Implenia Geschäftsbericht 2024 – Analysten- und Medienkonferenz vom 26. Februar 2025

Good day and welcome to the analyst and media conference on the 2024 annual results of Implenia. We are pleased to present our results today here in the Connect, Implenia's headquarters, and also welcome those attending via livestream. My name is Silvan Merki, I am Chief Communications Officer here at Implenia. I will be happy to guide you through the event. We will hold our presentation in German, but you can also select the English translation in the stream. You can ask your questions afterwards here in the room or in the chat of the stream in German or English. Before we start, I would like to draw your attention to the disclaimer shown here. Today we will present as follows: first, CEO André Wies will give you a business update on the annual results, then CFO Stefan Baumgärtner will take you through the financial figures, followed by an outlook on strategy and market by André Wies, and afterwards we will be happy to answer your questions. I now hand over to André for the first part.

Thank you, Silvan, and greetings. 2024 was another successful year for Implenia. We achieved our goals, increased profitability, and thus continued the positive business development of recent years. This underscores that with our clear strategic direction and our strong team, we are excellently positioned for 2025. Therefore, we are again setting ourselves a higher operational target. Now to the details: The order backlog remained at a high level at 6.8 billion francs and is of very good quality. With 3.6 billion, revenue was comparable to the previous year. We achieved a strong EBIT of 130.5 million and were able to further increase the EBIT margin to 3.7%. In addition, we improved the equity ratio to 21.2%. With this, we achieved all targets for the 2024 financial year. With a comprehensive range of services, our divisions offer specialized competencies for large, complex real estate and infrastructure projects that cover the entire value chain. I will now explain the results of the individual divisions. The Real Estate division posted a solid EBIT of 37.2 million, including the contribution from the Ina Invest result. Due to the market situation, there were few sales last year as we want to monetize projects at the ideal time. At the same time, we invested above average in our attractive real estate portfolio. Regarding Ina Invest, we naturally welcome the announced merger with the KAM Group as a strategic partner. Implenia will continue to provide development and realization services for the merged company and will benefit from dividends. Real Estate develops sustainable and pioneering projects, both from its own portfolio and on behalf of customers. Examples are the development of the Lokstadt in Winterthur or the creation of new mixed-use neighborhoods such as in Baar and Pratteln. The order backlog of the Buildings division remained at the same level as the first half of the year despite the challenging market situation. Revenue was at the previous year's level at 1.8 billion, while the division improved EBIT to over 55 million. Wind Gasa also made a strong contribution to this result. Given the building permits in Switzerland and investments in large projects in Germany, the division expects an overall positive order development. Ongoing projects show the balanced portfolio mix of the division. Our specialized competencies are used, for example, at the Kantonsspital Aarau or at the Thron research building in Mainz. Civil Engineering achieved a further high order backlog of 4.3 billion. Revenue was at the previous year's level at 1.8 billion. EBIT rose to around 40 million, particularly due to strong contributions from the tunnel construction business in all our markets. Many years of experience and comprehensive expertise position the division optimally in the market. Implenia makes an important contribution to sustainable mobility and energy infrastructure in Europe. Examples are the Talbrücke 6 Helden in Germany or the Ligerz tunnel here in Switzerland. Implenia is also the only construction company working on all four European alpine crossings currently under construction, including of course the second Gotthard road tunnel. These projects are technical masterpieces that confirm our experience and expertise for large, complex infrastructure projects. Specialties achieved an order backlog of 197 million. Revenue rose to 169 million, and EBIT at 8.6 million was even significantly above the previous year. The division is further expanding its margin-strengthening areas with a focus on planning and consulting. It will continue to actively develop the portfolio in the future. The business units of Specialties bring innovative services to attractive projects, for example Implenia Fassadentechnik's work at the Heidekreisklinikum in Lower Saxony or the design of the building technology at the Lucerne shopping center Schönbühl by Planovita. Know-how for sustainable real estate and infrastructure is increasingly in demand by our customers. This year, we obtained limited assurance for all audited ESG key figures, a seal of quality for transparency and reliability. Moreover, leading ESG ratings once again confirm our leading role in the construction and real estate industry. For further highlights on this topic, I refer to the sustainability report published today as well. Before I now hand over to Stefan Baumgärtner for the financial update, we will show you a short video with insights into our current projects.

