Bilfinger Se Unsp/Adr

Good afternoon ladies and gentlemen and welcome to Bullfinger's Q2 2026 results webcast. My name is Martina Karl-Karke and I'm here today with our CEO Dr. Thomas Schulz and our CFO Matti Jakel. We will start with the presentation today on the quarterly highlights and then open the call for your questions. You can ask your questions via telephone by pressing star and 1 on your keypad or via chat in the webcast as usually. During the presentation all participants will be in listen-only mode and the event will be recorded. I will now hand over to Thomas.

Thank you. So, hello everybody. Welcome to our Q2 2026 result here out of Mannheim in Germany. Let's start with the highlights. We had actually quite a good order intake in the Q2 with around 1.5 billion euro and that in a quite volatile market environment especially with the Iran war. Our revenue has a quite good run rate and we foresee that definitely with more dynamic positive dynamic towards the second half and the end second half of this year and then of course the end of this year. Our EBITDA was not on the level as expected and actually moved down to 5.3%. Our earnings per share is up to 147, which is quite a nice improvement and the cash flow for the market situation with the Iran war is the 48 million, quite a good one. Our outlook is confirmed especially on the revenue where we see quite a dynamic in it and on the EBITDA margin at the lower end of the range but of course within the range. And from the 1st of April on our M&A Technocon is included in the figures. Before we go into the market and different business analytics and so on, something which is very important for us. It is the safety of the people we work with, our own people, suppliers, customers. And again, we had an improvement versus the Q2 25 on the total recordable incident frequency rate. and a fantastic improvement on the lost time injury frequency rate which is close to nil actually our ambition is to be on both or nil no accidents in work and our organization is doing here a fantastic good job When we then go into the different industries and we always show the four main industries for the Billfinger Group. You see on the left side the production index. Actually, the figures are from standard and poor's index to 2023. And the color code is, of course, corresponding with the more information per industry on the right side. Let's start with the chemicals and petrochemicals. Actually, one's by far the largest part of our top line. That changed. It's down to 21%. and the 21% in the revenue chair in the outlook is slightly flattish as we call it. What does it mean? We have especially in central Europe, Germany in the lead, quite a pressure in the market with cost reduction programs where we help customers, where we work with customers quite intensive, but of course the size of the orders and the demand is smaller than we are used to. So, in other areas like in North America and especially in the Middle East, it looks completely different. Then we come to the energy. Energy has a very good run for the Bill Finger Group, but energy as an industry we see quite positively for the years to come. It makes now 28% of the top line and actually replaced in a large extent that what we had as additional work in the chemical and petrochemical industry. The demand is quite favorable for that what we offer. For both industries, The outsourcing potential, the potential what we as Billfinger have to take over, especially asset performance, maintenance, turnaround business from our clients and their organizations is quite good. That is what we, by the way, see in all the industries. The next one is oil and gas. Stable, Good development, 19% of the top line, good demand for us, good customer relation, and with some differences in the region, but especially the run for LNG and investments in the Middle East out of the situation what we have since end of February are driving here a good demand for the future. Then last but not least, our green ones, the pharma and biopharma. It's 10% of the top line. Smaller business and a little bit more cyclical but quite good demand. Nevertheless that this year with some European impacts slowed the growth a little