that we had not only in the last two years, actually in the last three years, if we would show that too, quite a good development. And if you grow in your order backlog more or less double digit from last year to this year with that volatile market, that's a very good performance of our organization. With that, I would like to give to Mati, our CFO.

Thank you, Thomas. Good afternoon, ladies and gentlemen. Let's take a quick look into the numbers, and let's start with the group performance, and then we'll take a look into the segments. Revenue grew by 4%, organically by 2%, to 1.35 billion euros in the second quarter of 2022. We do see growth in pharma and biopharma following the strong order intake that we reported in the previous quarters. And as Thomas alluded to, oil and gas continues to grow with a renewed focus on fossil fuels. And the chemicals and petrochemicals overall continue a consolidation path, but when we take a look into Europe, you can see the negative impact that particularly Germany has there. On the profitability side, we continue our margin progression quite nicely, 11.5% gross profit after 10.7% the year before. I just keep repeating myself, how do we do this? Yes, how do we do this? Yes, we improve our operational excellence, efficiency, standardization, de-risking, better execution in the field are the contributors and the levers that are working to improve our gross margin. And in addition, we see The positive impact from the acquisition last year, that is performing much better than what we had expected during the due diligence, and that's fair to say. On the SG&A cost, it's 86 million this year, after 86 million last year, relatively also a progression to 6.3%. we have included Roto-Werken this year earlier on so there is a full quote of Roto-Werken SG&A in there and then there is a couple of months of N0 the acquisition and hence in absolute numbers we stay at the same level as last year but relatively an improvement that leads to an improvement in our EBIT A to 5.5% You see the adjustment that we had in there of 10 million last year. That's the bad word from the acquisition. If I eliminate this to go to a like for like comparison, we see 90 basis points improvement from 4.6% to 5.5%. Into the segments, orders received. Again, Thomas mentioned this. We have received new contracts, but we also have renewed and prolongated framework contracts, important contracts. We see organic growth in the energy industry. We showed before the revenue shares of the industries. If we look at chemicals for the first half of this year it was 23% after 26% last year and conversely energy increased at the same amount to 23%. So we see the shifts in our industries between the industries. So here orders intake 9% organically to 1.15 billion euros in the segment Europe. Revenue is flat at plus 1 respectively minus 1%. Here we see regional differences, German speaking region negative and the other regions being positive. So in total, that gives you a flat development in E&M Europe. However, profitability, again, if we take out the 10 million badwill, we see 70 basis points improvement on a like-for-like basis. And also here, de-risking standardization and the very positive development of the former stock business under our guidance and leadership has made a very good contribution to the profitability improvement. In international, our two markets, Middle East and North America, obviously the order intake is very high compared to last year, plus 60%. That happens sort of Every three or four years we have a very large framework contract in the United States that gets renewed and prolongated now for, I don't know, 85 years or so. And that really drives up the numbers in the second quarter of the respective year. But also we have received orders as we just showed before in the Middle East for the seawater desalination and that also is driving our growth there. What do we see in the market? In general in the US the market remains cautious. The political uncertainties that you can read about every day in the newspaper It does have an impact on investment decisions and mostly capex, not so much opex. But on the other hand side, we see Middle East and there's news about investment in production capacities almost every day. So also very interesting to see the market. On the revenue side, plus 4%. Here the U.S. is slightly negative, but the Middle East is better, so positive. Everything is in line with our expectations. In particular, the oil and gas industry is here represented with good growth rates. On the profit side, also in line with what we expect and in line with the outlook, 3.5%. Margin progression is also working here. In absolute terms, seven after four million. Small numbers, but still the trajectory is the right one. And when we talk about international, coming back to the U.S., just on a side note, We reported about the accident last year that happened in Georgia. In the second quarter, a complaint was filed in the court. The complaint was filed against several US companies, including one of our subsidiaries. The whole case is in a very early stage. The investigations into the cause of the accident continue. And that's sort of the latest status on that case. Then we move to technologies. Order intake is flat. Not surprising because the businesses that we are in there, pharma and biopharma, energy, do tend to be more volatile in terms of awarding contracts. Last year we had significant order intake from the pharma and biopharma business and this time we had more order intake from the energy side despite the fact that we do see delays in the projects related to energy transition. Financial investment decisions are being delayed as people review their projects and the markets pretty much on a daily basis. The revenue grew by 15% to $205 million for the quarter. Strong quarter performance as we implement and execute the life science contracts, but also in the nuclear arena we have seen higher revenues in the second quarter. And the margin improvement here is an impressive 100 basis points compared to last year. So the trajectory is also in the right direction. Again, improved operational excellence through all the business lines that we're operating in technologies. How does that convert into net profit? Net profit is stable. The EBIT of $72 million compared to $70 million last year, quarter over quarter. Financial result is the same. The taxes are a bit higher. We've seen the tax rate increase from 25% to 28%. There are timing effects in there, tax credits when they are being granted, so nothing to worry about. And in the end, these are small numbers. So that the profit is absolutely in line with prior year, but also absolutely in line with what we had expected. Cash flow, I know that's the most favorite pastime of our CEO. Yeah, thank you. When he's not out there doing sales. So, very good performance, continued good working capital management. On the right-hand side, you see how the relation between net trade assets and revenue is declining from 10% to 9%. Our target is to get down to 8%. Also, I can only say it's working and we will continue that as we go along. Then on net liquidity and leverage, starting off with the leverage, that's the usual seasonality that we have when we go through the year and then we pay out the dividend, which you can also see on the left-hand side from end of March to end of June. What happened there, we paid out the dividend, we continued the share buyback, and we paid for the acquisition there. of N0 so that took out some liquidity and we expect this to go back up again as we generate free cash flow. I think that's so much from my side and I hand it over back to Thomas. Thank you, Marty.