Thank you, Stefan. After further strengthening our competitiveness in the 'Fit for Growth' phase, Implenia is now entering the next phase 'New Horizons'. For 'New Horizons', our successful strategy continues accordingly. We consistently pursue our four strategic priorities: profitable portfolio, profitable growth, innovation, and talents and organization. Particularly important for us are improved margins with optimized cash flow. The strategy of broad positioning along the value chain and our sector-oriented specialization. Adjustments are made in our divisional structure: the Real Estate and Buildings divisions are merged and integrated, led by André Wies. Thus, the position of Jens Vollmar will not be refilled, and the Executive Board will be reduced from currently eight to seven people. The Specialties division is now called Service Solutions and is further developing into a provider of modern and versatile services, including with Wincasa. This adjusted organization enables us to move forward even more successfully. We are ideally positioned as a group to benefit from societal megatrends and to help shape changes in the industry. Population growth, urbanization, and the energy transition are driving demand for complex real estate and infrastructure projects. Implenia's range of services and expertise are precisely aligned to exploit these opportunities as best as possible. We expect a positive development of total construction output in Switzerland and Europe. Accordingly, we expect increasing order development, also supported by our strong pipeline. Only the German residential construction market remains challenging. Our strategic focus on large and complex projects is paying off, so we are little affected by the low demand for small residential construction projects in Germany. We aim for a sustainable increase in profitability based on three building blocks: first, optimizing our existing business, e.g., through a consistent focus on operational excellence; second, growth in the existing business, scaling similar projects; and third, developing new business opportunities. With this, we are well on our way to increasing our profitability in the medium term to over 4.5%. Implenia achieved its 2024 goals. This underscores that with our integrated offering and strong team, we continue to be excellently positioned. After six and a half years, I have decided to withdraw from operational activities at Implenia. For Implenia, this is the ideal time; the group is strategically strong and can grow sustainably profitably. As of April, Jens Vollmar will take over as CEO. As the head of a large division, he has significantly shaped Implenia and will continue to pursue our strategy consistently together with the team. I wish Jens and the entire Executive Board much success, luck, and of course some fun in this great task. My thanks go especially to the Chairman of the Board Hans-Ulrich Meister, the Board of Directors, the Implenia Executive Committee, and all colleagues for the trust placed in me. I am proud of what we have achieved together. Implenia is today a strong, financially healthy company, made possible by the commitment of the entire team. And with that, I hand back to Silvan.

Thank you, André. You saw it in the video earlier; we cannot bring our impressive projects that are being built outside into here. But we are happy to show you on site what our experts and specialists are committed to every day. We invite you this time to visit the Ligerz tunnel or the new building for the Department of Biomedicine in Basel live. You will receive an email after the event with the opportunity to register for this. I would also like to point out the upcoming dates: on March 25 we will hold our Annual General Meeting, and on August 20 we will present our half-year results. If you have further questions after this event, please contact the known contacts. And now to the Q&A; for this, I ask André and Stefan to come back on stage.

We will start with the first questions here in the room. I see hands going up, that pleases me, and afterwards we will also answer the questions asked in the chat. First, right at the front.

Yes, thank you. Holger Frisch, Zürcher Kantonalbank. I had three questions. First, you mentioned that you invested above average in the real estate portfolio, about 40 million, the adjustment in the free cash flow. At the same time, you said you sold below average. My question is: what does below average mean? What is the average value that one should work with? That might be the first question.

Shall we answer directly? Yes, thank you.

Yes, thank you. We invested net 40 million, gross over 60 million invested in 2024, and sold less. There is no clear line, but we have seen different performances from the division over the last half-years and years. They always came in at about 40 million on average. Now you also have to add that about 16 million comes from Ina Invest, so you can roughly see what below average means here.

Then I would have two more questions regarding Ina Invest. First, can you help me understand it more precisely? So 31 million come as a cash payment in 2025, that was mentioned. The net EBIT contribution is 16 million, but in Ina Invest's announcement this morning, the impact is 34.7 million, and at the same time you have an impact on the net level of a proportionate loss of 6 million. Maybe you can help me reconcile these numbers.

Yes, that may be answered by Stefan.

Besten Dank. And then maybe a second question on Ina Invest: I saw that revenue increased from 21.2 million to 77.3 million in 2024. What were the main drivers for this significant increase? I don't understand the numbers.