bit down but from 26 on quite a good outlook up to 2030. Out of this we go into some selected orders. On the left side you see out of the chemicals petrochem from one of our long-term well-established customers that we have the task to install an air preheating system with the pure target to improve efficiency. This is asset performance at its best and actually proves our high quality what we deliver to our clients. In the mid is Germany with energy sector. It's EWE Hydrogen. We are responsible for the engineering, installation and commissioning for the integration of a new 320 megawatt production plant for hydrogen. On the right side, with our new M&A, we actually were successful in the second quarter to close an order with a mining company, a gold mining company, for some mechanical, electrical and insulation work in the gold processing plant. Mining will have, for the Billfinger Group, as well as data centers and other Smaller industries, an important role in the future and actually a bigger and a better dynamic. Out of that into innovation. Innovation for us is important because we have a lot and we can offer to the customers a lot. It's a big differentiator in the peer group. It makes actually quite a lot of our good reputation. This time we are proud to present to you the Billfinger automated gas analyzing system. When you have large gas production sites, processing plants and so on, it can go over several square kilometer. To test the product, that means the gas and what you have in the gas, you use so-called analytic gas bottles. These analytic gas bottles get the content of gas and then they normally take that together and bring it to an external laboratory to check how the content of the gas is. In other words, how good the quality is. We offer a system, a mobile system, which can 24-7 do that on the site there where you take the gas bottle and on top of it collecting the data digital and on top of it certifying the product what the customer is producing. This is a significant improvement for our clients in the gas industry. Out of that we come to the demand and here you have our opportunity pipeline at the top left and it starts indexed in April 2024. When you now compare the three times quarter to 24 25 and on the right side in dark blue 26. You see the difference. We are more or less on the same level in the opportunity pipeline. Opportunity means what do we have in front of us where we can bid on and where we have a good chance to get the order. And you see as a difference to the others that in the quarter to 26, the first and the second month was fairly low. and the third one really showed an improvement. And that is what we mean that the quarter two showed at the end a significant improved dynamic. But what you see too is that actually the order pipeline up to November, December in 25 was slightly increasing and showing quite a good development for the business to come in 26. Then we had the winter downturn, a little bit longer and stronger winter than we actually calculated, which is only a few months or maximum a quarter, one and a half quarter deferral time impact. But the Iran war at the end of the February actually brought hesitation, prolongation, deferral, postponing of necessary work as projects, maintenance, turnarounds in the industry in Europe. and of course in the Middle East. That is nothing which is cancelled. It is a time effect. What you always have an unexpected bigger crisis. People are getting more hesitant. Our customers are getting more hesitant. They need more approval from supervisory boards. They crunched their budget multiple times instead of giving directly the order. So what we foresee is that the second half of the year creates a significant better dynamic and business environment for that what we have to offer. If we then look into the order intake, this 1.5 billion for the second quarter 2026, the third best with and without Technocon by the way, in more than 10 years for the Billfinger Group, shows that we already saw good signs at the end of the quarter too. The backlog improved to the Q1 and of course to the year end and is slightly down to that what we saw in Q2 2025. And with that, I would like to give to Matti, our CFO.