So when we look into the outlook, you see on that slide that we show the first half year result for 24 and 25. And you see that we are from 2.4 to a little bit more than 2.6 billion in the revenue. And the EBITDA from 4.7, which includes the 10 million of the badwill last year, into 5% this year. and free cash flow quite a significant step up in that development, too. Of course, we confirm the guidance, and when we talk about confirming the guidance, we definitely confirm the midpoints of the guidance, as we always do. And for us as management, very important that we confirm, of course, the midterm targets, and we are already excited about the new midterm targets, what we will announce then in December. Maybe that as an additional thing, we of course look into some KPIs and ratios, how is our SGMA versus contribution margin versus revenue and so on developing and all that together actually shows that we are on the right track to achieve our midterm targets. And that makes us confident, no matter that the market is very volatile around us with tariffs, which we are not impacted directly. Then Ukraine war, then all the political situations throughout Europe. It's quite a volatile market, but a big thank you to our organization. These kind of volatile times to really perform well in line with that what we expected. So with that, I would like to give back. to Jasmin, but before I can go through the highlights again. Orders up 18%, revenue 4%, EBITDA margin on 5.5%, cash flow more than doubled, our outlook confirmed, the net zero targets are approved by the science-based target initiative, all that in a stable development for us, but a very volatile market. And Capital Markets Day on the 2nd of December, where I hope that you attend with all the people you know. And now back to Yasmin.

Great. Maybe not all the people you know, but at least yourself. So thank you very much, Thomas and Matti. We're now happy to take your questions. If you would like to ask a question, please press star 1 on your keypad or use the chat function. To withdraw your question, you can press star and 2. So, our first question comes from Michael Poon from Deutsche Bank. So, Michael, your line should be open now.

Good afternoon. Thanks for taking my question. I'll start with a nasty numbers question. So, you did a good $160 million of free cash flow year-to-date and advised about the run-off, the run rate per quarter in H1 was a good $50 million. and profitability in H2 is usually higher. So the question would be, what would have to go so terribly wrong so that you only arrive at the low end of your guidance? And let's say, why not narrow the guidance a bit more towards the upper end?

