Group CFO (Member of the Executive Board), Bilfinger SE
Aufzeichnung der Rede des Vorstands der virtuellen Hauptversammlung 2023 der Bilfinger SE
Die Bilfinger SE hat ihre ordentliche Hauptversammlung am 20. April 2023 als virtuelle Hauptversammlung im Rosengarten Mannheim durchgeführt. Die Rede von Thomas Schulz, CEO, und Matti Jäkel, CFO, wurde live im Internet übertragen und steht jetzt als Aufzeichnung zur Verfügung.
Transcript (3 segments)
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Thomas0:00
Good morning, esteemed shareholders, ladies and gentlemen. I welcome you on behalf of the board to this year's annual general meeting. Thank you for participating. As a company focused on efficiency and sustainability, we chose a virtual format. You can exercise your rights fully in this virtual format. Allow me a personal review of the past 13 months. Since taking over my duties at Bilfinger, I have met many customers, employees, suppliers, shareholders, and media. My focus was on looking forward. My visits to Bilfinger locations in Europe, the Middle East, and the USA have reinforced my belief that the Bilfinger team is highly qualified and motivated. Our employees have performed outstandingly under difficult circumstances, and my thanks go to them first. It is up to us to seize opportunities from global trends. The world remains in a crisis mode, with societal, political, and environmental disruptions, including the Ukraine war, challenging our order. Companies worldwide face challenges like inflation, fluctuating energy and raw material prices, disrupted supply chains, increasing bureaucracy, labor shortages, and climate change. We have analyzed these challenges to identify options for our strategy. We formed an internal team, Team 12, in mid-2022 to develop our strategy further. In September 2022, we established a new management structure to improve efficiency. In November 2022, we announced an efficiency program to standardize workflows, simplify administrative structures, and reduce costs. A quarter of the savings will be invested in employee training to strengthen competitiveness. We see the efficiency program expenses as an investment in our future. Our CFO, Matti Jäkel, will elaborate on this. The volatile market developments reinforce our focus on efficiency and sustainability. We presented our strategy on the capital market in February, with positive feedback. Our vision is to be number one in efficiency and sustainability for our customers, with two strategic directions. In the future, efficiency will be equated with sustainability in industries, and technology will provide solutions. Bilfinger will contribute. Last year showed our focus on customer efficiency and sustainability is on the right path. Our solutions are in demand for efficient plant operation, secure energy generation, and renewable energy expansion. I will present details later. Important milestones included successful new contracts and extensions, like a million-dollar maintenance contract for Shell in the Gulf of Mexico. The USA is a key growth market. In sustainability, we realized innovative projects, such as a production plant for vegan cheese in Austria, reducing CO2 and engineering time. Another innovative product is CO2 Master Planning, analyzing industrial sites for CO2 reduction. Overall, Bilfinger grew in 2022, reaching pre-crisis levels, becoming more profitable, and generating more cash. I am pleased to have welcomed Matti Jäkel as CFO in July last year. With his engineering and financial expertise, he is a true asset. I look forward to working with him. Dear Matti, please take over and present the figures for the past fiscal year.
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Matti Jäkel10:30
Thank you, Thomas. Ladies and gentlemen, esteemed shareholders, allow me to briefly introduce myself. My name is Matti Jäkel, and I have been CFO of Bilfinger since July 1, 2022. Since joining in 1989, I have accompanied and shaped the company's development. In 2010, I moved to the industrial services division. I bring extensive experience in service and project business. It is a pleasure to help shape the next phase of company development. Bilfinger's business model has proven robust in turbulent times. Persistently disrupted supply chains, the Ukraine war, and inflation pose challenges for our customers. Our core competence in improving efficiency and sustainability is in demand in volatile markets, as shown in our financial figures. Order intake increased by 15% to over 4.6 billion euros, with all segments growing. Order backlog rose by 9% to 3.2 billion euros, with an order intake to sales ratio of 1.07. Revenue grew by 15% to 4.3 billion euros, reaching pre-crisis levels. Gross profit increased by 13% to 437 million euros, with a gross margin of 10.1%. Sales and administrative costs rose under proportionally by 6%. Bilfinger achieved an EBIT of 75 million euros in 2022, down from 121 million euros, mainly due to increased special charges of 65 million euros. Excluding special charges, EBIT would have been 140 million euros, slightly up from the previous year. Most special charges were for the efficiency program, enabling annual savings of 55 million euros after reinvestment in training, improving EBIT margin by about one percentage point. The EBIT margin was 1.8%, or 3.2% adjusted. One