Yes, Thomas, thank you. Good afternoon, ladies and gentlemen. I will run you through the group numbers and then the segment numbers to provide some more color on the reports that we have issued early today. Revenue is up 7% to 1.45 billion euros for this quarter. The book to bill at 1.03. is better than what we have seen in the last three quarters where we were below 1.0 and obviously with a very huge order intake in quarter two 2025 we were at 1.31 but I come to the effects for quarter two last year again when we go through the segments. Gross profit is down by 80 basis points Thomas talked about the Temporary effects that the Iran war has on almost all of our industries and the delays that the uncertainty has caused and that's delays not only in capex but it is delays in opex spending so and that translates into some sort of underutilization within our operations and that's the main reason why gross profit margin slightly slipped to 10.7 percent. Conversely, on the SG&A expenses, they were up 2 million. That's related to the Technocon acquisition. But as a ratio, we improved from 6.3% to 6.1%. Continued integration of the acquisitions that we had, continued efficiency or effects from the efficiency program, which gave us that improvement. Overall, profit margin slightly down from 5.5 to 5.3%. Obviously, looking at our guidance, that's below what we had expected. But the reasons, I think, are fairly clear and should disappear in the second half of 2026. Let's take a look at the segments individually. Orders received in Western Europe, 482 million. Last year we won a big contract in the United Kingdom for a chemicals customer. That's an effect that we did not repeat this quarter, but if you look at it sequentially, quite an uptick over the last few quarters in orders received, underpinning the increased dynamic in the market. Revenue flat at 1% up to 477 million euros, booked to build at 1.01. And the profitability up 50 basis points in Western Europe. Here we see, as I said before, further efficiency improvements from the integrations of the acquired businesses. Over to Central Europe, which includes the DACH region, so the German-speaking countries, as well as the Nordic countries. Here, orders received minus 10% to 646. Again, last year, we won a fairly large contract, also for a hydrogen production facility, but much larger than the one that we showed earlier for EWE, so that makes up the difference. and the change in the numbers revenue up 9% to 664 million euros quite nicely given the circumstances and the environment book to build close to 1.0 showing a better dynamic than in the past quarters and the profitability down 90 basis points 5.2 to 4.3 here particularly in the german-speaking We saw quite some delays and quite some hesitancy in spending capex but more so in opex causing temporary underutilization throughout the operations across that geography. And lastly, Segment International, again on the orders received last year, a three year contract renewal in the United States, which happens every three years in the second quarter, did not repeat itself, but at minus 12% organically overall, minus 32% organically. What we have here included is the addition of the gold mine contract in Turkey that was also presented a few minutes ago. Revenue, nice growth at 10% to 302 million and the book to bill 1.15 also quite favorable and showing good dynamics in that market. Profitability, an uptick of one tenth of a percentage point, 3.8 to 3.9%, 12 million euros. So despite all the issues that we have in the Middle East, We saw a stable development in the profit margin for our segment international. How does that translate into earnings per quarter? 54 million in the second quarter. Matti Jakel, Matthi Jakel, Martina Borger For you who have been with Billfinger for a longer period, see that the tax rates may fluctuate from quarter to quarter depending on where we record income tax or taxable income throughout the various tax regimes in the countries. So that may fluctuate from quarter to quarter as you can see here. But 54 million, nice profit for the quarter. Cash flow at 48 million over 53 million last quarter so a good performance but also lower because we didn't receive as many large contracts so lower advance payments and we have timing effects when it comes to billing when our customers are hesitant not only with awarding contracts then they also slow down on approving our invoices. Again it's a timing effect that will disappear in the second half of 2026. Finally, a quick look at cash, net liquidity and leverage. You see a drop in cash in hand and you see a drop in financial debt. We repaid Large parts of our promissory note loan, in German Schulzein, Darlehen, I was told by our lawyers that's a huge difference. But then that's why we said a German law governed promissory note loan so that everybody knows that this is different to what you understand in the US or UK by a promissory note loan. It's debt, we paid back the debt, so that reduced the cash and it reduced the liabilities, financial debt. We reissued the same Instrument, and we collected 300 million in early July. So you will see the reversal of all of this when we get together back in the third quarter. 300 million increase in cash in hand and 300 million increase in financial debt. Net liquidity typically is low in the second quarter when we pay out the dividend, which we did. And we also paid the purchase price for the technical group Thomas Schulz, Andreas Müller, Martina Borger I hand back to my colleague.