Okay, Michael, this is Mati. On the outlook, free cash flow, that's what you're talking about. Why did we keep, I'll start with the second part, why did we keep the guidance as it is? As you know, cash flows are volatile. We expect for the second half, as we have seen in the first half, a few larger new orders typically we get advanced payments. The timing of those payments are hard to narrow down and to determine when they will happen. And that gives us sort of a bit of uncertainty. And that is the reason why we kept the guidance where it was. Yes, we have a one-time effect in the first quarter, but that was already included in our guidance. So nothing out of the ordinary has happened. And the second quarter, we'll see how much the volatility that Thomas talked about will affect us. And typically, it does affect us on the cash flow sooner. rather than later and that is why we kept the guidance the same we also kept the guidance the same for all the kpis with respect to the volatility in the market but as said many times before we're targeting the midpoint of our guidance ranges and that is what we have confirmed again and again and also today understood thank you then uh one on the

backlog, which obviously developed very nicely. The roughly 4.5 billion that you have now, what is the saving of that backlog and what visibility does it give you for the second half and also in terms of saving into 2026?

what we look at month after month after month is how much of the revenue that we're targeting and here the midpoint of 5.4 do we have under contract and at the end of June we had somewhere between 85 and 90% of the backlog of the planned revenue under contract for 2025 So that means that about two and a half billion to three billion out of the backlog is for this year and then the rest goes into the next years and very smaller portions go into the year after. Maybe by way of explanation, when we look at our long-term contracts, framework contracts typically, we only take into backlog the next 12 months of revenue. Other companies take the full duration, three years, four years or five years. We don't do that. We've never done this and we stick with our convention. So that gives you a bit of a reference to what the 4.5 billion in terms of backlog means for us. So we're very well covered for 2025 and we also have very good coverage already for 2026. Excellent.

Thank you. And that's that last question. I would say the new The German government got quite a bit of maybe premature praise right at the beginning. Still we are lacking like real reform efforts so far. When you think about your talks with your clients about potential decisions to keep capacities, build up capacities, shut down capacities, What mood do you see currently and, let's say, what would be needed to really show positive turnaround here? Because, obviously, so far we haven't seen a positive development yet, referring to your comments during the presentation.

Yeah. Michael, it's here, Thomas. We can say it like that. The new election in Germany actually brought very positive feedback and situation and mood into the industry. But everyone or most of the people in the industry said, okay, give them the 100 days to formulate good ideas, to formulate plans, and then to start to execute. We heard a lot of very good proposals, especially out of the Ministry of Economy, where we for years before heard really a lot of not so good things. which was taken by the industry very positively regarding pension, lifetime, social cost, work time, productivity, and so on and so on. But it's now time to execute things. And that we formulated, the industry is formulating that the industry is open and would support activities immediately. There were several meetings with the government to show that the industry is willing to invest. That means we are from a timing at a crossroad. If the government is starting to implement and to realize some of the good ideas, not all, but some of the good ideas, then not only the German industry would invest more, actually foreign investments into Germany would get unlocked too. Of course, on the hindsight, you have, of course, the situation if they don't do anything and going on only to talk, then that would be negative. But we think some will come through. and it will be a way forward which is slightly positive and as more as they realize reforms, as more positive it would be.

Thank you very much.

Alright, thank you Michael. So our next question comes from Olivier Calvet from UBS. Olivier, please go ahead.

Yes. Hi. Hopefully you can hear me. Good afternoon, Thomas and Justine. Thanks for taking my questions. I have a couple. Firstly, on the U.S. incidents you mentioned with the claim that has been filed, I'm not sure what you can say at this stage. You mentioned it's early, but would there be a specific timeline for you to potentially build a provision?

The complaint was filed. The complaint did not include any numbers. So that makes it very difficult to even assess any magnitude. And until we know some sort of magnitude and can make an assessment, there is no, we have no possibility to take a provision, nor are we obligated to take a provision. Specific timelines on court cases are even more difficult to assess. What we hear from outside counsel is it will take time.

We are not talking here months.

We are not talking months, we are talking longer periods.

And whenever something comes, we will then inform about it. But we didn't change our view on the case at all.

Okay, fair enough. The second one, just coming back to the numbers so far in the technology segment, I was just wondering, trying to understand the margin ramp-up that you expect. It's obviously, as you said, up about one percentage point in the second quarter. I'm just wondering about the building blocks to get to that 6.3 to 6.8 percent EBITDA margin or maybe rather the midpoint of 6.5 for the rest of the year?