On which figure? In the annual report in the appendix. You said revenue? Yes, exactly. This contract adjustment directly affects revenue as well. This special payment, this contract adjustment, goes into revenue, and that is the main driver why revenue increased significantly compared to previous years.

Thank you, clear.

Very good. Participants in the chat in the livestream can ask further questions. I have no questions in the live chat at the moment. But here in the room, Reiner Weihofen from Finanz und Wirtschaft.

A question about the merger of the divisions. I have a bit of concern that transparency will be lost if you combine the two somewhat different businesses of real estate and building construction. Do you share that concern, or will you maintain transparency also for us as external observers?

Of course, we do not share the concern. First, why were they separate? We wanted to drive these divisions forward so that they could be successful with focus. But you have to realize that this is already an integrated model, real estate and property construction. Therefore, we are merging them now because they are both successful. Regarding transparency, we will of course show the three divisions separately and provide the transparency that is necessary so that analysts and media and the external world can interpret it correctly.

Very good. Further questions here in the room. The microphone for Johannes...

Johannes Brinkmann from the news agency AWP. I have a question about the synergies from Wincasa. You once quantified them at 10 million in 2027 and 5 million in 2024. Has that happened? Are they on plan? How does it look?

Yes, we are very satisfied with the integration of Wincasa and also the synergies. These 5 million were achieved, we also showed that with these 20 million total before PPA deductions. So yes, they were achieved, and for 2027 we currently see no argument why we would not achieve that either. So we are very, very satisfied with Wincasa.

Thank you for that question. I see a hand going up in the back right. It is still possible to enter questions in the chat. But first, the question in the room.

A short question about the takeover of the additional share in the joint venture for the tunnel construction project. What were the backgrounds that you took over a significant additional part? That is the H41 you are referring to. We took that over from Wiebild. Wiebild grew relatively quickly but decided to withdraw from the Austrian market more or less. And we think this is an excellent project, we know the project very well, and we decided in joint negotiations to take over the entire project.

Very good. Here in front, a hand.

Thank you. Two questions. Martin Hüsler from Zürcher Kantonalbank. Can you briefly explain what impact the new contractual agreements with Ina Invest will have in the future? Will there be less cash flows or contributions in the future? That might be first.

Maybe first: the contracts were basically dissolved and replaced with strategic partnerships. So we assume that the asset management will certainly decrease, and the development and execution cooperation will continue on a strategic basis. But you have to imagine that we are not talking about very large numbers; we are talking about single-digit millions. So the first part will certainly decrease, and the second part goes into a strategic partnership.

Okay, thank you. And then perhaps here, following up, we take the 130 million EBIT of 24, probably have to subtract something because of this one-off payment, and you are guiding for 140 million. Is that primarily the real estate business that should improve, or do you expect an improvement across all divisions?

One of our strategic priorities, as I said, is to further optimize the business with operational excellence and also scale it. So we expect that all divisions will continue to develop continuously and contribute to margin expansion. This includes of course the real estate business, but also the other divisions will contribute. So the building construction now in the old system, also civil engineering and the specialties.

Very good, thank you. Are there further questions here in the room? Otherwise, I have received three questions in the chat, all three from Fond, I think from Otto. The first one is asked in English: 'Can you give us an idea of the stage of the split in terms of sales and profitability between the new divisions?' I assume I answer in German: There is currently no guidance or details about that. We will also not guide on that level in the future. But you can assume that if you now calculate Wincasa out of Real Estate and the business unit of the former Buildings division, you approximately get a result. Civil Engineering remains the same. There are minor shifts from Real Estate organizations that go to the new Buildings but also to the new Civil Engineering, but these are not significant changes. So you can imagine it like that. A second question from Otto: 'How are you seeing potential synergies thanks to this new reporting?' I think there are synergies in the sense of cooperation with customers, as the customers of Building Construction and Real Estate are very similar, and therefore we can probably work more integrated now on a large scale. But you should not expect too much in terms of cost synergies. However, if we go from four to three divisions, some cost reduction will certainly be possible. But that was not the primary reason for doing this. The primary reason was actually that after these two divisions operate so strongly, we now want to bring them closer together for the customer and operate that way. And for the other two divisions, there is no change per se: Civil Engineering not at all, and for Service Solutions it's simply that Wincasa is added and we want to consistently expand this margin-strengthening service business. And the third question: 'Can you give us an update regarding your M&A strategy?' I think I have implicitly shown the M&A strategy. It has not changed. We will continue, as you saw on one slide, to look at margin-strengthening business fields along the value chain, and if we find an ideal target, we will strike. These will not be actual construction activities but rather service businesses, and therefore also this Service Solutions division. But it could also be in planning or realization after realization, theoretically in a division. But basically, it is really the service business before and after along the value chain.