Thank you, Matti. So, now to the group outlook for 2026. The outlook is confirmed. The EBITDA margin is expected at the lower end of range and Technocon acquisition is included. When we look into the revenue, we have a 5% improvement versus the first half of the year 2025. and of course the guidance what we gave for 5.4 to 5.9 we are on a good run with the revenue we of course target that what we said before when we look into the EBITDA it's the same level it's 5% EBITDA as we said and explained in the presentation we expected more but the second half of the year regarding that what we see in the market dynamics with all the things what we have on hand it looks Good that we are then in the guidance, not outside the guidance, in the guidance in the EBITDA one at the lower end of the range. The free cash flow with 69 looks quite lower than last year. But of course, there is no repeat of a special case what we had out of the normal payment and cash inflow in the quarter one 2025. But with the run rates what you already saw in the second half of 25 with all the growth and all the activities what we do gives clear indication that we are well in the range of 250 to 300. To finalize, a short feedback or short summary of that what we had in the quarter two. Orders were the third largest in the quarter since more than 10 years. Revenue with 7% up. EBITDA margin a little bit lower than expected. Earnings per share up. Cash flow in the market conditions quite on a good level. And the outlook of course confirmed. So with that, Martina, I think we can go to Q&A.

Thank you very much, Thomas. Ladies and gentlemen, we will now start the Q&A session. As previously said, you can ask your questions via phone by pressing star and 1 or via the chat in the webcast. And I'm seeing that we have first questions lining up. So the first question comes from Craig Abbott from Kepler-Geoffreux. Craig, your line should be open. Please go ahead.

Yeah, good afternoon. Can you hear me okay?

Yes.

Yes. Okay, excellent. Thank you. Yeah, good afternoon, gentlemen. Yeah, a couple questions from my side, please. First of all, you know, obviously it's very reassuring to hear, you know, that you saw orders start to pick up at the end of the quarter. You showed us the opportunity pipeline really picking up in June. But I'm just curious if you could provide some color what has changed that has made your customers now, also here in Central Europe, to be more willing now to move forward with both their OpEx and CapEx investment plans? Is it just simply optimism that the Middle East conflict will soon be resolved? That is the first question. And the second question is, You know, we look at your guidance on the implied EBITDA margin for the second half. It's pretty high, 6.7% versus 6% in H2 last year. And I'm just curious what gives you the confidence in the current environment, given where you're coming from up there, H1, to be able to achieve this. Thank you.

Yeah, Greg, I'll take the first part of the question. We see actually in global business always the same situation. If an unexpected crisis of a larger extent, in that case the Iran war, is happening out of the nothing, Then you get a kind of a shock. Customers are stopping a lot of things. They actually asked their supervisor about two, three times. They pushed back on acting, and in that case, in the Middle East. For the Middle East, of course, a lot of people were at home and not going back to the offices. In especially Western Europe, the roller coaster with the energy costs significantly up, then down, then subsidized, then all the very difficult to read outlook for the energy costs to go, customers were going on a break. And that last, as in all crises, a few weeks. and we saw then in and we got and I was you know that I'm going out quite often to clients then in June we saw actually that the society in the industries got used to that roller coaster used to we have a deal we have not a deal we have a deal And then, of course, looking into and knowing if they postpone maintenance, if they postpone turnarounds, if they postpone their project, everything gets postponed. Efficiency improvement too, and to finalize the project. So out of that, there was then more push, more dynamic in the market to go on with things and to inform us in discussion with us when things will happen so that we can organize it. And that explains in a second the underabsorption, because the people we have underabsorbed Yes, Craig. If we look at how we

How we set out the year for 2026 and if we look at the midpoint of our guidance, the profitability that we had intended was 6% and that is what we said all along. If you compare this to last year, that's a 50 basis point uptick. If I look at last year's second half, we delivered 6.0%. So that 50% basis point, that was already in the making and in the plan. So now, because of some of the delays and a bit of an underachievement in the first half, we need to step up to the plate a little bit stronger and harder and we rely on what has not happened in the first half is going to happen in the second half and when we go into over absorption then everything we make there drops straight to the bottom line. You could see on our SG&A we're better off than Last year, and that will continue. So given that mix, that gives us the confidence to deliver to the lower end of the range at 5.8%, with obviously an implied margin for the second half of 2026.

Okay, thank you. I have one quick technical question and I'll get back into queue. If we look at the consolidation and other operations line, there were some large moves in that second quarter in both directions with both basically reporting zero contribution. And I just wonder, because it's a pretty meaningful amount, particularly on a quarterly basis, I just wonder whether there are any special factors here and how we should think about these two lines developing in H2. Thank you.

Well, those lines, they do fluctuate a little bit. And we had a few There have been some movements here in sort of opposite directions last year and this year. Nothing to be concerned about. Maybe one thing that I should add here is other operations. Our business in South Africa really benefited from a very high demand in 2025, first quarter, second quarter. That didn't repeat itself for various reasons. I'm not going to go into the detail. But that's normal fluctuations, and we find ways to compensate for that.

So we expect a more normal progression in H2? Yes. Okay. Thank you.