With the guidance we are targeting the midpoints not only for the group but also for the segments. To be honest, the margin buildup is we're slowly moving into a territory that we believe we should have been in for a number of years. So we have had issues in that segment, and they're well known to the community here, that we... that we got rid of, underperforming contracts, underperforming projects, businesses that we just stopped doing. And what we're now seeing is that we're getting into territory where we should be, also compared to our peers and competitors in the market. And there is There is upside potential there, but it's hard work to really get it into the into the PNL. But this is a special focus as we review our strategy and develop new midterm targets.

Yeah, that the we think it's good development. Are we satisfied? No.

Okay. Okay. Final question would be just on the pharma and biopharma. You mentioned you usually have this ability to move experts from one geography to another. I was just curious as to whether you think this is an adjustable health market for you when you think about your international geographies, your current footprint? Is that something, an area where you'd like to see perhaps organic growth through hiring or inorganic growth to support the growth in that specific industry?

Yeah. Let us say like that. We have a strategy where we focus on two main strategic levers. One is the internal de-risking operational excellence, and the other one is the positioning. And especially pharma, biopharma belongs to that positioning part that we offer more of our good services where we are quite successful in the center of Europe all over where we are. That started, but we are far from good in that. It takes just time to build the confidence, the resources in a way that you then get the orders, because there are already existing suppliers. But we see here the growth potential for the future, but that will not impact that much 25 or 26. That will take longer time, as we said in the positioning part. The industry in itself, pharma, biopharma, actually food is related with it, utility is related with it. 80% of what we do in that industry, we actually do in oil and gas, we do on nuclear, we do on other industries too. That's the beauty in it. So we don't need to have a lot of people, actually only a few experts over the global product centers from one, let's say from Europe into U.S. to make business. Because the people what we need on site to make the work we already have done in the local areas based on other business and other industries. So for us, it's quite a growth potential what we have in front of us.

Okay, thank you. Thanks.

Thank you, Olivier. So the next question comes from Craig Abbott from Kepler-Givreux. So, Craig, we are curious to hear your question now.

Yes, thank you. Also three from my side, the first two more numbers related and the third one more bigger picture. First of all, in Europe, despite also sluggish top line, if you will. You've managed to increase the margin, the underlying margin, another 70 basis points, as you highlighted. And I just wondered, specifically in that division, which factors are driving that mostly? Is it a rising share of these standardized services? Because I would have thought more the operational gains would have already been realized, or were there potentially mixed effects there? I'll leave it there and then ask my next two questions. Thank you.

I think mixed effects is the right term. We have had a couple of regions where we needed to do more de-risking. That has happened. In other regions, we are driving product mix and standardization. And also not to forget the real impressive margin progression that we have seen in our acquisition. You know, the former stock entities that have really helped drive the underlying margin increase. So it's a mixed bag of effects that are helping the margin progression there.

If I may just quickly follow up on that, I mean, to meet your four-year guidance range there, you're going to need further progression, second half, and second half is typically stronger. I mean, so you see yourself very much on track?

That's correct, yes. Yes, absolutely.

Okay. Thank you. My second question, on the orders, I mean, we understand, you made very clear that, look, I mean, we should not take the very strong Q2 numbers or run rate. We understand that. Nevertheless, would it be fair to think in the direction of still a modestly positive book to bill as being likely in Q3?

There's no reason from our end to be afraid of sort of it's now stopping somehow. The pipeline, and I think Thomas showed it, the pipeline... is very good. Our sales success rates continue at the rates that we have known from the past, and even some better. So we're optimistic also for the second half in terms of a book-to-bill rate exceeding one.

Okay, excellent. And my third question is, getting back to the discussion on the public projects or at least public-private projects being outlined here in Germany. I didn't dig into a lot of detail, but about the plans to move ahead with these gas power plants to serve as reserves to smooth out fluctuations in the renewable energy network. So, any early thoughts here on what the potential opportunities here could be for BizSinger, and whether or not any of this might already be reflected in that order part-time? Thank you.