Thank you, André. Further questions here in the room? On the left, Thaserto from UBS.

A question on the gross margin. I saw that it increased significantly compared to 2023. Is this simply the effect of operational excellence, or are there specific one-off effects? Is it business mix related, and is there further upside for the next years? That would be the first question.

I'll start, and you may answer. Yes, it is actually all of what you mentioned. It is a mix of all of that. I can only support that: it is the mix of everything. But as shown, we have continuously increased our margin in the past. We want and must continue to increase in the coming years to reach at least that 4.5% point. It is a combination also with other joint ventures, but we want and must improve operationally, that is clear. So we must also continue to increase the gross margin.

Thank you. And on the provisions, a small detail question: I saw that they continued to decline after they had already declined last year. How much of this is related to one-offs? What flows into the P&L for this year? Maybe you can elaborate.

Important: provisions for all ongoing and closing large projects. There are always projects that are completed and new ones come in. In the past year, we completed some large projects, and it is always a mix between new formation of provisions, releases, or of course the use of provisions during the entire period. This has a lot to do with the project durations; it is normal. But we expect that this will not only continue to decline because the longer the projects, the higher the provisions tend to be. That is not so calculable. But we do not expect any extraordinary effects.

One last question on the dividend. With increasing profitability, the dividend also increases. But you have also said in the past that the payout ratio should additionally increase. Do you have a specific target range for the payout ratio, or what can we expect?

No, we have not defined a target range. We really have a mixed approach. We look at all aspects of the company, whether it's the equity ratio, whether it has to do with the profitability of the company. But of course we want to return a fair share to our investors, and that will be the strategy in the future as well. But there is no payout ratio target.

Very good, thank you. It is still possible to enter questions in the chat of the livestream. I currently have no further question in the chat. May I give the floor to someone here in the room for another question? Further questions? We all want to go to lunch, I assume. Exactly, you can already smell it a bit. Yes, that's right. There is still a question here in the room. Here in front, left.

Hello, a follow-up question on the dividend or dividend policy. You say you don't want to define a payout ratio, but you can also make statements like progressive dividend or depending on business performance. Can you support that?

Exactly, we have always said that. We started paying a dividend a few years ago again, and we said we start cautiously but want to increase it continuously along with the success of the company so that investors can benefit accordingly. And the KPIs we use for that are clearly the equity ratio, clearly free cash flow, and of course the equity ratio and also the future and how we believe in the future of this company. I think this 50% increase to 90 centimes is a clear commitment from the Board of Directors on how we assess the situation and also assess the future.

Yes, good. Martin still has a question.

Maybe a question from the engine room or from the value assurance program. When you look at the projects today, and I assume it's a huge cloud of points with thousands of projects, and you compare it with last year or the trend, what kind of portfolio are you handing over to the new CEO? Has everything improved? Or can you give a little insight?

At least a large part of the order backlog must be perfect because it comes from the new CEO. That's in building construction. No, jokes aside. The value assurance process we introduced in March 1, I think, was absolutely the right decision, not only that we did it but also how we did it. And I am really enormously proud of how it has developed. And it's not that it has become enormously better from 2023 to 2024 now; it has developed over the years. On the one hand, it's the process, on the other hand, it's the culture in the company. We have completely different conversations, a different quality. It's about everyone wanting the same thing: we want successful projects. And success includes satisfying the customer, but also satisfying Implenia. That requires a margin, and how we assess these risks, how we structure the contracts, is no longer comparable to what we did years ago. But the development from 23 to 24 was not a leap; it was a continuous improvement. Are we at the end? Absolutely not; we can continue to improve. We are also doing more with artificial intelligence and of course with references. That's where specialization is an advantage: if you have built a data center or a hospital once, it's easier to build a second one because you have the experience not only in calculation but also with the employees. And I think we have made enormous progress, and I sleep extremely well now.

Yes, we said it. Further questions and backgrounds are available from the known investor and media contacts. Those who are here with us in the Connect are invited to a small lunch afterwards. I thank you for your attention, for your participation in this analyst and media conference, and wish you all a nice day. Thank you very much.