Thank you very much, Greg. We can continue with the question queue on the call. So the next question comes from Paul Schurter from Bernstein. Paul, your line should be open. Please go ahead. It seems for me that's probably dropped out of the telephone call. So let's continue with the next person on the queue. That would be Michael Kuhn from Deutsche Bank. Michael, your line should be open.

Good afternoon. Thanks for taking my questions. It's kind of follow-up. So, on, let's say, the postponed work in the first half, and I think we discussed it in the last call already, let's say, by how much can your clients usually push out those decisions? So, when are they actually forced to come back? If you look at the opportunity that obviously improved towards the end of the quarter, let's say, can you give an indication on how much was just about delays and how much is like generally new projects that come into the market?

Very good question. Hi, Michael. At first, a lot of the business what we do is actually creating additional business. And that comes on top of it. In crisis situation, business what we do doesn't get a lot of additional, if at all, additional business. In crisis, the orders what we get and the work what we do normally is very much regulated to a smaller amount. So this kind of additional work, especially in the maintenance part, asset performance part, that is what has to come in the second half of the year. Because it is very much impacting the efficiency. Then we have larger orders, new orders, projects. In the projects you can move, but you can't move it for half a year or two years or so because you have work permits and you have certifications and permits to do additional work on a respected, let's say, area or land or location. And if you don't fulfill time milestones towards the authorities, your permit is gone. So one of the things where we always work with clients in the pre-visibility, in the feasibility and actually in the pre-engineering phase is the time schedule so that we really hit the milestones. Otherwise, our clients get the permitting problem with the authorities. That describes a little bit that we actually foresee quite a revenue improvement in the second half of the year. We are in close contact with our clients to organize it. So from that point of view, our visibility on that is actually quite good.

Maybe let me add, Michael. We distinguish between discretionary spend and non-discretionary spend. And on OPEX, you can delay to a certain extent doing maintenance work or fixing one thing or the other. But that really has limits, time limits. And we're not talking Thank you and then maybe a small thing I think in Central Europe on one of the slides you mentioned some softness in pharma I think for a couple of years you

I benefited quite a bit from on-shoring efforts. Is that wave already over or is that also rather a temporary thing in your view?

Yeah, we can be very specific with that. The figures are of course standard and poor figures and they are two big markets in Europe where we are actually more or less not really in. and they had a setback based on taxation and other things. It's not Germany, it's not Austria, it's not Denmark and so on. And that has an impact on the overall. And it is history, so it's past, it's over. And we didn't see it in our figures. But from a pure reporting point of view, it of course is in the data of Standard & Poor's.

Okay, that's reassuring.

Thank you. Thank you, Michael.

Thank you very much, Michael. So the next question comes from Olivier Calvé from UBS. Olivier, please go ahead.

Hi, thanks for taking my questions. Maybe the first one just on your thoughts on organic growth going forward. If we see other intake remaining under pressure over the next few months, And just to confirm that your forecast, your forecasted guidance assumes an improvement in orders in the second half. Perhaps if you could comment how much of your backlog you expect to convert into revenue this year, that would be question one. And then just secondly, on the Technocorn acquisition, I think, you know, good to see an order here from that gold mine here. You've had control for a quarter now, but just curious if you are seeing increased discussions as a result of your expanded footprint in the region. If you're seeing new customers or if that's mostly with existing ones. And I just wanted to check if the organic order growth in international that was with that goldmine or not. Just out of curiosity. Thank you.

I come with the second part at first. Yes, it is in the goldmine order. And as we said for the Technocon, for the Turkish acquisition, we are not only having in the target Turkey, we actually have countries around Azerbaijan, Kazakhstan, Uzbekistan and so on in the focus too. But you need a base because we need people on customer sites. When you look into these countries, Turkey included, one part of the process industry, which is our main industry, is the mining industry in these areas. And their high-quality work, digitalized, is very much appreciated. And we have a quite motivating model for customers in that area. Thomas Schulz, Matti Jakel, Thomas Schulz, Andreas Müller, Martina Borger Yes, Olivier, and your question.