Yeah. Of course, we like to see the talks about the investment regarding gas power stations, especially if they are that advanced that you can switch them over to hydrogen. from fossil into hydrogen. That's what we like to see because we can offer a lot. So for us that's quite positive. But it would be positive too to reactivate minimum three of the six high tech nuclear power plants. That would be positive for us too. It is of course positive if companies invest and build into hydrogen energy resources and supply. We are actually a big player in that part too. For us, wind is with some business related, too, because we can offer very efficient energy storage possibilities, what we do for some of the cities in Germany. And if it comes to solar, in the same. So whatever the government is doing in any direction, we will have regarding the energy supply, of course, an advantage. The only thing is that they start to act to make it like this. I think the ideas are all on the table and they are discussed up and down. Just act. And I think you will have the same message from RWE and other German energy giants. So we see that positive, but it's not only Germany. We see that all over Europe. We see actually with the revival of fossil fuel and fossil-related energy in other parts, like in the Middle East or in U.S., progression in CAPEX, and with that then in the longer-term OPEX part where we participate a lot in, very positive too. But it's nothing what we see is coming over the next week. It will take time because it's politically driven, and they always have a lot of time.

Yes, okay, but it's another positive path out there looking further down the road. Okay, thank you very much. Thank you, Greg.

Thank you, Greg. So, from wrote a question in the chat and I'm happy to read it for you. Given a strong order intake, what should we take away from this? You mentioned higher order intake in the oil and gas and energy segments. This means we will see a continued shift in revenue mix away from chemicals towards these areas, right? How are negotiations with clients in these segments compared to chemicals? Are you seeing better pricing here than the chemicals business? And based on the order backlog, can we expect a steady margin improvement going forward? I would appreciate if you could give us a bit more color on this.

Yeah, I think we answered it in a kind of a mixed couple approach. Given the strong order intake, what should we take away from this? Of course, positive. It makes us very proud in such a volatile time that our organization is able to deliver such a high record order intake. But, and that's always the German but, you know, It is, please don't go out and think each quarter will be like that. We had some special orders and contract extensions in the quarter. What we didn't have before, and we explained before why it's so weak or weaker, now we have to explain why it's stronger. We have that volatility in the order intake. There is no seasonality in it. It depends very much on contracts and customer behavior and so on. Then you mentioned higher order intake in oil and gas and energy segment. This means we will see continued shift from chemicals away. We always have a movement between the different industries. We should not really overstate that. We don't have a movement of 50% in one way or the other over one quarter. It's always some up, some down, based on the timing where we are. But of course, we see in the chemicals and petrochem, the orders what we get, you get an order for 100 and you finalize it for 100. In good times, you get an order for 100 and you finalize with 130. You get additional work. And that is with the challenge what they have in the industry, of course, not happening. When we have in the energy sector or in the oil and gas, you get 100 and you can make 130 out of it. So there is a kind of the amount of orders is actually not changing a lot. It's more the size and what comes as an add-on on top. Then we go further. How are negotiations with clients compared to these chemicals? Believe me, coming very much from the sales side, it's not so much about the industry. It's more about the culture you talk to. And I can give you some cultures where it's very difficult to sell something and other cultures where it's easier. But important in one thing or one thing, they all have in common. If you are a company as we as Billfinger are, we are not offering only one product. work, one offering, one product, where you can combine and showing the efficiency improvement when you have multi-trade, as we call it, up to solution partner. They are all very positive on that. We definitely see more a movement into the larger suppliers with a bigger offering to combine and to be more efficient. So regarding the pricing, Marty, do we see better pricing or worse pricing in the chemicals?

