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.