On backlog conversion into revenue. What we measure month to month to month is what we call the coverage. That is how much have we already realized in revenue and how much of the revenue that we forecast is already in the backlog. And that percentage tells us quite clearly where we are going in terms of revenue in relation to our guidance and our budgets. And that ratio is 90% at the end of the second quarter. and it was 88% last year, so to be very specific. It's not a number that we do publish all the time but I think under the circumstances it's the right thing to be very transparent here. So what we have on hand and what we have placed is in line with previous years where we always hit our revenue guidance in the midpoint. So that gives us confidence and I hope it does give you confidence that we're on a good track for 2026 when it comes to revenue.

Okay, so in other words, you're confident on your visibility in the second half and you're not relying on incremental orders in the second half to hit the midpoint of your guidance?

Well, we have all the intake, you know, months after months on our framework contracts and with others. But we already have 90% in the books already, which is a fairly high number compared to prior years. So confidence is there. Yeah.

We have a further question on the phone line. The question is from Andreas Wolff from Bernberg. Andreas, please go ahead.

Hi, everyone. Thank you for taking my question. Could you talk about utilization in H2 last year and the utilization you need to achieve The year-on-year margin uplift in H2 this year. So do we have to go above a standard 100% utilization? And if yes, how are you going to handle that? Thank you.

It is in the business the so-called average or regular utilization. Neutral Utilization, as we normally calculate when we do forecasts and so on. Then you have the term of the underabsorption. That means you drop 1%, 2%, 3% below that. You have more people available than you have work, which then, of course, creates your pressure on the cross-margin in our business model mainly. But we have times of overabsorption, which means, as Matti rightly said, whatever we do in the cross-margin drops directly through. and is a profit creation. And in situations as we are in the second half of this year, we see that coming that we have over absorption. Overabsorption doesn't mean that we need now armies of people more to do the work. It is actually less vacation time, what we took quite a big part already in the first half of the year. It is adding here and there some lower quality work with external partners and so on. And with that, you run an overabsorption, which is definitely more profitable than the regular absorption. That is how we run that margin uplift. And we look of course into that what we have in the revenue, which kind of work we have in the revenue, what is our product mix, what is our geographical mix, and with the new structure, significantly easier to do that. And then based on that you can see how you run. Let's look into Western Europe in the second quarter where we delivered a 7.7% EBITDA. and that with a, let's say, not huge improvement of the revenue. So what did we do there? We were able more and more to deploy the right people with the right quality at the right time at the right location and that makes our business more profitable. I hope that answered your question.

It seems so. Thank you very much. We have further questions and we'll now take a question from the chat. The question is from Igor Sonin from Baader Alfavelie. I have a quick question on Technocon. Backlog is minus 2% absolute but minus 8% organic. So it looks like the acquisition brought in a fairly large book relative to its revenue. Could you give a sense of the duration and the remuneration mix of that backlog? I'm just trying to understand whether it behaves like your maintenance business or whether it's longer cycle work.

That's a very good observation, Igor. We always like when people read all our publications, then we know it's worth the work that many people put in. No, really, it's a lot of people who spend a lot of time making Billfinger very transparent. So yes, always when you have an acquisition, there's a first-time consolidation, and that is also true for backlog. In terms of the mix of work, most of the work that Technocon does resembles the mix that we have throughout the group. In broad terms, we're talking two-thirds is maintenance business, give or take, whatever is included, so the longer-term work, and then one-third is more the short-term work or it's, you know, we call it project work. But the mix that we acquired with Technocon fairly much mirrors the Billfinger business model. In numbers, the increase in backlog on the 1st of April were 115 million that we received at the time we paid the purchase price. So I think that's in the financial report for the second half. So these are numbers that we have disclosed anyways.

Thank you very much. I can read another question from the chat, which is from Davie Luis from Amira Gestion. The question is, you have ambitious mid-term margin targets. How confident are you to keep improving the margin structurally in 2027 to stay on that trajectory?