Well, you know, where there's cost pressure on the client side, they try to give that to their suppliers. And when they come and talk to us about price reductions, typically our response is, let's talk about efficiency. Because then you win and we win. Just a price cut or a cut to our price list is just not an option for us. It doesn't help. It doesn't help them and it doesn't help us. So we encourage the discussion on efficiency. And efficiency is something that we are experts in. But it takes two parties. It takes the client and it takes ourselves. We have plenty of ideas on efficiency improvements and gains, but the client needs to be willing to discuss it with that. And as we are an integral part of their operations, they need to be willing to make changes to their organization. Otherwise, it won't work. So when you look at the energy and oil and gas segments... Pricing is good. I think the discussion with the chemicals is, as I just alluded to, let's talk about efficiency rather than price cuts. And that leads me into the quality, and we talk about quality of our backlog, and we have seen a steady improvement. of the quality of our backlog, meaning there is a steady improvement of the margins that we do have in backlog, and they do convert into margin improvement in the P&L. That is how we see it.

We still have two questions in the chat. So just as a reminder, if you would like to ask another question, please press star one in your keypad or use the chat function. And it's another question from Nicholas Demeter from Metzler. And it reads, it's now regarding the technology segment where we are seeing a good development. And one apparent driver of this growth seems to be the work related to nuclear contracts. Is this primarily linked to the construction of new nuclear power plants or to the decommissioning of nuclear power plants? Could you remind us again what exactly is being done in this area? Also, within the new order intake, are there new orders coming from the nuclear segment? In which countries do you see the greatest potential for this area going forward where Bill Finger can participate?

Yeah, we have, of course, everyone knows that we are part of the Hinkley Point project, and a new one is coming with Sizewell, a kind of a copy, which is good, but the whole world looks on that, but in reality, In my life, I saw only once such a revival of an industry in that dramatic positive development as we see it for the nuclear industry in the last few years. That was mining after the financial crisis. And only Germany is the one on the wrong side. Only Germany is the blind one. Only Germany is the one where we talk about decommissioning of nuclear power plants. When in U.S., they reactivate a 12-years mothballed power plant for Microsoft because they need more energy for their data centers and other things. There's a kind of a sadness in it. Of course we work on the decommissioning too. There's no question mark. But of course when you have a new build, that demands more resources, more business. It's just bigger in the figures, new builds, than decommissioning. But we should not forget that we as Bielfinger in the nuclear sector are not only in the new build and the decommissioning, we actually offer waste treatment. We offer special solutions, for example, in Germany, the nuclear waste deposit Asser, that mine site where we deliver the technology to take older barrels and other things out of the mine site to treat them different. We are the ones building a prototype for fusion, nuclear fusion reactor, the new technology in it. So we are actually in different areas in that business. But of course, a new build of a nuclear power plant is always that capital intensive that it's in our top line the bigger part of the business.

Thank you, Thomas. So we have a question from Gerard O'Dirty, also from Exler Bank. Should we still assume large-scale M&A is most likely to be in the USA? You have previously stated a few larger US businesses are on your radar and that you are undertaking comprehensive due diligence by US to avoid missteps. So could you provide us an update on your strategy and willingness to move on M&A opportunities?

We do that. We have no change of that. And we are conservative people. I think we can say that. And you see that with the guidance and whatever. But we look for a larger one in U.S. and we look for a larger one in the Middle East. And we do bolt-on acquisitions in Europe, as you saw, Nordic Mechanical Solutions, for example, a few weeks ago. So we do that. But if we take something on board in a larger scale, it has to work. It just has to work. And that is what we look into. And what is it what we mean? It has to work. It has to cover a market which is where we have competence in. It has to cover a market in U.S. where we have good management teams getting into the company with good customer relations. And that takes time to look into. We have a good example of how positive that can play out. The acquisition of Stork was not done in three months. It took quite a long time, more than one and a half years, if not longer, to look into, and it actually came out positive for us as Bilfinger and very positive for the people in the former Stork, now Bilfinger Group, and we are very happy about that. And of course, we look into that we have in larger M&A transaction that we do something which adds shareholder return. This is for us number one importance.

So thank you very much Thomas and Marti. There are no further questions. So thank you all for your active participation in today's call. Our next financial calendar event will be the publication of our Q3 results on 13th of November. And as Thomas said, please also already note 2nd of December into your diaries for our Capital Markets Day. As always, if there are any remaining questions, please reach out to me or the Investor Relations team. And thank you very much. Stay healthy and goodbye.