of the most important metrics for CFO is free cash flow. We improved it to 136 million euros through working capital improvements. Net investments were 30 million euros. Dividends and share buyback resulted in outflows. Net liquidity decreased to 145 million euros. Now, looking at our three business fields. In Engineering and Maintenance Europe, order intake increased by 14% to 2.9 billion euros, with new framework agreements. Revenue rose, supported by strong turnaround season. EBIT included special charges of 36 million euros. Adjusted EBIT was 140 million euros with a 5.0% margin. In Engineering and Maintenance International, order intake increased by 31% to 833 million euros, mainly from maintenance contracts in North America. Revenue grew by 44% to 798 million euros. EBIT improved but was still negative at -8 million euros. The negative result is due to old contracts, and we are reducing project risk. In Technologies, order intake increased by 13% to 672 million euros, particularly in pharma. Revenue rose to 592 million euros. EBIT was 8 million euros with special charges. Adjusted EBIT was 18 million euros. The consolidated result decreased to 28 million euros due to special charges and other factors. Adjusted, it was 82 million euros. Our share started the year at 29.90 euros. We paid a special dividend and conducted a share buyback. The share price showed volatility, ending at 27.08 euros, with a total shareholder return of about 7%. In early 2023, the share price has risen to around 38 euros. Bilfinger is on the right path. We propose a dividend of 1.30 euros per share, a yield of 4.8% on the closing price. The payout ratio is about 60%. With the revised strategy and efficiency program, we aim to achieve an EBIT margin of at least 5% by 2024 and 6-7% by 2025-2027. Organic growth will outperform market growth. We target increasing dividends while maintaining a solid financial position. We aim for an investment-grade credit rating. We have a syndicated revolving credit facility of 300 million euros. We request approval for share buyback authorization and new authorized capital. Thank you for your attention. I hand over back to Thomas.
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Thomas26:20
Thank you, Matti. Ladies and gentlemen, as just presented, Bilfinger has a solid financial base and clear goals. What makes us so confident? Our most valuable asset is our highly qualified employees. We have long-standing customer relationships and see sustainable demand. Challenges like inflation, overregulation, labor shortages, and sustainability goals offer opportunities. Technology is the answer, and we are well-positioned. We see ourselves as a driving force in industrial transformation. Our goal is clear: to be number one in efficiency and sustainability. The success of our strategy depends on consistent implementation. We expect positive demand with market growth of about two percent per year. We will expand our product offering along the value chain, as 80 percent of our services are similar across process industries. We will first exploit the potential in current markets and then explore adjacent markets, aiming for additional growth of two to three percent annually. We are open to acquisitions that fit our offering and support our goal. We will divest activities not contributing to this goal. Our business model improves efficiency and sustainability, creating value. Growth potentials and value chain expansion offer opportunities. Our business model has proven crisis-resistant, as plants require continuous maintenance. Customers need to reduce costs and CO2 emissions, and we are the ideal partner. Even if companies reduce capacity, our service is essential, like in nuclear power plant decommissioning. We are optimistic about the energy transition, with competence in conventional energy and expanding into renewables, like hydrogen projects and nuclear energy in the UK and France. Internally, operational excellence is being implemented through standardization, bundling, innovation, and digitalization. The focus is on framework and service contracts, aiming for 80 percent of total sales. The efficiency program will improve profitability, especially in the international segment. The key to sustainability in industry is technology and continuous improvement. We invest in employee training. Sustainability is core to our strategy, with clear goals in environment, social, and governance. We aim to be climate-neutral by 2030 for Scope 1 and 2 emissions, and will measure Scope 3 emissions. We follow ambitious social goals, like avoiding accidents and investing in training. In governance, we adopted a human rights declaration and aim for internal supplier audits. Bilfinger is well-positioned to seize opportunities. In 2023, we will implement the strategy and efficiency program. We expect revenue between 4.3 and 4.6 billion euros, EBIT margin of 3.8 to 4.1%, and free cash flow between 50 and 80 million euros. We are not satisfied with current profitability and aim for 5% EBIT margin by 2024. Our employees are key to success. We thank them and our shareholders for their trust. We look forward to establishing Bilfinger as number one for efficiency and sustainability. We show a short film to underscore this goal, and then hand over to our supervisory board chairman, Dr. Cordes.