Very confident. When you look into Western Europe, already today on 7.7% EBITDA in the quarter two. They had some hesitation in the UK, actually in Belgium, Netherlands too. So when we look into the profitability of our industry sector, with an 8-9% EBITDA in 2030, we will be not the best performing company. To make it fairly clear, we are under the top 20%. That is what we see. We have peers already having that as a target for next year and the year after. We have areas in the world like in North America where the EBITDA margin is significantly higher than you have it here. And we can use all the different parameters to explain that why, but generally we have to lift up our profitability. We see that we can do that. We have a full-fledged strategy on it. And we said that on the capital market day at the beginning of December, if all the Bill Finger groups would perform as already the ones perform as we would like to have performing them, then we are more or then we are close to 8% EBITDA in the whole group. Today. So out of that, it is a lot of work to do. We do it step by step. We will inform you how far we are, what we do and so on, and we will achieve it. That 26 has to be a step up to, sorry, that 27 has to be a step up to 26 is clear. So from that point of view, we are in quite good expectation what we will deliver in 27 as well as up to 2030. It's a good company.

Thank you, Thomas. Just a reminder for the participants, you can ask your questions via phone by pressing star and one or via the chat function. There's another question on the chat, which I would read as well, which is from Moritz Walz from Discover Capital. Has the structure of your received orders and the underlying contracts changed over the past few years in terms of margin profile? Are newer contracts more attractive than legacy contracts, less attractive or the same?

That's a very broad question, I would say. No, the structure Let's put it this way. We look at various aspects of risk profiles, Moritz. One key element is remuneration. How are we getting paid for our work? Is it time and material? Is it unit rates? Or is it lump sum? So, three very generic forms of being paid, remunerated for our work. Time and material, the lowest risk. On unit rates we assume productivity risk and on lump sum we assume productivity and also quantity risk. That's very generic for the contracting industry. What we have seen In the last few years is an increase in the time and material but also in the unit rates and with unit rates we feel very comfortable because we control the productivity and whatever productivity improvement we have and generate stays with us. On time and material it goes to the client so we like unit rates and we have been able to change some of the Subtitles by the Amara.org community We don't take any EPC work. That's a bad word in Bill Finger. Really, it's a bad word in Bill Finger. It's definitely a bad word, yeah. However, we work with our clients and we discuss, okay, let's look at the engineering phase. What can we do together in engineering? Because when the engineering is done, the risk on quantities is much, much reduced. And we don't have to put contingency on contingency on contingency. So while we still have one third of our work in projects, the underlying risk profile of the project contracts is much better than what we've seen in the past. And we do see that in the numbers we have We have a lot fewer what we call blowouts, so contracts that really go bad. And that has improved our risk profile. It has improved our margin profile. So I would say it is how we work with the client to make the contracts attractive. Yes, there's clients out there that in their first proposal come and say, I want this one thing, you build it, you take every risk. We don't like that, but we don't tell the client, go away. We tell the client, here are some ideas to make it workable for you and make it workable for us.

Definitely. And when you look into the attractiveness, we have it actually as one sub-lever in our strategy. We call it de-risking. It's a big part of that. We have a good organization with the new structure. We are closer all together. And with that, the judgment, which kind of risk we actually take with an order is very transparent. That is, as Matti said, transparent to the client and makes it for us possible to avoid these what we call horrible or blow up or red flag contracts.

Thank you. We have further questions. We will now take the question from Paul, who had apparently technical difficulties, so I will read it out. We have recently seen very low water levels on parts of the Rhine following the European heat wave, which historically has created challenges for German chemical producers. Are you seeing any impact on customer behavior so far in Q3? Specifically, does this create an additional headwind by delaying discretionary projects and turnaround activity further? Or could it actually support maintenance demand if customers use periods of low utilization to bring assets offline? How should investors think about the net effect for Billfinger?

At the moment, we don't hear that from the clients. We see that in media. And in that case, we have to admit that politicians, especially in the States, act quite quick. You know that we have that weekend or Sunday truck driving restriction, and some of the states actually lifted that completely. to put more from the water to the truck, which is good. On the other side, we see in the central European chemical industry some additional work coming out based off the Iran war and the reduced energy supply into Asia. That counter that made it in the last few weeks and months more positive for some of our clients here in Germany and actually in Central Europe. So to summarize it, here it weighs a little bit, on the other side it's more positive. Up to now we don't see that impact.

Thank you. We have further questions. So the next question we will take from the telephone line from Olivier Calvé. Olivier, please go ahead for your follow-up question.

Yeah, thanks for taking my follow-up. Just a couple left. You've just mentioned, Thomas, the refineries clients. I was just curious if you could quantify the rough share or exposure for you of those kind of clients in your chemicals business. Then a second question probably also for you would be on M&A, if you, without being too specific, could comment on the M&A pipeline. And thirdly, perhaps for you, Matti, on the free cash flow. So you did around close to 70 million in H1. You point to the low end of the margin guidance, but you've reiterated the full year free cash flow guidance. Just if you could help us out on the building blocks and the working capital benefits you'd expect in the second half. Thanks.

At first to the refinery plants we are of course not going in the details so much by country because here when we talk about the River Rhine it's predominantly Belgium, Netherlands and Germany, Switzerland in that part. But you see that our share in chemical and petrochem is roughly 21% over the whole group. So the exposure is there, but the exposure with the impact, what we as BILFINGER got already since 2021-22 with very, very high energy costs for our clients and some plant closure, what we reported on in the last few years, shows that with whatever happens in that part, we actually countercompensate with more business out of energy especially. So it is at the end quite good in the customer relationship building. We have more single work to do. The orders are smaller and we help them in dealing that with shortage in water supply. Of course, there is an end then to it too, but that is more what the market can tell you in that. But in our modeling, the impact is not, we don't see that. M&A pipeline looks good. In some parts it looks very expensive, to be honest, and in some other parts very promising. In that way that we see some areas in the world like the Middle East definitely outperforming growth rates what we had in the model before. based on making a whole area with a lot of countries like Saudi Arabia, UAE and so on more resilient for crisis situations and finding new routes for in and out and bow supply into their countries, which we as BILFINGER will contribute from and for it. If we then look into when we say the timing effect in it, crises are then more difficult to get people around the table to make a final decision on whatever it is, and that is what we see with the M&A too.

Yes, Olivier, on the free cash flow, we have seen in the first half An increase in work in progress, so unbuilt performance, timing effects, as I explained earlier. That will resolve itself in the second half, so that's part of the working capital. We expect order intake to generate advance payments, as we always do, but a little more than we had in the first half of 2026. On one large contract we have built up Our considerable work in progress where we had to negotiate terms and conditions and that was successfully done in July. So there's already a step up that will hit the second half of 2026 in terms of free cash flow generation. So that gives us confidence. We've performed quite well on working capital management in the last So many quarters. We've seen those delays here. But as I said, we expect them to resolve themselves for the second half and quite confident on generating EBITDA and also positive contributions from working capital. Nothing out of the ordinary.

Thank you.

You confirmed the full range of 250 to 300? Yes.

Thank you, Olivier. There's a further question on the chat, which I will read out. The question is from Gerard Odoherty from Metzler. Since the end of Q2, given the on-off nature of the peace process in the Gulf, has anything changed positively or negatively in terms of day-to-day business willingness to move ahead on projects, a return to some form of normality?

What we see is actually more workload in that respect for the Middle East to look into how to make the assets, what our customers have in that region, more resilient against similar crises. Second, a lot of talk and they actually act in that area quite well regarding, as I said before, what we call the inbound and outbound supply for the different countries in the Middle East. They look, to make it simple, they look for new routes to receive and to deliver their products and getting products from all over the world into. So the street of Hormuz will sequentially lose its big part of importance. They will do everything to balance that more, which means infrastructure in processing plants too, which is of course for us very, very positive news.

Thank you very much. I do not see any further question that is willing to be asked. So this concludes our Q&A session today. Thank you very much for your participation. Thank you. And for investors and analysts, if you have any further questions, as usually, please feel free to reach out to the investor relations team. Thank you very much and goodbye.

Thanks a lot.